Social media has revolutionised the way we communicate over the past decade. The power of social networking is such that the number of worldwide users is expected to reach some 2.95 billion by 2020, around a third of Earth’s entire population. There are currently 320 million monthly active Twitter users and 400 million LinkedIn members. However, Facebook surpasses them both, having 1.7 billion users. In addition, Instagram has 400 million users and one billion people visit YouTube every month.

A recent article in the Huffington Post, ‘How Social Media Is Shaping Financial Services’, states that social media is transforming banking relationships in a major way. Financial institutions that adapt and adopt these effective social media technologies will be in a position to engage consumers in the ways they want to be engaged.

The retail banking industry is at a critical point. The cost of managing relationships through massive branch networks negatively impacts many banks’ ability to generate profits. This will lead to the creation of new distribution models, customer experience platforms, crowd-sourced business models and other game-changing innovations that will redefine the banking industry.

Accenture’s Banking 2016 Report proposes three business models for banks to achieve next-generation banking. Relevant to our discussion here are two. The ‘Intelligent Multichannel’ bank model offers enhanced multichannel experiences to engage customers and the ‘Socially Engaging’ model creates customer intimacy through social media interactions. This means the creation of new distribution models, customer experience platforms, crowd-sourced business models and other game-changing innovations that will redefine the banking industry.

Compliance and regulatory challenges coupled with a traditional cultural mindset has meant that until recently, the financial services sector has lagged behind some other sectors in their comprehensive adoption of social media and technology. However, with high levels of penetration, use and engagement demonstrated by these figures, it stands to reason that social media will increasingly become the go-to channel for financial customers as they make decisions about which financial organisations to do business with.

Hence it is becoming critical that financial organisations focus on developing and implementing strategies for how they can capitalise on social media as a marketing and customer service tool and combine it with cross-channel efforts. It means going beyond just using social media as a customer engagement tool to collecting and using data from social media to gain insights that can help with customer sales, services and marketing.

Customer service
Financial institutions should go beyond using social media as a channel to simply broadcast messages, but rather leverage it in ways that engage the audience in genuine two-way conversation. By listening to your audience, you give them the opportunity to provide wonderful insights that can help you do business better.

Many banks are already using Twitter and Facebook pages as a permanent channel for retail customer interaction and tracking customer feedback with a view to building a better customer experience. The real value of social media is that you get to listen and gather intelligence. 

When customers are dissatisfied with the service they are receiving, they are increasingly turning to public channels to vent their frustration, well aware of the damage they can cause by giving the company negative publicity. Handling this type of public customer service has to be approached with caution because conversations that were previously private and one-on-one are now being publicly broadcast. The biggest challenge is maintaining security standards when customers inadvertently provide personal information on a public platform. As a result, financial institutions have had to implement sophisticated social media policies to handle situations when highly sensitive information is shared publicly.

The power of social media can be a negative, given the speed with which issues spread on social media. But it can also be extremely positive – able to foster better relationships or create additional touch-points in the digital marketing space.

Progressive financial organisations are using social media as a crucial element of their customer service initiatives. It makes business sense to do so as research has indicated social media as the most cost-effective channel for delivering customer service. The numbers reveal that handling a customer service request via social media costs three times less than handling the same request via the phone. An increasing number of customers expect real-time responses from their service providers. In fact, almost half of all social media users claim that they have used this channel to obtain customer service.

Sales and marketing
Social media marketing can no longer be disconnected from a financial services firm’s overall marketing strategy, and the trend is towards financial institutions understanding social audiences and mapping customer needs to a meaningful social experience.

By adopting a methodical, data-centred approach to social media marketing, financial institutions can leverage the opportunity to increase customer acquisition, enhance cross selling, drive customer retention, provide operational efficiency, and lower risk. Moreover, they can obtain immediate feedback on marketing campaigns from social media data.

Financial companies are using social networks to engage consumers – either by participating on Twitter and Facebook or by operating their own networks. American Express maintains three Twitter accounts and five Facebook pages.

JP Morgan maintains several individual social properties and fuels each one with a specific set of content that is relevant to each business unit.

These social platforms are used for customer service and as a way for consumers to discuss banking and other financial issues with each other. These conversations and content shared on social networks can be studied to inform what goes into new products. They are also creating and moulding brand perceptions through posts, comments and ‘likes’. By carefully monitoring existing and prospective customers’ comments and posts on social platforms, financial organisations can gain intelligence that gives them a better idea of their product and service preferences and enables them to plan their marketing strategies (both online and offline) accordingly. It can also help define which social networks are the most effective platforms to use for placing targeted messages and adverts. Hence, they can employ sentiment analysis, content tracking and crowd-sourcing techniques to turn a customer service and relationship building practice into actionable science.

Financial customers of all ages are engaging in social media networks to get information on organisations prior to making decisions about which one to do business with. Millennials, in particular, are prime sources of information on social media since this generation is both an important target market for banks, and an active group on social media.

To conclude, generally adoption has been slow and most traditional banks today have only implemented limited programmes, which are often run in isolation from the core business and not as an integrated solution. The opportunities social media provides do not concern only customer service and marketing, but more fundamentally affect the products and services themselves.

Social media is so much more than a means of listening to customers or monitoring the brand’s reputation. It can generate critical business benefits and connect companies to customers in powerful ways at a time when strong customer relationships are essential for competitive differentiation. Financial institutions should mix and match services – sentiment analysis and customer analytics of social data, content management, social listening, automation, personalisation – personalised to their requirements and feed real-time data back to the business lines in ways that they can use to make a financial impact.

Fauzia Kerai Khan is Chief Consultant, i&b Consulting, Training, e-learning.
fauzia@iandbconsulting.com