The Potential of Social Media in Banking
The telecom, automotive and retailing industries are among the leading users of social platforms for customer engagement. Take a look at the Amazon site and you'll see what I mean. However, the same cannot be said of banks, which due to their natural conservatism and regulatory concerns, are still waiting and watching, barring an adventurous few that have started to feel the pulse of this phenomenon.
I think market dynamics - defined by consumers' increasing use of social media especially on their smartphones, the maturation of social technology, and the evolution of a regulatory framework for social transactions - will propel banks to change their attitude sooner rather than later, starting with the early adopters who will render social media participation ' hygiene' in the years to come. And that's good news because in the long run, the adoption of social media can bring them many benefits such as a chance to participate in the consumer decision-making process and build advocacy in their bank's favor. Also, here lies an opportunity to improve sales, service and customer experience.
Banks can also get direct feedback from customers on what they like about the bank and its products and what needs improvement. Co-creating with customers to come up with better, more relevant offerings provides a fillip to innovation and product development and, exposure to real-time customer information can be used to propose offers on the spot, customized to the immediate context. Moreover, the channel offers exposure to new opportunities such as P2P lending and a chance to spread financial awareness by contributing to discussion forums and providing access to Personal Financial Management Tools over social media.
A clutch of forward-looking banks including Bank of America, Wells Fargo and Citibank, have taken a head start on their rivals in the social arena. It is time the rest played catch-up, if they are to leverage any advantage of being early starters in this game.
