Social Media Banking: Are Banks Ready?
- by Chetna Narayanan and Prasanna Sekar
A trek to the bank branch / ATM to either open an account or make a payment transaction is a familiar event for most of us. But the last 5-10 years has brought about sweeping changes in banking with an array of payment channels - plastic cards, online (Internet), mobile, peer-to-peer (P2P), and more - made available by financial institutions.Gone are those days when one has to visit a branch or trek to an ATM to make payments. Online banking has enabled customers to transfer or make payments from the comforts of their home.
After online banking, P2P services and mobile cash transfers emerged as the next important frontier in payments, opening the customer's gateways to new innovative ways of payments as it connected individuals to banks, the Internet and merchants.
Today, banks are moving a step further by transforming themselves from "transactions to interactions" using social channels such as Facebook, Twitter, etc. The growing presence of banks in social media is changing the way banks engage with their customers. Banks are making themselves accessible in social media channels. Thanks to the new age 'social banking', customers can do their favorite activity, i.e., be online on Facebook / Twitter and simultaneously, get access to banking activities.
Social media channels such as Facebook, Twitter, and WhatsApp have grown over the years. These channels have a much bigger potential to act as a medium to do business for banks and not just be limited as a medium to get feedback or advertise new products. Concepts such as social media payments could change banking by allowing customers to use social media to make payments or carry out various other transactions.
The concept of social media payments is not new. However, few banks have realized its potential to be the future of banking. Things are changing now as more and more banks are starting to accept social media as a medium for payment transactions.
Consider a scenario where a customer can pay through his / her twitter handle and WhatsApp. This has already been implemented by Barclays in 2015 for their 13.5 million twitter users in the UK. ICICI bank too allows customers to pay through Twitter, and ABN Amro is leveraging WhatsApp as a medium for customers to send payment requests to another person in their WhatsApp contact list.
Facebook, WhatsApp and Twitter are not the only social media channels for banks. There are other channels such as Pinterest (Image Sharing) that banks can leverage. Banks could create boards such as "buying a car" or "holiday destination" in Pinterest and pin it with interesting images that will interest or influence customers when they are evaluating their purchase options.
Fintech are also responding actively in the social media payment space and are trying to provide integrated solutions through social media apps. For instance, Fastacash, Circle, Venmo (owned by Paypal) are leveraging social media networks and messaging apps to provide P2P payments and consider social payments to be its future.
In a world where change is the only constant, banks must change too and adopt newer ways to differentiate themselves and engage customers.