Social media spending by banks plateaus as interest wanes

The use of social media by banks has 'plateaued', with the average spend stuck below EUR500,000 per annum, according to data from Efma and Wipro.

The research - conducted among 100 banks worldwide - found that social media efforts were mainly managed by the marketing department followed by the branding and communications team.

With a clear focus on hard-to-measure metrics such as 'engagement' and brand management, the average spend by banks is not surprisingly miniscule, with 80% of the firms contacted by Efma allocating less than EUR0.5 million per annum, and barely ten per cent of the sample pushing beyond the EUR1 million mark.

The study found that few banks are prepared to use popular social media channels such as Facebook and Twitter, for transactional activities.

"The impression we have from speaking to banks is that this is not a priority for social media," says Efma. "Banks would prefer to encourage customers onto the bank's website for transactions or product sales, where security can be guaranteed and a better level of service provided."

But for those who get the mix right, the results can be rewarding. The report cites the experience of Turkey's DenizBank, which released a balance-checking and money transfer app for Facebook users in January 2012.

The bank says that 10% of its online banking customers have registered to the use app, representing 150,000 users. Since release, DenizBank has acquired 140,000 new Facebook fans, and generated over 3 million viral impressions from Facebook ads.

According to DenizBank: "The banking on Facebook project became one of the most successful PR activities in the history of the bank".

However, for the majority "the overall sense is that we have reached a sort of 'plateau' in the use of social media by banks," says Efma. "While some banks are of course just catching up, the leading banks are still working out how best to use this channel in the future, conducting experiments, and looking for indicators from other industries."

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Related Companies

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Retail banking

Keywords

Innovation Mobile & online banking Social media

Comments: (5)

A Finextra member 29 May, 2013, 15:08

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The dollar value here doesn't worry me. But I appreciate that EUR500,000 is still consider 'small' in the eyes of Banks. What worries me is the last of effectiveness the banks are having.

Global trends show that 'I hate bank ABC' movements are having far deeper impacts on trust, brand opinion and consumer engagement than any of the banks. Understandably, its tough to compete with the messages like the Debtor's Revolt or the 12-year-old economist, who have such 'human' messages which reached viral scales. But banks just don't understand what social media is.

I still continually draw strong correlations between President Hosni Mubarak's arrogant complacency and that of the banks. Social Media can, and has empowered ideas of everyday people to topple those in power.

Leaves the question, 'Is it easier to topple a dedicator or bank?'

Either way, the voice of the people will prevail. So bank better start paying attention to what social media ready is.

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Matt White - Finextra - Toronto 29 May, 2013, 16:00

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If the banks are Mubarak and the customers are the protesters, does that make Scott and co Mohamed Morsi, the scary fundamentalist waiting in the wings?

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Brett King - Moven - New York 29 May, 2013, 16:58

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Let's examine why banks' interest has waned in social media. Is it because social media is dead in the water?

With 1 Billion users on Facebook, with Instagram, YouTube, WeXin (WeChat), Tumblr, Pinterest and other platforms growing, with Instagram and Tumblr both selling for $1Bn - the evidence is that social is going from strength to strength.

So the much more likely scenario is that banks who traditionally have a very strict 'command and control' approach to messaging and marketing are not comfortable with the dialog style or engaged approach that social demands.

There are FIs like Navy Federal Credit Union, CommBank in Australia and ASB Bank in NZ are absolutely thriving in the social space. CommBank did $700m in Facebook P2P transfers last year and are opening 3-4,000 new accounts per week via Facebook.

The data is unequivocal - if you make the effort and align your efforts with the crowd, you get massive benefits and get a highly engaged, compassionate audience that has strong brand affinity.

So why is is that social media interest is waning? It's clear that most banks have not changed their operating practices to really benefit optimally from social and they're just not getting the results that those who are competent in the area are.

This data should not be seen as an argument for scaling back spend on social - it is proof that most banks aren't adapting appropriately to the conversation.

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Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 30 May, 2013, 14:30

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Customers need as much advice on how to approach social media as banks. Many of the former simply don't understand that there's got to be a difference between communicating with friends and a bank on social media. Shedding command-and-control, changing style of engagement - all these are fine. But, it's not fine for a bank to dignify a lot of gibberish and NSFW language put out by customers with response (cf. Bridging Social Media With Traditional Customer Service Channels on my company blog for examples). Not surprisingly, banks prefer to engage with customers on their own websites. I only wish they improved the UX of doing so.