12th June 2012
Yet while there have been dramatic changes in some old school industries, others, such as financial services and investment houses, have failed to tap into the digital revolution.
As Psyfi blog notes: "Publishing, an industry which had run on business models largely invented in the Middle Ages, has been completely revolutionized. Other industries have had their economics completely upturned by the interconnectivity of the internet, cheap, distributed processing power and the power of peer review."
For example, the list of new services that Amazon has introduced to retail is impressive. One of the most popular innovations was product reviews, leaving traditional players such as HMV and Waterstones languishing in its wake.
"And its ability to creep into new realms, launch new services and steal market share with little fanfare has made retail's biggest players take notice, particularly over the past couple of years," says Retail Week. Amazon drives this pace of change by being unafraid of risk and unwaveringly forward-looking.
So why isn't the financial world taking note given, for starters, the clear need to develop trust in the industry? While there are basic rating systems for funds provided by the likes of Morningstar and Standard & Poor's, and we've witnessed the introduction of low commission internet share dealing which has undermined many old school brokerages, that's about it.
The fund demographic might be thought to be passive – unlikely to blog or comment on their thoughts, but there is a growing awareness, particularly in this environment, of the usefulness of these tools.
So is the financial industry on the cusp of a revolution?
Peer reviews and social media has become a particularly useful tool when booking a holiday, say, or picking your next book for your bedside table – so why not an investment fund? Do you do a swift survey to see how many stars a product has on Amazon, say, and what people say about it before putting in your credit card details? Probably. Wouldn't it be beneficial to have ‘investor reviews' offering the same service in a modern format that's easy to decipher?
After all, recent economic turmoil has highlighted the importance of knowing exactly how your investments are doing, and it's comforting to know that if you hold some dog funds others are equally disappointed at their performance. Over the last few years, financial markets have been influenced by a series of worldwide events – particularly concerns about the EuroZone debt crisis, which have resurfaced recently – impacting on returns. Wouldn't you like to share this with fellow investors?
There are plenty of examples of the success of the peer review system in its various guises. Ebay provides mechanisms for assessing the trustworthiness of sellers, Facebook allows you to canvas your friends' opinions, while TripAdvisor uses peer reviews to assess holidays. And so it goes on.
Psyfi blog says: "You don't go and read the blurbs by friends of the author before buying a book, you read the reviews by readers. You don't take the word of the travel agent before buying a holiday, you read the thoughts of people who've already done it."
So it seems strange given the level of distrust surrounding the financial industry that there aren't most forums for specific investment discussion out there. We have MoneySavingExpert.com, but that's mainly focused on saving money.
Consumers and investors alike have a desire for power – and technology has helped by providing a point where they can group together and this inform others of their particular opinion.
Most forward looking brands recognise retail in its current guise as broken and they are looking for ways to engage the consumer but this has to be something different – why not the financial industry?
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