The awakening of 'social media banking'
Banks must satisfy the technological demands of their clients and support them via social networks if they are to retain their loyalty.
Banks find it difficult to redirect customers to digital channels. These continue to perceive that branches offer better service than online channels for simple and complex transactions alike. So says the World Retail Banking Report 2015 from Capgemini and Efma, based on a sample of individuals in 32 countries. It also points out that use of internet and mobile banking channels grew significantly in 2015 against 2014, rising from 53.7% to 70.5 % for the internet and 16.1% to 36.4% for mobile banking. However, there has been very little impact on use of branches.
The report also points to banks being "largely unable" to satisfy their clients' technology demands, making them feel their brands are not right for them. The client experience deteriorated 0.8% worldwide, with the number willing to recommend their bank declining 3.6%. The report emphasizes the need for the financial sector to work more closely with clients via technology or risk losing their loyalty. To connect with them digitally.
According to Accenture, banks must generate stronger ties with clients by identifying, via social networks, their interests. In the “Banking 2016- Next Generation Banking” report, the firm emphasizes the importance of communities, via dedicated forums on issues relevant to specific communities, and getting users involved (interaction via social networks), to thus hear their clients' voices via a range of platforms and social networks, with the feedback serving as a springboard for new initiatives and improvements. As a model for next generation banking, it discusses "the socially engaging bank":
- Engaging customers where they spend their time (e.g. on social networks), focusing on personal interests.
- Leveraging influencers.
- Co-creation based on increased customer intimacy.
According to Accenture, banks must generate stronger ties with clients by identifying, via social networks, their interests
Case studies
“How banking got agile” is another research paper from Accenture, describing how the German bank Fidor, among others, has harnessed social networks to create what it calls “banking with friends”.
Based in Munich, the bank only operates online. Its clients chat with their bank consultants should they have any questions or want to share ideas. Fidor has no sales staff. It relies on its online community to recommend it to others and propose product innovations.
As an example, Accenture points out that the bank allows its clients to play online games (a virtual forex market) and help finance interesting projects via crowdfunding, all as they check their bank accounts.
Clients can login via Facebook and allow 'likes' to determine the interest rate on their accounts; the more different customers who “like” the rate, the higher it goes. Fidor Bank also partners with a German peer-to-peer lender to help its customers make loans among themselves.
Social networks offer banks access to customers’ social profiles, allowing for greater insights into their behavior. They can then personalize offers for each customer.
Another example that “How banking got agile” discusses is CBA, Commonwealth Bank of Australia, the first bank in the country to launch a near-field communications payments solution.
The CommBank Kaching app enables customers to pay anyone they choose through mobile, email or Facebook contacts. They can also use the CommSec app to buy and sell stocks on the go, while the Property Guide app from CBA offers real time real estate information.
In India, Kotak Mahindra Bank launched its Jifi Saver account, which can be opened and managed via Twitter and Facebook.
These banks have harnessed social networks not only to understand and listen to consumers, but also as a vital means of securing their loyalty by making operations more efficient and reducing risks.