Banking on social media

By Rodney Johnson, Head of Mobile Practice Channels, Capgemini Financial Services

Rodney-Johnson
Rodney-Johnson

Social media and mobile have forever changed our lives, from the way we purchase items to how we search and use information to make both personal and business decisions. With 90 percent of financial services organizations dedicating funds for social media initiatives in 2012, according to a recent report by Aite Group, it’s clear banks deem social and mobile important channels1. However, while it’s important for banks to plan effective social and mobile strategies, there are key risks and challenges, relating to customer data and security that must be acknowledged and addressed or they risk missing out on the opportunity to deliver a superior social and mobile experience to their customers.

In this article Rodney Johnson, Head of Mobile Practice Channels for Capgemini Financial Services will explain what the current social and mobile landscape looks like for banks and detail the benefits of investing in a social media program along with some of the key challenges they need to address.

The current social & mobile landscape
While the majority of us have a general understanding how mobile devices and social media are used on a personal level, it’s important for banks to first understand how they are used across the financial services landscape.

As many financial institutions have learned, customer expectations for banks to provide an array of services via mobile devices and social media have only increased over the last few years. Furthermore, customers are often expecting a quick, easy, customized and seamless way to access and update account details, gain information, report customer service issues or make a complaint. Currently banks across the globe are using social media to provide a comprehensive way for their customers to access a multitude of services, such as information about new products and promotions, account information and reporting customer issues.

Some of the largest banks such as Bank of America and Citibank have dedicated Twitter pages for customers to report and resolve customer service issues but small to mid-size banks are also looking to mobile and social media to provide an enhanced customer experience

For example, Spanish bank La Caixa includes a link to its customer service team via Twitter and Australia’s Commonwealth Bank displays tweets in its app, and also provides Facebook updates and its latest YouTube videos to its customers.

Additionally, Société Générale, in France, seeks direct feedback from customers on a wide range of topics through Facebook and Twitter. In Poland, Alior Sync and ICICI Bank in India encourage customers to share their spending and savings goals through Facebook.

An established social media presence governed by a sound mobile strategy can yield many benefits to financial services companies, which can directly or indirectly strengthen their brand position as well as generate additional revenue including:
Enhanced brand visibility – Having a meaningful social media presence lets companies increase their brand awareness and exposure to their target customer segments. According to a survey by Social Media Examiner, 45 percent of adults check out brand pages online regularly2.

Reduced costs – Social media is already being used by banks to receive customer complaints and issues and provide real-time resolution. This opens up another channel for customers to reach company representatives, which translates into fewer people waiting in line to speak with costly call centre or branch representatives. Banks may also start providing automated banking transactions via tablet apps, minimizing overheads associated with traditional infrastructure

Foster innovation – Mobile and social media are intrinsically linked to spurring innovation as they allow for input directly from the customer base. This enables banks to collect direct feedback and data from consumers, coined as crowd sourcing, and use that information to explore ideas to support their business needs and enhance offerings.
For example, The Priority Club Select Visa Card was developed through a private online community setup by Chase and IHG. Cardholders provided deep views into their lifestyles and travel behaviours, allowing Chase and IHG to offer more relevant rewards to their customers

Generate new revenue sources – The reach of social media and ubiquitous mobile devices are very effective marketing tools for banks. Well-designed social media pages can be used to launch new products and promotions, effectively directing traffic to a bank’s web site and subsequently improving search rankings. As an example, Commonwealth Bank in Australia provides its customers with a mobile app called Kaching, which allows them to handle daily transactions, conduct P2P payments and social media banking without leaving Facebook.

Enterprise applications –Social media channels such as Facebook are very effective for reaching customers but they can be extended to internal employees too. Recruiting teams regularly mine social media sites for identifying and approaching top talent candidates and sales staff may network with customers and approach potential prospects via social media channels as well. There are enterprise specific social media networks and applications that are very popular amongst companies, including SalesForce.com’s Chatter solution.

Understanding and tackling risks and challenges

As with any external communication, information posted on social media sites must adhere to corporate policies and government regulations. There must be clear rules about customer information and data security. A few examples of guidelines banks should consider to avoid potential risks include:

  1. Reining in employees who have their own social media pages
  2. Refraining from selectively editing Tweets and Facebook posts
  3. Ensuring boards and executives have oversight of social media
  4. Reviewing and performing due diligence on all vendors’ social media activities

New York-based Chase is an example of a bank that has mitigated risks and challenges well and has come out on top in social media in the second quarter. The bank currently has a social media presence, touting 3.8 million Facebook likes, 22,229 Twitter followers, 559 tweets sent and 116,052 YouTube views. They have excelled to this position by simply understanding its customer needs and wants as it relates to mobile and social media but also by adhering to strict guidelines on how they conduct their social and mobile strategy.

Furthermore, banks need to ensure the right people with the best knowledge of their products and services are representing them on social media. In some situations, banks have lost control of the sales process as a result of customers turning to social media. Rather than meeting with a sales representative to discuss a bank’s offerings and services, customers are relying on Facebook, Twitter, Google+ and other mobile channels to decide which bank they want to choose to do business with An effective mobile strategy would outline how to incorporate social media into the marketing campaigns and also provide insight on how to effectively navigate the social media channels.

In order to address their challenges, banks must setup tools and technologies that can listen-in to the social media channels and integrate them into sales and services systems in order to obtain the best return on investment from social media.

This action begins with an effective mobile strategy and roadmap. Both elements are crucial to the success of banks moving forward and enhancing the technological integration needed to improve their social media offering to customers. . It’s the pure mobile experience that is going to determine a bank’s level of success. In short, understanding the challenges and what it takes to conquer them successfully are key to driving mobile and social media forward in this space.

The simple reality is that mobile technologies have forever altered the world we live in. Banks must adapt and learn to make mobile work for them or risk missing out on differentiating themselves to prospective customers or, worse yet, fail to retain their current customers. Financial institutions that don’t fully understand the role mobile plays and work to incorporate it in ways that help to leverage their value proposition, through social media or otherwise, will be negatively impacted.

The future of mobile and social media
The future of social media and mobile for banks will be marked by several advancements in customer centric features for better service, personalization, targeted marketing and co-innovation initiatives. Such initiatives will be integrated across various channels such as branches, call centres, the web and mobile channels to provide a seamless customer experience.

The convergence of social and mobile channels will also transform how services are ultimately delivered to customers. Imagine an unhappy customer walks out of a bank and then tweets about it. The bank can then monitor for such tweets and respond by having the bank manager phone the customer and provide a one-on-one resolution. Gone will be the days of customers spending valuable time on the phone trying to resolve an issue. Instead, social media and mobile presents banks with an opportunity to provide a differentiated service that enables an efficient, valuable and cost effective way to keep customer experience and satisfaction levels up.

While the opportunities and avenues around the mobile and social media channels appear to be endless, it remains to be seen how banks will make the most of these without compromising security, privacy and while adhering to corporate policies and government regulations. However, with the sheer dominance of mobile and social media, banks are being challenged to react quickly and effectively by providing these types of capabilities in the near term. It will be interesting to see how the financial services industry will further adapt to provide an enhanced and personalised experience for their customers.

References
1. Aite Group/EFMA survey of 166 financial services executives, August‐October2010.
2. Forrester Report: “Best Practices In Digital Money Management”, May 2013.