Retail banks face the prospect of disintermediation if they fail to prepare for the swelling interest in new media technologies and social networking by their customer base, according to analyst house Gartner.

Social banking won't change the consumer banking model immediately, says Gartner, although retail banks that understand social media, financial social networks and microfinance have a better chance of adapting their services.

Gartner defines social banking as an emerging approach to retail banking that makes depositing, lending and the connections between depositors, borrowers and financial institutions transparent.

Stessa Cohen, research director at Gartner, says the definition removes the banks from the centre of the customer relationship: "Instead the bank takes its place among a series of loosely connected financial and social relationships mediated by online social-networking media and tools."

Full Story at Finextra