Social media is transforming banking relationships in very significant ways, from improving customer service to allowing users to send money to others via online platforms. New financial technology companies are using social media data to help people get access to credit or even simply open a bank account. Social media can even impact your ability to get a loan. Integration is happing so quickly, it is possible to argue that social media platforms may be the banks of the future.
Social media platforms can no longer be considered places where people simply connect and communicate in real-time with the click of a button. Platforms, such as WeChat and Viber in Asia as well as the global powerhouse that is Facebook, are increasingly providing a broad range of services to their users either directly or through partners, making them central to people’s lives.
Such high levels of penetration, use and engagement have meant that financial institutions are starting to recognize the opportunities social media can bring to their businesses. They are looking to gain a competitive advantage over other institutions while also trying to mitigate the threats posed by social media, such as when people share highly sensitive information publicly.
In addition, regulative complexity and 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.
But things are moving very quickly. Financial Technology (FinTech) has emerged as its own industry, encompassing companies that use technology to make financial systems more efficient. A report by Accenture and the Partnership Fund indicated that global investment in FinTech ventures has tripled from around $1 billion in 2008 to nearly $3 billion in 2013. Many of these companies are using social media to revolutionize the traditional business models that the finance sector has relied upon for decades.
There are five key areas where social media is changing financial services around the world:
1. Customer Service
A growing number of customers expect real-time responses from their service providers. When customers are not happy with the service they are receiving and want to vent their frustration, they increasingly turn to public channels, aware that no company wants the negative publicity. Thus more and more banks and insurance companies are adding social media (usually Twitter and Facebook pages) as a permanent channel for retail customer interaction, fully integrated into Customer Relationship Management (CRM) systems. In September 2014, Econsultancy compared the response rates of 16 retail banks on social media in the UK. The quickest response time was three minutes, and the longest was one hour and twenty-four minutes.
This type of public customer service requires caution. The biggest challenge is maintaining security standards when customers unknowingly provide personal information. As a result, banks have had to implement sophisticated social media policies to handle situations with sometimes emotional clients, since conversations that were previously private and one-on-one are now being broadcast for everyone to see.
2. Marketing
Social media marketing can no longer be disassociated from a company’s overall marketing strategy, forcing them to adopt not only a data-driven approach but also a test-and-learn mindset that can handle an ever-changing social environment. According to Accenture, the results are clear: better segmentation, real-time marketing, reduced acquisition costs and quicker time to market are requirements of a solid marketing strategy.
Many online retail P2P lenders such as Lending Club and Prosper, and small business lenders such as Kabbage and OnDeck have grown exponentially by using online and social media as their core marketing channels. More traditional companies are also investing in social media integration. American Express, for example, links a client’s Amex card with his or her social media profiles on platforms such as Facebook and FourSquare, and then delivers deals based on activity such as likes and check-ins. The credit card company has won awards for this social innovation.
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SOURCE: The Huffington Post
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