Social Banking- the next big thing but are banks ready for social media?
Social media is taking consumers, governments and businesses to new conversations and real-time customer management- a concept considered unimaginable not more than a year ago.
It has become an important tool to measure customer sentiment, engage customers and potential consumers with your brand and improve the customer service experience before they are escalated to other channels. But being such a sensitive industry with job cuts and interest rate rises, the big question is: are banks ready to make this big leap?
With social banking comes real time customer management, big data and a huge shift in how banks use social media to interact with customers!
The Australian and New Zealand banking and finance industry is starting to harness social media and the subsequent value of Big Data to improve client relations and customer satisfaction. An internal survey* conducted within the banking and finance sector recently states that 44 percent of respondents see social media channels such as Facebook and Twitter to be the biggest contributor to unstructured Big Data. However, it is the analysis of these channels that 68 percent believe can provide better insights into customer behavior.
Contrary to the above, Ovum’s latest report, ‘the impact of social CRM on retail banking’, indicated some 60 per cent of the world’s retail banks have no plans to use social media, with only six per cent of retail banks currently using social media for customer queries.
One of the banks to take social media to a new level and translate it into social banking is Australia’s Commonwealth Bank, the world’s seventh largest bank. Being the first of its kind available within the Australian banking sector, the bank recently launched a new mobile app, which allows their customers to transfer funds to friends via their Facebook accounts or mobile device. This app is a perfect tool to provide services in real-time and to its mobile audience. But will banks be able to keep up with this shift to social banking and more importantly, will this come at a price for transaction banks?
A relatively novel concept, the opportunity for transaction banks that deal with banking procedures like payments, settlements and lendings is huge in developing and further utilising the principles of social banking. Transaction social banking comes with higher levels of customer convenience and has a wider appeal through social media channels, enabling customers to now add conventional banking services and integrating them with the real world.
Being fairly premature though, social banking could also bring with it challenges through subsequent issues including privacy, security and real-time customer management, but will this be shadowed by what Commonwealth Bank has already achieved? Only time will tell…won’t it?
*Sybase Technology Trends in Capital Markets Survey