Social Media: A Knight in Shining Armor for Banks
December 2013
Social Media in Banking Overview Rapid growth of digital channels in the last decade has been one of the industry-defining trends that transformed the manner in which retail financial services companies operate. Growing access to internet and rising usage of mobile phones and tablets are among the major contributors to this trend. In the era of internet and social media, visiting a local branch to conduct most transactions is behind the times. Net-savvy customers now demand a much wider array of services and communication touch points from their banks. Given the growing amount of time consumers spend online and the emergence of social networks, banks are seriously considering social route as a prospect to make up for the lost personal interactions traditionally conducted in the branch.
Social Media Social media refers to information and communication technology platforms designed for real-time social interaction, such as wikis, discussion forums and blogs. These platforms are available either on public sites such as Facebook, LinkedIn, Twitter and Pinterest or on private sites such as Jive, Yammer, Salesforce, etc. Social Media Universe Blogs/ Conversations
Customers Service Networks
Blog Communities
Location
Comment Reputation
Pictures
Video
Micromedia
Events
SMS/Voice
Social Bookmarks
Video Aggregation
Lifestreams Blog Platforms
Documents
Specific to Twitter
Crowdsourced Content
Livecasting – Video and Audio
Social Networks
Music
Niche Networks
Wiki
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Social media is used by more than a billion individuals of all ages to communicate on almost everything: personal life, product reviews, shopping experience, recruitment and so on. On average, social media users spend more than 10 billion minutes on Facebook, watch almost 4 billion videos on YouTube, and send about 340 million tweets every day. These numbers are projected to increase in future, not just because of increase in the overall user base but also due to increase in penetration of smartphones and media tablets, which allow users to access internet even when mobile.
Social Media Usage by Age in the US
18-19
30-49
50-64
64+ 0%
20%
40%
60%
80%
100%
Source: The Demographics of Social Media Users 2012, Pew Research Center
According to Pew Research, usage of social media in the US is skewed toward younger age groups and gradually decreases with the rise in the age group. Also, women and urban consumers are more likely to use social network compared to their counterparts.
Social Media in Banking Social media adoption by banks and financial institutions is still in a nascent stage compared to other sectors like retail. While its acceptance has increased in the last few years in absolute terms, it is still underpenetrated. Majority of the banks active on social media use it as a tool for marketing and communicating. An analysis of various initiatives taken by banks in the social media arena shows that the primary drivers for the adoption of social media are direct and indirect customer engagements and building brand awareness & customer affinity. To a lesser extent, social media is used to improve customer retention and service, win new clients, and for marketing. Given its vast scope, banks will need to adopt social media in some form or the other to stay competitive in the marketplace and remain relevant to their customers.
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How banks can use social media to their benefit? In the current weak economic situation, when banks are looking for ways to cut costs, while enlarging their audience reach; with social media they can kill two birds with a stone. Customers use social media as a platform for sharing their banking experiences, and banks gain by understanding the demands of customers, which in turn help them better their product offering. In addition, the compounding effect of word-of-mouth publicity has compelled banks to consider and adopt social media as an important touch point with customers, both existing and potential. •
Build a community and crowd sourcing ideas In social media, banks can track how a customer behaves or thinks in real-time and use that intelligence to plan new products, services, and support. In 2012, Barclaycard launched a new credit card called Barclaycard Ring in the United States, using inputs from social media. Barclaycard Ring, a community-built credit card, includes an internally-run online community in which cardholders can pitch new ideas and features that can be incorporated in the card. Barclaycard describes it as the world’s first ‘crowdsourced’ credit card. Reward for cardholders who do not repeatedly call the company for service is one such idea emerging from the community members. Users who actively engage in the community will also benefit from a ‘giveback’ scheme
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Targeted marketing messages On social networking sites, users revel information that can be very valuable to banks. This information in the form of their likes, dislikes, hobbies, desires, etc. can be critical for marketing teams of banks. Pushing marketing content relevant to customers results into more customers getting attracted towards banks offering.
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Brand Building/Improvement Tool Social media can be a very handy tool for banks in a brand-building exercise. Compared to traditional media, social media offers better customer engagement and hence presents a better opportunity for promotion and brand building
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Cost Reduction Tool Social media can be a cost reduction tool for banks as they can use it as a low-cost channel to distribute messages, as a conversation platform, to provide customer service, and to identify dissatisfied customers
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Increase Revenue While the usage of social media to drive revenue in the banking sector is in its infancy, results from other industries which had adopted social media at a much earlier stage are cheering
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Customer Service With an active presence on social media, a bank can service all the queries and concerns of customers and thereby, helping them in taking a well-informed decision. Using social media for customer service is also cheaper when compared to traditional methods
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Case Examples of Social Media in Banking Bank Name
Social Media Initiative •
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In October 2013, Wells Fargo announced to open two "social reputation command centers” – the primary center in San Francisco and the secondary in Charlotte. Its social media team will monitor social platforms like Facebook and Twitter to track social media sentiments and respond to emerging reputational threats, and also to improve customer service Command centers will also work closely with the bank’s analytics department and content creation team to reveal relevant insights that could impact the brand, customer service and day-to-day operations In November 2013, Capital One 360 launched an online campaign called ‘What are You #Saving4?’ to let people share their saving aspirations and know how the bank can give them a head start to achieve them The campaign, launched from November 8 till December 20, involved uploading of an image that best captures a participant’s savings dream and sharing it on Twitter or the bank’s website. Every lucky winner would receive a cash prize of USD 500 and many more The contest was open for only Capital One account holders; new customers were allowed to participate after opening a savings account with the bank In 2013, Barclaycard announced a Facebook-based sweepstake competition ‘#LiketoLove' Entrants were required to like the Barclaycard US Facebook page, submit a photo of things they love and include a 'Like to Love' logo within the picture. The photo needed a caption describing why they have chosen the picture The competition was open to all US residents, whether they were customers or not, and offered entrants the opportunity to win customized daily prizes worth up to USD 100, weekly prizes worth up to USD 1,000 and one grand prize worth up to USD 25,000 In 2013, American Express partnered with Twitter to help customers do online shopping by tweeting a special hash tag American Express members who sign up for the program will be able to buy products by mentioning the appropriate hashtag in a tweet. The @AmexSync account will tweet back with a confirmation hashtag Once you tweet that confirmation hashtag, American Express will send you a confirmation e-mail and give you 15 minutes to confirm you want the product. Your card will be charged and the goods shipped to your billing address The service will only work with compatible American Express cards (no prepaid or corporate cards) and a public Twitter account
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Best Practices for Social Media Adoption The following are some of the best practices banks should adopt to successfully incorporate social media into their overall business activity.
Once initiated, remain active: Having a mute presence on social media is equivalent or even worse than having no presence on the platform. For effectively utilizing the social media platform, banks need to have an active account and thereby keep the customer engaged. A prolonged state of inactivity can promote a negative image of the bank, and in a way backfiring. Interactions should be Intelligent, Relevant and Quick: Being an informal interaction platform, customers expect a casual interaction and not a typical automated response. Banks should employ real people to communicate with customers in a day-to-day kind of interaction. This will result into fast and interesting interaction and improve user engagement.
Track customer sentiments: Banks should vigorously track both positive and negative sentiments about the bank on all possible social networks. Tracking sentiments on a regular basis will provide banks with inputs that can in turn help them understand customers’ perception about the bank and help them made necessary adjustments to their product
Conclusion While usage of social media platforms like Facebook and Twitter is on the rise in various industries, compared to retail and other industries, banking is undeniably late to join the social media revolution. Though there are some banks which have broken the mold to take initiatives, as an industry, banking has still a long way to go. Many banks have established a social media presence over the past few years, but in reality very few customers are currently using social media to interact with their banks. There are some things that social media can never replicate, so do not expect to completely do away with those regular meetings with your bank manager ‌ but you can still be friends on Facebook.
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