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Karl Havard - Communisis

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Social media and the finance sector

10 December 2013  |  1932 views  |  1

Don’t believe the hype: social media and the finance sector

Banks are understandably excited about the prospects offered by social media. There are now 1.4 billion Facebook accounts worldwide, with the UK population spending 22 per cent of their time online using social media platforms.*  But interestingly, this is 3 per cent down on the previous year, and may be an indication that enthusiasm for social media is beginning to wane.


Recent research** shows that people in countries where social media is more advanced - such as the US, Europe and Canada - are using social media much less for their banking needs, compared to other activities. The two main areas where social media is used are researching financial products and customer service issues. However the levels of usage are still relatively low in comparison to other communications channels.

 

There is a myth that online, and social media, is going to dominate our future lives to the exclusion of other channels that we currently use. This is not necessarily true. Individuals may be enthusiastic about using social media in certain parts of their lives, but when it comes to their banking, the choice of channel depends upon the complexity of the transaction. It is this which drives behaviour; the less complex being undertaken online; the more complex in branch. This applies across all demographics, even though the younger generation tend to prefer using social media and online channels more broadly.**


Despite this, it makes sense for banks to establish a social media presence that can be easily accessed by customers who want to use it to engage with them. But banks must carefully consider what they are trying to achieve with this platform. For example using it simply for gimmicks or marketing purposes is unlikely to be the right strategy; rather it must seek to make customer service better and rebuild trust with their consumers.

 

One of the main challenges for banks is that being accessible across a number of social channels provides individuals with the opportunity to offer their honest opinions, which are often driven by personal experience and extremely public. And it is an unfortunate truism that people are more likely to share bad experiences rather than good.


In this situation, a well-intended response by a bank to a customer service issue, perhaps attempting to establish a dialogue with the customer in a show of responsiveness, could result in a misplaced tweet and potentially damage trust and consequently the bank's image. In this scenario it's probably best to acknowledge consumer feedback initially through social media channels and then encourage the conversation to be continued through more private channels.


One way to achieve this is for financial institutions to use social media as 'active listeners'. This means identifying customer sentiments and complaints and then proactively using less public channels, such as email or direct mail, to engage with consumers in a way that is relevant and helpful to their individual needs. This will provide a credible level of reassurance that consumer concerns are being met, add a more personal touch, and ultimately begin to rebuild trust.

 

So in practice this could mean that, when several customers in the same area complain about queues or service levels in a branch, this intelligence could be used to improve their experience and also to send them an apology in branch or via other channels.

 

The key thing is to ensure customers’ concerns are being heard and positive action is seen to be taken to make things better. In the right context, social media can play an important role in enhancing a bank’s reputation but only as part of an overall multi-channel brand experience. Banks need to ensure they don’t underestimate the continued importance of customer service excellence at every touch-point, which includes face-to-face service in branches, transactional services online and through print. They need to be present on social media to hear what customers are saying about them, but there is still some way to go before it presents meaningful opportunities for proactive marketing and interaction with consumers.

 

* The Telegraph, 16 April 2013.

 ** Ernst & Young (2012): The customer takes control – Global consumer banking survey, p. 17.

 *** Ernst & Young (2012): The customer takes control – Global consumer banking survey, p. 24.

 

TagsMobile & onlineInnovation

Comments: (1)

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 12 December, 2013, 16:49

According to AdAge, social media yielded just 2% of online holiday retail sales in the USA. For banking products, sales from social media marketing are likely to be even lower. On the other hand, my company's work with service providers across multiple industries shows that 10-15% of messages received on customer support social media channels are actually queries or requests - not complaints - that are just a step away from being opportunities for upselling and cross-selling. More in my Finextra blog post: The Business Case For Social Media Customer Service 

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