When you look at the way the internet has impacted the way we consume music and news, or the way we shop, it may seem that financial services is perhaps one of the industries on which the web has had the most limited impact.

Apart from online trading, there have been relatively few revolutionary inventions in terms of financial web applications. Of course, Paypal comes to mind as one successful venture. More recent initiatives in the field of social lending or microfinance, such as zopa.com or kiva.org also look promising, even though the current economic climate may get in the way of many people’s lending urges.

One of the latest web initiatives in online finance, SmartyPig.com, revolves around the notion ofsocial networking. The idea is to create a savings account for a specific purpose – a trip somewhere or a new car – and have friends and family contribute to it. However, some web-based, bank-related inventions never lived up to their promise. Remember account aggregation? Despite being touted as the way of the future to manage one’s finances online some six or seven years ago, it never amounted to very much.

So far nothing, and certainly not internet-only banks, has yet threatened to render traditional banks irrelevant in the same way the internet is shaking up the traditional business models of the entertainment, media, or even travel industries.

Will Web 2.0 deliver more compelling financial websites? Will a start-up take the industry by surprise and become the banking equivalent of Google?

Filed under: Retail Banking, Technology