Press Release

Egham, UK, February 6, 2008 View All Press Releases

Gartner Says Social Banking Platforms Threaten Traditional Banks for Control of Financial Relationships

New Technologies, Ethical Trends and Rise of Social Networking Set to Change Industry Dynamics

Non-bank competitors are pushing aggressively into banking and investment services, threatening to undermine banks in the financial relationship, according to Gartner, Inc.  The threat is particularly pronounced in two businesses that are at the very heart of banking, namely lending and payment.

Gartner predicts that by 2010, social-banking platforms will have captured 10 per cent of the available worldwide market for retail lending and financial planning.

Social banking* is the combination of social trends, such as green practices, social entrepreneurship, and peer-to-peer (P2P) lending and financial planning via social networks, with banking products and services. Venture capital investment in financial social networks (FSNs) such as Zopa, Prosper and Lending Club, as well as Virgin USA's acquisition of a majority stake in CircleLending point to the growing prevalence of FSNs and increasing consumer interest in this area.

“This combination of business, non-profit organisations and social justice is being bolstered by general consumer trends and social causes that appeal to consumers to shop ethically,” said Alistair Newton, research vice president at Gartner.  “In addition, more consumers are generally spending more time in social networks which increasingly form part of consumer purchase processes for new products and services.”

Gartner expects social banking to initially take off in geographies with a developed banking market and widespread adoption of broadband and potentially wireless communication systems. “Social banking will emerge first where societal cultures have high levels of acceptance for social welfare and potentially where the underserved or unbanked client segments need capital and market access,” said Stessa Cohen, research director at Gartner.  “So we are likely to see this trend first in Western Europe and parts of the United States.”

Gartner advises banks:

  • Not attempt to replicate social-banking platforms unless they can clearly establish a strategic intent centered on social welfare, as opposed to traditional commercial return. Instead, banks should identify opportunities for partnerships with FSNs, providing banking capabilities such as transaction processing and risk management that are often lacking or insufficient in FSNs.
  • To urgently invest in customer behavioral and segmentation analysis and re-engineer business intelligence models so that they can better understand the demographic changes taking place in the market.

Note to Editors*

Social banking should not be mistaken for charitable giving. Rather, it combines the social trends in networking communities of interest with financial products, services, capital and market access for a return on investment and social benefit.


About Gartner

Gartner, Inc. (NYSE: IT), is the world's leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities and build the successful organizations of tomorrow.

Our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We're trusted as an objective resource and critical partner by more than 15,000 organizations in more than 100 countries—across all major functions, in every industry and enterprise size.

To learn more about how we help decision makers fuel the future of business, visit

Comments or opinions expressed on this blog are those of the individual contributors only, and do not necessarily represent the views of Gartner, Inc. or its management. Readers may copy and redistribute blog postings on other blogs, or otherwise for private, non-commercial or journalistic purposes. This content may not be used for any other purposes in any other formats or media. The content on this blog is provided on an "as-is" basis. Gartner shall not be liable for any damages whatsoever arising out of the content or use of this blog.