Earlier this week, Visa launched its Facebook Business Network. While the first to use Facebook, several other major financial institutions have opened small biz networks on the Web in the past six months:

• Advanta's Ideablob launched last September at DEMOfall (previous post here). It's a unique website with monthly contests awarding $10,000 to the best idea, as voted on by users. It's an intriguing concept with decent traction, almost 30,000 unique visitors last month according to Compete (see chart below). (Full disclosure: I just realized I'm wearing an Ideablob t-shirt; schwag can still pay off!)
  
• American Express's OpenForum: As the name suggests, it's a business forum and resource directory, not unlike Bank of America's (see below). American Express has added posts from several prominent bloggers such as John Battelle's Searchblog and Anita Campbell's Small Biz Trends to keep the site fresh. The site has 5,400 members and monthly traffic of about 11,000 unique visitors, up threefold from a year ago.  
  
• Bank of America's Small Business Online Community, a general forum and resource directory, launched in Oct 2007 (see original post here). It's primarily a forum, with some additional articles on the side. Total membership is just under 15,000.
  
• Capital One's Slingshot, launched in February, is primarily a business directory. But it does aim for community involvement with user-submitted business reviews and comments on certain topics.
  
• HSBC's (UK) Business Network: Another forum-and-blog site similar to AmEx's OpenForum. So far it appears lightly used, with just six blog entries this year and 270 member profiles.
  
• Intuit's Quickbooks Group: Although not a financial institution, the Quickbooks site is a good example of an active community with more content, including ten blogs, and as much traffic as the others combined (not including BofA which is unknown) with nearly 90,000 unique visitors, almost double the number a year ago.
  

 Unique website visitors in May 2008 (source: Compete)

This week two Finovate Startup alums launched the
services they demo'd a month ago at our conference:

• June 2: CheckingFinder from FirstROI/BancVue
• June 4: Friends & family student loan facilitator, GreenNote

We'll start with GreenNote and look at CheckingFinder tomorrow. Although I'd seen the GreenNote demo, since it was in closed beta, I hadn't had a chance to use it until earlier this week.

My first impressions are favorable. The site helps students reach out to family and friends to put together a "personal loan consortium" to finance educational expenses (also called a "pledge drive"). While GreenNote does not currently provide access to funds from outside the student's own network of friends and family, the service does offer tools to solicit loan pledges via email. It also collects the resulting loan pledges from interested parties, then sets up and services the resulting loan. 

The process:

• Students solicit loan pledges from their network, and hopefully the networks of their network
• Interested friends, family, or anyone else who's received a loan request from the student (either directly, or through forwarding) create a GreenNote account and make loan pledges (minimum $100)
• Once the loan is funded (minimum $1,000, no maximum), GreenNote verifies enrollment, collects the money, and packages it into a single loan agreement with the student
• When it comes time to repay the loan, lenders can choose to forego the principal and/or interest and gift it to the student, lenders will also be able to lower the rate

The terms:

• Loans are deferred for up to five years while the borrower is in school, then initiate a six-month grace period before repayment begins
• Interest accrues during the deferment period
• Repayment is over a 10-year period, meaning that lenders must commit their money for 15 years
• The rate is currently 6.8% fixed, but GreenNote takes 100 basis points of that, so lenders receive a 5.8% return (which they can elect to lower at repayment time)
• GreenNote charges a 2% loan fee at funding, with a minimum of $49

Coming soon:

• Allow third parties to browse loans they might want to fund (e.g., alumni)
• Facebook integration

Analysis
At first glance, it looks like an expensive way to put a nice wrapper around funds that have already been made available by the student's family. And certainly, if mom and dad are providing the bulk of the cash, it's not necessary to pay 2% for a promissory note. For most loans, you can do that for less at online paperwork specialists such as Virgin Money or LoanBack.

However, the power of GreenNote's model is tapping into the friends of friends, and the friends of those friends, and so on. As a student puts together an email pledge drive, recipients are encouraged to pass the request on to appropriate parties who might be willing to participate. For example, Pat who is headed to Michigan State, knows Jon whose uncle is a successful alum of the school. Jon's uncle, who'd be highly unlikely to simple write Pat a check, might be very interested in putting a few thousand dollars into a long-term 5.8% deposit that earns him a fair rate of return and helps someone go to Michigan State.

GreenNote is well thought out and well implemented. The main problem though, is finding enough deep pockets willing to put thousands of dollars on deposit for up to 15 years with no guarantee of repayment.

Financial institution opportunities
Lenders have taken some heat recently as they've cut back on student lending during the credit market turmoil. A bank or credit union could gain some positive PR by facilitating this type of lending among their own customer base and community. It could be built from scratch or potentially in partnership with GreenNote.

Background
GreenNote is backed by Menlo Ventures, among others, and has an impressive board and advisors including prolific blogger and partner at Glenbrook Partners, Scott Loftesness. Bill Harris of Intuit, X.com (now PayPal), and Passmark (now RSA) fame is on the board. The launch was covered this week by TechCrunch, VentureBeat, and C|Net among others.

GreenNote homepage (5 June 2008)

The latest research from our Online Banking Report division is now available. It's a double issue (#152/153) released today entitled:

Online Investing Communities: Will social networking revolutionize saving & investing?

We believe social networking will eventually play a large role in online investing, and evidently we are not alone. We found 54 companies involved in investment information exchange and only six of those have monthly traffic of 100,000 or more.

So, while we like the idea, it will take a while to catch on. Only about 25% of the U.S. population owns individual stocks, and only a small subset of those make a trade every year. Furthermore, the prime social networking demographics, those under-35, are less likely to own or follow stocks. As a result, we project that it will be well into the next decade before adoption passes the 10% mark.

In preparing the report, we asked 400 U.S. online users what they thought about the idea of sharing investment info in a social network setting setting such as Zecco Share or Motley Fool CAPS (see note 1). While there was a decent amount of interest from the under-30 group, 30% were somewhat or very interested, the overall enthusiasm for the idea among all U.S. adults (21+) was only 22%. See the full report for more research results and the resulting 10-year social investing forecast.

About the report
Subscribers may download it here as part of their annual subscription plan. Others may purchase it here. The printed version will be mailed to subscribers later this week. 

For more information read the abstract here.

Note:
1. We asked U.S. online users for their opinions about social networking for investment information (fielded April 18-19, 2008, n = 401). The top-level results are including in the report. For more detail, All-Access subscribers may download a complete summary PDF document of all questions and answers or download an Excel file of the raw data. In addition, All-Access subscribers may use our online research tools to run their own cross-tabs and filters on the dataset. The dataset will be available next week through subscriber accounts at OnlineBankingReport.com.

This morning I was at the Parc55 Hotel in San Francisco to hear Prosper CEO Chris Larsen's "state of the union" address at his company's annual user meeting, Prosper Days. I've heard him speak four times in the past year, and I learn something important every time (see note 1).

The highlight today was an analysis he unveiled showing the performance of loans made to borrowers who've been endorsed by friends and family. About a year ago, Prosper added an important social networking feature that allows friends and family of potential borrowers to post endorsements. Even more important, Prosper shows whether the friend has put their money where their mouth is and made a bid on the loan (see screenshot below; note green number in upper right showing the amount of the bid made by the endorsing friend).

Analysis
The theory is that the social endorsement(s) will have two important benefits:

• Help lenders identify quality borrowers 
• Provide borrowers with more incentive to repay the loan so as not to disappoint their endorsing friends

The first year's worth of data are in and the results are promising. The loans with higher social capital (i.e. endorsed by and bid on by friends) are performing significantly better so far:

• Loans with a single friend bidding on the loan are performing 35% better than similar loans without that endorsement
• Loans with multiple friends bidding are performing 50% better

Because Prosper makes its loan performance data public, investors will be able to track the value of these endorsements over time. If it turns out that endorsements do correlate with better long-term loan performance, loan rates will be bid down accordingly, and the borrower will capture the value of their social capital/reputation through lower loan rates. Already, the rates to these endorsed borrowers are running 10% lower. 

Lenders can even search on these so-called "social elements." Prosper's advanced search includes 43 searchable fields, four in the social area (see screenshot below).

Note:

1. Prosper will be demo'ing their latest platform improvements at our upcoming FINOVATE Startup conference (previous coverage here).

2. For more information on Prosper and person-to-person lending, see our Online Banking Report, published in December.

My teenage son has just starting "Facebooking," and he loves it. It's his first foray into social networking, and I can tell he'll be a user for the rest of his life, or at least until something better comes along.

Those of us who are merely parents of social network users often find it difficult to understand its power. In my son's circle, Facebook IS the Internet. It's where every online session begins and ends and where important social connections are made and nurtured. That's why strategic investors such as Microsoft, Google and others are said to be giving Facebook as much as a $10 billion valuation (see previous coverage here).  

All this has enormous implication for every retailer and service company on the planet. It amplifies word of mouth exponentially. Remember the old adage that every disappointed customer tells 10 people about their problem. With the instant broadcasting capabilities, an unhappy customer can now share his/her thoughts with 100+ Facebook friends with a single click (note 1).  

And it's not something that is 15, 10 or even 5 years away. It's happening today. Case in point: this summer HSBC (UK) was forced to reverse a policy change that would have ended a common perk for U.K. student banking accounts, a multi-year grace period for overdraft credit lines with limits up to US$3,000 (see HSBC student page here).

Local students were so taken aback by this change in account terms, they formed a Facebook group called, "Stop the Great HSBC Graduate Rip-Off" (here or see screenshot below). Apparently the group was planning to rally its 5,000 members into a little civil disobedience. The group was hoping to cause customer service headaches by flooding the bank's branches, and overloading teller lines, with student customers asking for detailed explanations of the new fees.

According to news reports (here and here), the bank quickly backed off the rate change and reverted to the liberal interest-free borrowing guidelines.

Implications
You should be using, tracking, analyzing, and brainstorming about how to tap social networks for sales, marketing, service, and recruitment.  

Note:

1. And the simple click-and-complain activity can be broadcast to every friend before the disgruntled customer has a chance to cool down (and/or sober up) and think through the issue in a more rational way.

Note: Read part 1 and part 2.

Many articles and blog posts will tell you that the cost to enter into the world of blogs, wikis, RSS, podcasts, social networking (Facebook or MySpace), social bookmarking (del.icio.us or ma.gnolia), or  Application Programming Interfaces (or APIs) mean that you can start a blog or social media project for your bank or credit union at a total cost of zero. Right?

Well, sort of.

One of the critical, but often unsung factors of success of a social media project is the resourcing. If you're going to invite the public to play, make sure you have someone who can help create the kind of community you want.

As we planned ChangeEverything.ca at Vancity we had many discussions about how to create a vibrant and postive community. We have all seen online bulletin boards, discussion forums and blogs degenerate into the kind of name-calling no one wants associated with their brand. This was one of our worst fears. Since then, we've learned a great deal about community building.

In my first part of this post, I mentioned nine success factors for a social media project. An important one is hiring someone who knows how to nurture and grow an online community. Here's why.

Whether or not hard dollars are spent launching a social media project, someone needs to manage the initiative and ensure that it achieves its goals. This is a very specific skill-set with the following requirements:

• Someone who can inspire visitors to come back, readers to register, and registered users to add good content.
  
• Someone who knows when to get involved in discussions and threads that are degenerating, going off topic, or just going nowhere.
  
• Someone who can elevate good material to the homepage so it will hook like-minded people, as well as delete remarks you don't want on the site.
  
• Someone with good taste.
  
• Someone who understands the business goals of the site and can act appropriately and decisively.

Recently I have seen a few interesting posts speaking to the issue of good online community moderation. One was on Jeremiah Owyang's excellent web-strategist.com: For the Community Managers. I also saw a very good piece on Seth Godin's blog: Jobs of the future, #1: Online Community Organizer. So it seems that more and more people are catching on that this free revolution has some resourcing costs built in if you want to achieve success.

Here are three examples of financial institutions that blog and how they manage their resourcing.

Wells Fargo

Wells Fargo has a total of four blogs, the most for any financial institution. According to their VP of Social Media, the amazing Ed Terpening:

Although we have an Experiential Marketing group dedicated to social media activities for Wells Fargo, all of our bloggers are team members who have other full time jobs. They add blogging - writing, posting, reading, replying - on top of those jobs, and our lead bloggers take a more active role than others. The culture of blogging is unique and we strive to connect with that culture through many different voices at Wells Fargo. Finding the person with the right passion + knowledge is our goal, whether they have a professional communications role or not (most do not).

Verity Credit Union



Verity was the first financial institutions to blog, beginning in late 2004. It recently received an excellent facelift and functional overhaul. It's a highly usable and readable blog. According to their CMO and VP Shari Storm, they staff their blog with volunteer employees from around the credit union. Employees who want to blog go through a quick 10-15 minute training on the dos and don'ts of blogging, and they are allowed to spend no more than an hour a month blogging so their managers won't get upset with the project. This is a nice way to save money on resources. Until their recent overhaul, their blog was even hosted for free at Blogger. Says Storm, "One of the unexpected successes of our blog is how much employees like writing for the forum. We’ve heard from employees that it provides extra job satisfaction and a sense of employee pride."

Vancity



One of the key success factors of ChangeEverything.ca was the investment in a full-time Online Community Moderator, Kate. Kate has been instrumental in nurturing the community, providing them with contests and activities, connecting the site to the press to get earned media exposure, moderating comments and understanding the needs and wants of the site's registered users. Not an easy job, and I always say that Kate is one of the key reasons why the site has grown and excelled in the way it has. She has an amazing balance of clearly knowing the purpose of the site, and also being open to where the community wants to go. She deserves amazing credit and her skillset will only make her more and more valuable. (NOTE: no poaching!)

So, by all means try out social media. There are many low-cost, even free, options. But realize  that for a site to achieve longevity and success as a communications vehicle, branding tool, community platform, or whatever you have planned, you may need to invest in social media management. This means either tapping good people internally to devote time to the project or hiring a community moderator to ensure your project develops to its full potential.

William Azaroff is the Interactive Marketing & Channel Manager at Vancity where he develops interactive marketing initiatives, and pioneered ChangeEverything.ca, the groundbreaking change-themed online community. William also plans strategy for the online channel, with a view to its potential to help Vancity, its members and the community. William brings nine years of experience in Vancouver, Seattle and Los Angeles producing web projects for such clients as Honda, Disney, Intuit Canada and Nike Jordan. He writes about the intersection of online branding, social media and the world of banking on his blog at azaroff.com/blog

A recent article in Bank Systems & Technology looked at the question of whether or not banks were reaping Web 2.0's potential. The subtitle of the article—"some institutions aren't realizing all that Web 2.0 has to offer"—is generous beyond belief.

The article takes the form of a panel discussion, with participants from Wells Fargo, Adobe Systems, Tower Group, and Hurwitz & Associates addressing questions about which banks are implementing Web 2.0 technologies, and why banks aren't embracing them more than they have.

The Tower analyst had some interesting things to say, while the rep from Wells Fargo understandably focused on internal initiatives, although (probably reflecting the part of the organization he works in) he made no mention of WF's blogging efforts.

What had me shaking my head in disbelief was the comments from the Adobe person. Her reply as to why banks aren't embracing Web 2.0 technologies more: "The main obstacle seems to be that institutions are hesitant to improve one section of their website too drastically for fear of making the other sites look even more out of date."

Robin Bloor of Hurwitz better captured reality with his response to the same question:

"It may simply be a matter of where to invest. A Web 2.0 project is very difficult to define in terms of specific business objectives. There are no obvious corporate successes to imitate, and no easy way to calculate payback."

My take: There are three major forces holding banks back from capitalizing on Web 2.0:

1) ROI. Despite all the talk about building customer relationships, most banks invest in sales, not in relationship building. If there's no clear link between the investment and a sale, most banks are reticent to make the investment. An example: Personal financial management. NetBanker now tracks more than 20 online personal financial management sites. Why is it that most banks (with the exception of a select few like Wells Fargo) aren't making an investment in a PFM or Wesabe-like capability? Because they can't see how it ties to making a product sale.

2) History. Besides "no obvious successes to imitate," there are past failures to avoid. Plenty of bankers still remember the online community efforts that banks dabbled in seven, eight, nine years ago. They jumped into those initiatives feet first back then and found that they were jumping into empty pits. This time around, they're more cautious and asking, "What's different this time?" Well, there are plenty of things different this time, but they still need to be educated about, and convinced of, these differences.

3) Banker say what? Ask 100 banks if they could launch a successful social media campaign, and 95 will say, "Huh?" (4 will say no, and 1 very deluded individual will say yes, unless she's from Wells Fargo). Even if some banks were willing to take a longer term view of the ROI on these investments, it's still not clear to many exactly what Web 2.0 is—and isn't. I, for one, wouldn't suggest tossing around words like "wiki" or "facebook" with senior execs at most financial firms.

So is Web 2.0 dead when it comes to banks? No. But the needle isn't going to move until one or both of the following happens:

PFM sites influence consumers' choice of institutions. Wesabe's Jason Knight has said that his firm doesn't compete with banks. And he's right, of course. But if (or when) Wesabe starts becoming an influence on its members' choice of firms in any significant manner, the banks will sit up and take notice. And then start, however belatedly, to get on the Web 2.0 bandwagon.

P2P lending makes a bigger dent in the big banks' business. Firms like Prosper can crow about the dollar volume of the loans being made on their sites, but, for now, many banks assume (rightly or wrongly) that these transactions are not cannibalizing their business. If this view changes, however, banks will start whistling a new tune regarding Web 2.0.

Ron Shevlin is vice president of client solutions at Epsilon. Prior to that, Ron was an analyst at Forrester Research. He opines (translation: rants) about financial services marketing at Marketing ROI: Whims From Ron Shevlin. The opinions expressed here are Ron's, not those of NetBanker, his employer, or any other sane person or party for that matter. 

Due to Facebook's roots as a college-only social networking site, as recently as last year you had to use a .edu email address to gain admittance, it has remained a young person's playground much longer than MySpace. However, much to the chagrin of my college-age niece and her friends (note 1), Facebook has aged rapidly this year.

As you can see in the inset, in May, comScore reported that more than half of Facebook visitors were 25 or older (see full press release here and note 2). Using this chart, we estimate the median age of a Facebook visitor was about 23 a year ago and now it's closing in on 30 (I'd guess 27 or 28 based on the comScore data). Even more frightening for the younger set: last month there were 2.6 million more unique visitors over age 35 than in the 18-24 category. We noted this trend at MySpace last year (here).

Significance for Banks
As you consider your social networking strategy, don't think it's only for the under-25 crowd. Some of your prime customers, the 30-somethings with new families, new cars, new homes, and accelerating careers, also keep in touch with friends via social networks. Refer to Online Banking Report, Social Personal Finance, for a long-term forecast and strategic options for financial institutions. Also, see our earlier post on the Top-10 Banking & Money apps on Facebook here.

Facebook Lingo Defined
For those of you new to Facebook, Ad Age ran a sidebar off its lead article this week, This 23-Year-Old has Google Sweating, explaining a few key Facebook terms:

• Minifeed: Like an RSS feed, that automatically updates everyone on your friends list of any changes you make to your profile, including removing items. This feature caused a bit of a revolt, due to privacy issues, when introduced last year. But now it seems to be an important part of the network. It's especially critical for the viral spread of new applications such as Lending Club or Chipin. Unless they opt out, every time a Facebook user adds an application to their account, all their friends are notified in the mini-feed.
• Poke: The virtual equivalent of smiling at a co-worker passing in the hallway; a way to connect with someone without the more formal protocols of email, text, or voice messaging.   
• The Wall: A place to write comments on your friends profile, or respond to comments on yours.
• Tag: Allows users to associate names with the people in the pictures they've posted. As Ad Age says, "a college grads worst nightmare when it comes to the ever-crucial job search."

Notes:

1. This summer, my niece, a college sophomore, couldn't believe that I had a Facebook account. And she was more than a bit skeptical of my claim that I was tracking the social network for my blog and newsletter. To her, it's a privileged place for her friends to communicate: uncles, aunts, and especially parents, are definitely not on the invitation list. It will be interesting to see what happens to the hip kids as the establishment invades their turf. The Wall Street Journal had a similar story this week about fellow workers and even bosses requesting to be added as friends in social networks (here).

2. comScore is reporting the demographic profile of visitors, NOT the active-user base, i.e., those that maintain profiles. Active users would undoubtedly skew younger.

After six short weeks, there are 48 applications in Facebook's Money category. At Netbanker we are most interested in the 14 directly related to banking, payments, and lending. So here's the most-used list with the stock trackers, calculators, and shopper apps removed. Lending Club continues to lead the pack as it has since its May 24 launch in conjunction with the new Facebook platform. Applications are listed by number of Facebook users that have added them to their profiles.

Top 10

1. Lending Club by Lending Club >>> 11,012 users

Lending Club enables those in the Facebook community with good credit to easily borrow from each other with a trusted third party managing the process and assessing the risk. Previous coverage here.

2. Fantasy Banker by Prosper >>> 4,674 users

Prosper bills Fantasy Banker as a twist on HOT or NOT, "a fun & educational way to get acquainted with person-to-person lending by betting on whether real-life Prosper loan listings will fund or not." Previous coverage here.

3. My Bucks By Aryeh Goldsmith >>> 3,926 users

A virtual currency called the Facebuck.

4. BillMonk (Obopay) by Charles Groom and others >>> 2,793 users 

BillMonk is an expense tracker specifically designed to track debts and obligations (such as rent) between individuals. Used Facebook APIs long before the F8 platform was announced. Previous coverage here.

5. Buxfer by Shashank Pandit and Ashwin Bharambe >>> 1,482 users

Buxfer is another expense tracker specifically designed for singles sharing households expenses. Previous coverage here.

6. Pay Me by Yellow Media >>> 842 users

Pay Me was developed by a third-party developer to make it easier to initiate PayPal payments right from Facebook. Previous coverage here.

7. ChipIn by ChipIn >>> 830 users

ChipIn is a simple way to collect funds for an event, trip, or anything. Users create a clickable badge that is displayed in their profile. Other Facebook users chip in via the PayPal network. Previous coverage here.

8. PayPal by PayPal >>> 500 users

The official product from PayPal, the division of eBay. So far, merely allows you to easily request money from your Facebook friends. More functions are said to be on the way. Previous coverage here.

9. Ven by Hub Culture  >>> 154 users

Another virtual currency.

10. iSpend by Reman Child and Shawn Gupta >>> 141 users

A new financial tracking app posted last week. 

The Rest
11. Wesabe by Wesabe, Inc. >>> 104 users

The Wesabe Facebook app currently supports group discussions. It is not currently linked into its Web-based personal finance app. Previous coverage here. 

12. OmniSpense.com by Jonathan Kelly >>> 60 users

The newest expense tracker, appeared in the money category in the past 48 hours, but looks like it may have been posted about 2 weeks ago. 

13. BillTrack Bill Reminder by Michael Irizarry >>> 59 users

Bill Track is built specifically for tracking bills (surprised?). It was posted earlier this week. 

Yet another virtual currency.

One of the questions that I imagine many companies in virtually every industry is asking themselves is: How can we engage in the social web?

A lot of companies, banks and credit unions among them, see the opportunities that currently exist, but can't find their way in. One of my favourite quotes is from Rob Cottingham of Social Signal. He tells audiences who are looking to start a social web project that "before you look in the monitor, you should look in the mirror". It's fun to start a new project, and often people will start planning a way to leverage a new marketing trend such as social networking before they take a good look at themselves to determine if they have the stomach to open themselves up and take the leap.

Maybe it's not a matter of companies opening themselves up, but understanding where their openness already exists. Every company likely has an area where they are doing the kind of work where they can engage an audience in collaboration. It's a matter of taking the essence of a company's brand and brand positioning and marrying that with their philanthropic activities.

Most companies that are looking to the social web are, I suspect, also looking for ways to further leverage their existing community activities. I wonder how many of them put those two challenges together into the same project. Let's look at one good potential example in the banking sector.

Bank of America

Before we begin, I should disclose that I don't know anyone at Bank of America and what follows is my outsider opinion only – some food for thought.

According to bankofamerica.com, they sum up their brand this way:

Bank of America’s brand positioning, “Bank of Opportunity,” is emblematic of what Bank of America has always strived for throughout its history ― to create opportunities for the individuals, businesses and communities we serve throughout the world.

In March, Bank of America announced a $20 Billion environmental sustainability initiative. This is a major investment into changing their business operations and offering new products and services that have a sustainable focus. And yet their website hardly mentions this information. Doing a search on “climate change” on their website only brings up some press releases, a position paper, a speech and some other links to corporate areas of the site. I'm sure they have plans to bring this more front and centre, but what are some good ways to do that online in a way that's meaningful and gains them effective brand differentiation?

This philanthropic work provides an excellent chance to give up a little control in a focused area where they have a clear desire to become a true leader. Based on the amount of money they're planning on investing, this is obviously going to become a key differentiator for their brand, and I imagine they'll find a way to link this back to their brand positioning: Bank of Opportunity. It's not hard to see how that could work, and work well.

As they put money into their first initiatives, they could utilize the social web to engage community to find out first-hand where their money could make the biggest impact, or where their customers think they ought to invest. They could be harnessing the wisdom of crowds to help them create and develop environmentally friendly financial products and services. This could take the form of a social network, they could leverage Facebook, they could start a wiki or a blog. Eventually, when they have some real data about their climate change activities and impacts, they could release that data as an API so people who are passionate about climate change could take the raw data and create mashups that I can't even begin to imagine (but marrying large scale environmental data with Google maps could start to yield some interesting visual possibilities and show how Bank of America is improving America, perhaps even at the neighbourhood level).

By opening up and letting the chips fall where they may, albeit in a calculated way, BofA gets free advice, they attract the input of leaders in this area and they start educating people on their activities. They could introduce this new corporate activity slowly so people understand why they're doing it (perhaps link the concept that America has to be sustainable in order to be prosperous, and that's why a bank is putting money into this kind of work).

This would also help them win over some needed friends and allies in the environmental movement and encourage dialogue about the challenges we face as a society. There are myriad opportunities for them here, and exciting time to be in the marketing and communications departments, I imagine.

I look forward to seeing how they promote this good work. So far, their first initiative of helping a non-profit purchase an old growth forest with private capital is highly impressive, though definitely under-leveraged on their website. I hope they find a way to surface this work so that people learn about it - I think the social web could be the answer.

The social networking phenomena has entered a new phase: eCommerce. It has always been a bit hard to visualize mainstream businesses, like banks, book sellers, or phone companies making a profit on MySpace. It's been a great place for musicians and online dating companies to grab market share, but a MySpace Checking Account didn't seem just around the corner (see MySpace coverage here).  

All that changed May 24, when Facebook opened its network to outside developers, making its service more like Windows than MySpace. Already the service has grown by 3 million users, more than 10%, in the past 4 week, to 27 million (see Facebook profile in today's Wall Street Journal).

More interesting are the 893 new services have opened their doors on the platform. The most popular, Top Friends by Slide, already has 6.4 million users. Yes, that is no typo, in one month a Facebook service grew to more than 6 million users. With traditional marketing, it would have cost a bank or card company as much as $1 billion to attract that many customers assuming acquisition costs of $100 to $150 per new account. 

And it's not just the one app. A new Seattle-based music preference service, iLike, has added 3.8 million. There's not a whole lot happening in commerce apps YET, the first financial company with a service offering, Lending Club (see previous coverage here), is the most popular business app, with just under 10,000 users. That's about what iLike attracts in a busy hour, but for a financial services company, and especially a startup, that's huge, a grand slam using tired baseball metaphors.

For many reasons, it takes longer for traditional companies to pounce on new opportunities. But over the summer we'll start seeing hundreds of businesses launch on Facebook. By next year at this time, the Facebook apps directory will probably look like the New York City Yellow Pages (or at least San Jose).  

Financial Institution Opportunities

Searching the site, we only see four financial services that have launched on Facebook:

• Lending Club's person-to-person loan marketplace
• Prosper's lending game
• Wesabe's personal finance groups
• Pay Me, a payment service developed by Australian Ad Agency, Yellow Media using the PayPal engine (screenshot below, we'll provide more details once we finish testing it)

But so far there is no:

• Bank
• Credit union
• Credit card issuer
• Mortgage lender
• Brokerage (although there are several stock monitoring service including Forbes, Yahoo, and Social Picks)
• Rates tracking service
• Credit report monitoring service (though Identity Guard is advertising heavily today)
• Identity theft protection service

Let the race begin. But you better move faster than you've ever moved before, if you want to get the huge first-mover advantage on the Facebook platform. Good luck.

For more information, see our latest Online Banking Report, Social Personal Finance.

If you are interested in online personal finance, you'll want to read tomorrow's feature by the Wall Street Journal's Jane Kim, Managing Your Money in Public View (here). It's an accurate and almost entirely positive story that includes interviews from four satisfied users: two from Wesabe* and one each from Geezeo and Buxfer. 

Wesabe definitely gets top billing, as it should as the leader in the space. In addition to Geezeo and Buxfer, the article also mentions BillMonk/Obopay, Zecco, NetWorthIQ, and two new stock-trading-oriented social sites, TradeKing and Covestor. The only major omission is Mint, not because they were overlooked, but because they are not yet public. See here for our previous coverage of online personal finance.  

The market-size forecast cited is from the latest Online Banking Report, Social Personal Finance (discussed here and here).

One side note that I found interesting: The article included a disclosure that the paper's parent, Dow Jones, is working on a personal-finance site with IAC/Interactive Corp, parent of LendingTree, GetSmart, mortgage lender HomeLoanCenter.com and RealEstate.com. It will be very interesting to see what comes out of that effort.

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*Wesabe was on top of this story, posting it to their blog earlier this evening.

Wow, I can breath again. I just loaded the latest Online Banking Report on to our website, Social Personal Finance: Will social networking revolutionize personal finance? I'll post a summary later. Subscribers, you can download it now (here) free of charge. Everyone else, it's US$395 on its own, or for "just" $700 more you get the new report plus a stack of others, including our report on Web 2.0-ing your Bank, Mobile Banking, Mobile Payments, the latest online banking forecast and more.

Thanks to Scott at Payments News and Colin at The Bankwatch, who've already given the report a mention. And thanks to the Bryan Donovan and the folks at Compete, who provided a new online financial services data snapshot that I know you are going to find extremely valuable. More on that tomorrow.

Now, back to our regularly scheduled blog.  

Until this week, we hadn't seen much worth writing about on MySpace, other than Cassie's page, an avatar from Wells Fargo's Stagecoach Island (here). A few dozen credit unions have posted pages that range from tolerable to atrocious using the same free tools that 16-year-olds favor. A clear recipe for mediocrity. 

But last week, UK's Co-operative Bank <co-operativebank.co.uk> posted an excellent page that reinforces its reputation as a good corporate citizen (screenshot below). There's an interactive poll about automobile taxes, a CO 2 emissions calculator, some videos, wallpaper downloads, and the usual MySpace stuff. And to drum up friends, an important measure of success on MySpace, the bank will donate 20p to The Children's Society for everyone who signs on. So far its raised about US$20 with 48 friends. But the number is growing quickly; in the last 12 hours growing more than 50%, from 31 friends to 48.

The MySpace URL uses the company's tagline:  <www.myspace.com/goodwithmoney>. The bank chose Joni Mitchell's Big Yellow Taxi as its background music, an appropriate selection.