"Social banking, an emerging banking distribution model, has the potential to displace banks from the center of customers' financial services relationships. The growth of social networking and the emergence of social-banking models will drive fundamental change in the ways that consumers manage their financial lives.
There are two equally important aspects to social banking. First would be personal financial management sites, such as Geezeo, Mint and Wesabe, which allow consumers to aggregate their personal financial or investment account data, analyze it for spending and budgeting trends, discuss budgeting and financial management concerns with other consumers and financial institutions, and create and read peer and independent professionals' reviews on financial products or services.
The other aspect is the transmission and storage of funds within the social networking communities — peer-to-peer lending and saving. This type of social banking moves away from the simple sharing of data and information in the social-networking environment, and focuses on facilitating the flow of funds and deposits between social groups by delivering peer-to-peer loans and savings products through new peer-to-peer Web sites.
These sites have been established in many countries. Here in the U.S., there are such sites as Prosper, Lending Club and newly formed Virgin Money USA, the social lending organization formerly known as CircleLending. Peer-to-peer-based social banking unites the social needs and requirements of differing participants to deliver a self-sustaining model, linking supply directly with demand.
Social banking is driven by the desire of many bank customers to feel more connected with their trading partners by re-establishing the often-missing link between lenders and borrowers. This link can initially be established through social groups sharing data and information about their financial services products and services.
By re-establishing this link, social-banking sites leverage peer-to-peer connections to reignite the relationship aspect of banking and to tap into the desire of customers to know what happens to their deposits.
The potential benefits for banks to adopt this new distribution model are compelling. Social banking is consumer-focused and it creates the opportunity for consumers to have complex, dynamic relationships with their banks, and others involved in all aspects of the borrowing/lending supply chain." (http://www.americanbanker.com/usb_article.html?id=20090624JPFWAUJS)
"I should elaborate a bit on what Social Banking actually is. Essentially sites like Zopa in the UK and Prosper in America allow users to borrow and lend money, effectively cutting out the middleman. The central premise is straightforward – there’s a network of lenders and borrowers and, as Zopa concisely put it, the “people who have spare money lend it directly to people who want to borrow. There are no banks in the middle, no huge overheads, and no unethical investments.” It’s a neat idea that’s likely to appeal to the anti-capitalist in all of us. What’s more, a quick comparison of the interest rates indicated on Zopa show that social borrowing can be extremely competitive, especially considering the big lenders wariness in the post credit crunch market." (http://articles.taxationweb.co.uk/personal_finances/index.php?id=493)