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Banking on Social Media


Social media is extending the disruptive impact of digital era across a broad range of functions. While critics and naysayers discount it as fleeting distraction, history suggests otherwise. For instance, during advent of television, media could barely laugh it out only until half-minute commercial ads wiped out print ads.

Recent dawn of social media presents similar evolution with significant opportunities and challenges. Social media is not just a place where friends casually meet. It is the very place where everyone is adding value, information, opinion, facts and insight.


Consider planning a pleasure trip to far-flung destination – what sounds more appealing – information from Google search or direct interaction with people who have been to that place and share firsthand experience and finer details of their stay and journey? Forward thinking Marketing geeks, who reckon today’s shopping culture is guided by meaning between consumers and product, will exploit social media to create captivating brand and gain mind share of more than billion people who hover and jar on social media.


Speaking of social media from payments perspective, the available cognition provides a fair chance to banks, merchants, payment processors, program managers and financial institutes to develop an ideological kinship with consumer. Incidentally, the ones who have already ventured there seem to be taking divergent path to reduce the chasm between strategy and execution. Effective identification and dissemination of consumer information remains a daunting challenge for them and everyone is tasting success to varying degree.

Concept in nutshell

This article attempts to analyze a concept around delivering location-based promotions delivered in real time. This concept puts reliance on digital channels to create real-time promotional offerings based on consumer’s location at a given instance and preferences, likes, favorites extracted from social media. Such real-time promotional offerings can do much more in terms of product awareness, knowledge, liking, preference, conviction and purchase. Such offerings can be delivered through numerous channels such as coupons, check-ins etc. Operational processes and procedures can be accordingly built.

Value proposition

  • Monitor: Engage consumers directly, gain insights from an effective monitoring program and eventually decide how to reach the consumers
  • React: Positively influence consumer sentiment and behavior by responding rapidly, transparently, and honestly
  • Analyze: Solicit consumer input after the purchase.
  • Magnify: Spur broader engagement by providing guidance through promotions, referrals and recommendations
  • Leverage: Proactively lead consumers toward long-term behavioral changes


Besides tackling risk and technology challenges, it is hard to find reasons why real-time promotional offerings will not work. After all, if promotions have worked through offline channels, then probability of their convergence using digital channels in real time is a certainty.

Market Size

A quick glance at statistics published by reliable sources and data available in public domain can help to size the market for real-time promotional offerings and the extent to which it can persuade consumer to make impulsive purchases:

  • Around 114 million consumers are taking benefits of location-based services 
  • 34% mobile users download a merchant’s app and an equal number search for a discount coupon
  • 80% of mobile users prefer locally relevant advertising and 75% are more likely to take an action after seeing a location-specific message
  • 55% of mobile users express an interest in ongoing promotions but only 10% have actually received one from a merchant


In the current payment landscape, there is palpable void in payment value chain, specifically in the pre-payment and post-payment phase. The bespoke concept vertically integrates these phases and takes impulsive purchasing to next level. Financial institutes need to build products that can identify the functions, touch points and goals of location-based promotions and increase sales and revenues. 


Comments: (4)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 25 June, 2012, 14:51Be the first to give this comment the thumbs up 0 likes

There's no shortage of payment products that stoke impulse purchases. Amazon 1-Click, Google Wallet and PayPal are a few examples of products that don't make consumers enter 80-100 keystrokes of payment information before putting through a purchase transaction. Since they all operate on existing banking rails and pay toll by way of interchange fees to banks and card networks, there's really no pressing need for banks and FIs to build such products by themselves.

Question is, to what extent do regulators allow such payment products to deliver on their fundamental promise of enabling frictionless payments? Here, the situation is highly mixed. In some countries (e.g. USA), regulators don't interfere and these payment methods do permit impulse purchase. In others (e.g. India), they mandate two-factor authentication to the extreme degree (e.g. even for IVR and mobile payments), thereby nipping impulse purchase in the bud. 

A Finextra member
A Finextra member 25 June, 2012, 16:10Be the first to give this comment the thumbs up 0 likes

Thanks Ketharaman for sharing your feedback, much appreciated.

I would like to know, how often have you received personalized offers from the bank? 

The concept is more of bank-to-me rather than just impulsive purchasing. To stay competitive banks can't shy away from getting close to their customers. Social media offers a lucrative and easy way to do so. Besides, very select banks have done spectacular use of transaction data. 

There is no one size fits all solution, but there are definitely banks, that i know of, who stand to benefit from such offerings. 

Regulations are by and large function of policy goals of the dominant social group (such as governments) and they could be detrimental or corroborative to overall growth. Perhaps for these very reasons, just like payment transaction, even a public transit system may not work to its best potential in countries like India. 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 25 June, 2012, 16:47Be the first to give this comment the thumbs up 0 likes

I'd commented in the specific context of your statement that there's a "palpable void in payment chain...", which was the only Call To Action for banks and FIs that I could spot in the entire article. If you're also calling upon banks to use their transaction data to craft personalized, LBS offers, I agree with you. In fact, I've voiced similar views myself in a recent Finextra post and comments:

Save Costs But Lose Revenues With eBills And eStatements

A Banking Product Made to Order

A Finextra member
A Finextra member 25 June, 2012, 17:03Be the first to give this comment the thumbs up 0 likes

Thanks for your inputs - point noted - some more proof reading would have avoided such lapse. Request you to also refer "Value Proposition" section, it describes other aspects that would call bank or FI to consider such concept.

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