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Innovation in Financial Services

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

DIGITAL BANKING Tips - Tip 4: Banks and Social Media, What is the Magic Formula?

11 May 2015  |  2691 views  |  1

Digital transformation created two segments of people in society as Digital Natives (technologists) and Digital Immigrants (adapters). From the banking perspective, the change in customer behavior together with technological transformation (mobile, social media, wearables etc) - necessitates adaptation to this new environment. As majority of top banking managers are Digital Immigrants, they ask for help from Digital Natives (mostly either young talents of the bank or external companies/agents) how to manage this change. Of course there is a strategical gap between two minds even so Resources allocated, money spent then got 1 million+ followers at Social Media and .. .do not know what to do with them.

Majority of the banks are managed by using traditional KPIs (Key Performance Indicators) and ROIs (Return of Investment) - from the management perspective, it is always good to know that "how can we measure the success and how much you put / how much you get". On the other side, if KPI or ROI of Social Media activities considered, things get a little bit complicated. You can find couple of KPI/ROI definitions for SM and depending on the channel it varies (if it is youtube how many times it was watched and like, Twitter Followers, Facebook likes etc.) but principle is same.

This is the short version of the post. 

Starting from Tip 2 to Tip 30 only short versions of my posts are available at Finextra. From Tip 31, full (long) versions of my posts can be read here.

 

 

TagsMobile & onlineRetail banking

Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 13 May, 2015, 13:30

Uday Kotak, the CMD of Kotak Mahindra Bank, the 4th largest private sector bank in India, put it very well in an interview on Economic Times today. Traditional banking is driven by short and medium term profits, so it chases 20% of customers who contribute 80% of profits. On the other hand, digital banking chases the other 80% who deliver massive losses. As long as they are well funded, digital neobanks can afford to ignore revenues and profits in the short and medium term. However, even the largest and most profitable traditional bank is answerable for its financial performance to Wall Street every quarter.

I didn't see any guidance from Mr. Kotak on whether traditional banks should ignore short and medium term financial performance and go after the 80%. Which is okay since there may be enough room for both traditional banks and digital banks to coexist.

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