We all know the statistics about the incredible growth of social media in the last years: there are now 1.5 billion social network users globally. But what came as a bit of a surprise to me (I was reading a white paper recently prepared by GFT and IESE, “The Impact of Social Media on the Financial Services Sector”) was that social networking is also playing an increasingly important role in our buying decisions. 47% of Americans, for example, claim that Facebook has the greatest impact on their purchasing. In other words, we trust our friends to tell us what to buy.

The question is: does this also apply to the financial services sector? Do people choose a savings account or a mortgage based upon what they read on Facebook?

Well, the short answer is “yes”, and some banks are now catching on. In Spain for example, Banc Sabadell has a very active social network which they use not only to promote new products and services, but also as a way to stay close to their clients and improve overall customer satisfaction. Catalana Occidente, a large Spanish insurance company, has used social networks to promote its services. Through a series of campaigns, they learned how to effectively attract new customers and keep them. There are other plenty of other examples, from Citibank which has used social networks to improve brand presence to Barclays which created a social community for its Barclaycard holders.

Currently, the main area where banks are concentrating is social marketing, getting the word about its offering. But as suggested in the white paper, the area which should have the greatest impact for banks is social CRM. This area occurs following the capture of the client. By providing improved customer service and a vehicle to receive customer input, the banks can improve their relation to customers and re-establish trust – a word not much associated with the banking sector these days.

No doubt, it’s not easy to run social initiatives within an industry as conservative as financial services. One major hurdle is regulation. Consumer privacy and maintenance of records of social media activity are just two examples of the many issues which are affected by the regulatory environment. In the UK, the FSA sets out guidelines on how financial institutions should control branded content online, since they consider any content as a promotion.

Another hurdle comes from within. It is common to hear about internal resistance from the employees who see the new way of working as a threat and consider that social networking should be a topic only for the marketing team. A successful social networking strategy, however, requires a cultural change within the bank and broad involvement of many (if not all) areas.

It’s clear, social networking and mobility are two areas that will greatly affect the financial services sector in the years to come. Those who adapt will flourish; those who don’t…