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Lauren Gibbons Paul
Lauren Gibbons Paul
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Web 2.0 Enriches Applications and Services, Making Them More Compelling to Users

One of the hottest buzzwords of late, Web 2.0 refers to Rich Internet Applications (RIAs) that use the Internet as a platform to create interactive user interfaces that resemble PC-based applications. Typically, RIAs emphasize online collaboration among users.

Why It's Important: More and more financial services institutions likely will use Web 2.0 concepts and technologies -- both internally and externally -- to make their services and applications richer and more compelling to users. Banks, for example, might revamp their online banking applications as Rich Internet Applications (RIAs), enhancing usability and interactivity. According to Stamford, Conn.-based consultancy and research firm Gartner, by 2012, 75 percent of banks will use Web 2.0 technologies in retail delivery.

Social lending, in which borrowers and lenders come together without the involvement of a bank, is one financial services application that could benefit from Web 2.0 concepts. Tim O'Reilly, president of O'Reilly Media, which sponsors the Web 2.0 Conference and often is cited as the originator of the term Web 2.0, says he can envision a financial services application that would leverage other users' data to continuously improve the application.

Where the Industry Is Now: Many companies are beginning to dip their proverbial toes into Web 2.0 waters, with most using it internally at first. E*Trade already offers its customers a composite application, or "mashup," a form of Web 2.0 technology, to let them see where they might invest extra cash for the highest return. This service knits together data (the mashup) from a variety of E*Trade databases to gain an edge over competitors. Wells Fargo even joined the online gaming world by opening a virtual outpost on the Active Worlds site. The idea is simply to participate in the new online social networks, another Web 2.0 phenomenon, according to Gartner analyst Stessa Cohen.

Focus in 2007: Most financial services companies and banks will stick with experimentation this year.

Industry Leaders: Cohen cites E*Trade, Wells Fargo and Deutsche Bank as Web 2.0 leaders in financial services.

Technology Providers: Adobe, IBM, Microsoft, Nexaweb and TIBCO either offer RIA technologies or are pushing for broader RIA acceptance. Web 2.0 is both broad and new as a concept, so beware of vendors billing themselves as "Web 2.0 providers" -- this designation doesn't mean much right now.

The Price Tag: From zero to infinity. Well, that's a bit of an exaggeration. The point is, you can get started with Web 2.0 for free (by researching online communities and seeing what it's all about). Developing a full-blown, consumer-facing RIA, however, will cost well into the seven figures, as the required technical expertise is at a premium right now.

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