The adoption of social media in the banking and financial services (BFS) sector was hitherto sluggish, largely due to factors such as perceptions, compliance and regulations, reputation anxiety and the conservative nature of the industry itself.
It is heartening to note that BFS firms are now starting to harness the power of social media, which not only acts as a communication channel but as a significant delivery channel as well.
A recent survey by Socialware indicates that at least 84 per cent of the participants (financial advisers, incidentally) acknowledged leveraging social networking sites such as LinkedIn, Facebook and Twitter for business purposes. A remarkable finding is that more than 50 per cent of the respondents specified the positive impact of social media on their businesses. Effective customer analytics is a goldmine for any firm and, unmistakeably, social media is an excellent source. Being a relationship-driven business, BFS can leverage social media as an effective growth engine.
Social media strategy
While these platforms mature, as consumer inclination and acceptance of social media as a transaction channel increases and financial regulations evolve over time, it is likely to emerge as the next growth avenue for BFS firms. Crafting an appropriate social media strategy has become a prerequisite, as these new media continue to garner consumer time-spends across different media. Data mining of social media platforms is emerging as the next big source of unstructured data for hedge funds, banks and traders involved in algorithmic trading.
There are plenty of instances across the globe of banks and BFS companies resorting to out-of-the-ordinary marketing and sales campaigns spanning social networks. Apart from being a huge platform to market products or services, social media also provides great insight into consumer behaviour patterns, likes/dislikes as well as evolving market trends.
Turkey’s Akbank established a Facebook fan base of over 508,000, making it one of the “most liked” financial institutions in the world. Akbank, which has 913 branches and 15,300 employees serving over eight million customers, is effectively reaching 6.35 per cent of its base through its Facebook page, far outpacing the industry average of 0.14 per cent. — a whopping 45 times more number of fans (or customers) than what a typical retail financial institution witnesses!
New delivery channel
Social media platforms have altogether created a new delivery channel that has started to rival its conventional counterparts. Consumers can use social media for their banking needs in the form of banking applications inside their social networks, buy/sell tips and even customised financial products/services.
Some leading banks have started full-fledged customer service through their Twitter feeds and Facebook posts. Near real-time responses have proven to be a great customer experience enabler, positioning the brand as one that immensely values its customers. It also helps in gathering customer feedback and rewarding loyal customers.
Take for instance ICICI Bank in India, which offers customers access to basic banking services such as account balance, transaction history, cheque book enquiries, etc., from their Facebook Applications. These services are bound to evolve with time, presenting advanced features that are competing with (and perhaps gradually replacing) conventional Internet banking.
While the business benefits of social media in sales and marketing, customer servicing, customer retention and an alternate delivery channel cannot be emphasised enough, there are still a few challenges a BFS firm has to consider: regulation, arriving at the right strategy and devising tangible means of measurement, which are evolving all the time. But even so, one thing is clear: it’s only a matter of time before BFS firms fully embrace social media and reap long-standing benefits.
(Mr. Sinha is associate vice-president – Financial Services, Collabera, and Mr. Batra is senior consultant – Financial Services, Collabera)