Fed up with your bank? Concerned your trusted provider might cancel your credit card account, despite your fiscally prudent attitude? To quote one high street financial institution, there is another way - and it involves social networking.

Analyst Gartner says non-bank competitors are pushing aggressively into financial services and creating a threat around two core business areas: lending and payment.

The key is social banking* (the star is important, according to Gartner - see the note below), which the analyst describes as the combination of social trends, such as green practices, social entrepreneurship and peer-to-peer (P2P) lending via social networks.

Gartner predicts social banking platforms will have captured 10 per cent of the available worldwide market for retail lending and financial planning by 2010. And the analyst says venture capital investment in financial social networks such as Zopa, Prosper and Lending Club illustrate increasing consumer interest. Says Alistair Newton, research vice president at Gartner:

“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.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.”

Unsurprisingly - given ongoing fears of a growing digital divide - Gartner expects social banking to take off in geographies with a developed banking market and widespread adoption of broadband: in short, Western Europe and parts of the United States.

*Note on social banking
Gartner says "social banking should not be mistaken for charitable giving". And you know, they're right - there is some confusion. Google the term "social banking" and you quickly discover that social banking is:

• "A combination of the social trends in networking communities of interest with financial products, services, capital and market access for a return on investment and social benefit" (definition, Gartner)
• "A social banking process that caters specially to the development needs of the poor, in sharp contrast with conventional commercial banking" (definition, www.caledonia.org.uk)

Further reading

• Access? Open source? Rethinking the digital divide
• Social networking creates waste and exclusion
• Facebook? LinkedIn? Social networking is rubbish
• $15bn Facebook valuation masks the real deal
• Web 2.0 technologies = five hours of depression

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