Why Banks need Social Media

Banks and customers alike have been a little wary when it comes to Banks being on Social Media. I mean banking is serious business, is it not? So what can you do on Social Media without compromising all kinds of security?

Some banks have tried to build their community using Social Media. Just a digital extension of the age old system where the bank was at the end of the street where you lived and the manager knew you from the time your father opened your first bank account for you.

Banks are slowly trying to move away from the image of the imposing executive in a pinstriped suit to one that is warm and fuzzy and as an entity that is “close” to its customers. And this is very important for a Bank to do.

Customers are highly informed and have many options available to them. With smartphones empowering them with all kinds of information, what differentiates a winner from the others, has to be something other than just a great product offering. Let’s face it – banks offer almost identical products.

Also the young man or woman of today has so many reasons to go to a bank – a student loan if he wants to get a fancy foreign degree, a car loan when he wants to get his first car, maybe even for putting his roots down and paying for his first home! Getting the attention and then the business of this group is essential to a bank’s growth.

But Social Media? Is that the way to go? I mean, aren’t you setting yourself for a scenario where the whole world will know if there is a problem a customer has with you? What about your reputation? Just about anyone can post some negative stuff about you in a public domain!

Banks getting on Social Media conveys a message that they know what they are doing. They are confident about the products they offer. And if someone has something negative to say, they have a great opportunity of addressing it right then and there.

There are many other benefits that Banks can derive from Social media and through Social Media Analytics.

  • First and foremost, the bank can collect enormous amounts of personal information about its customers through social media analytics. While banks already have a lot of data about their customers, you can find out more here – their wants, their desires and needs. Their intentions and their sentiments. Even their interactions with others. It is possible to get a total holistic view of your customers.
  • When there is so much information about customers available, it is possible to make informed decisions. Data-backed strategies and decisions are now possible.
  • Because you now know more about a customer and what he wants or desires, banks can even modify their products and services based on this. Banks can even alter their pricing based on the information they get about trends, competitor offerings and customers’ reaction to all of these.
  • Social media is a great informal way to educate a customer about bank policies and regulations.
  • Through Social Media, banks can spot any likely defaulters or any negative behavior on the part of customers and prevent mishaps.
  • When the bank has so much of information about each of its customers, it is now possible for it to get into event-based marketing in a very big way. They know what their customers want and the right time at which they need it. And they can tailor their communication and their offerings to suit individual customers.
  • Social Media gives banks the opportunity to offer a high level of customer service to its customers. When there is a team that closely monitors social media, issues can be addressed instantly. Questions can be answered at once.
  • Both parties are happy – the bank on one side and the customer on the other. Happy customers are the best thing to happen to a bank. As all banks offer similar products at more or less similar rates, every bank must do all it takes to keep its existing customers happy.
  • Social media makes it possible for banks to enlarge and expand their customer base. They can reach geographical areas that they haven’t been able to physically cover before this.
  • Banks can keep track of market trends – see how they pan out. See how the customers react to them. This is a treasure trove of information in the hands of the bank.
  • You can keep your eye on the competition and the customers’ reactions to the offers that the competition puts out. And be quick to swoop on any customers that might contemplate a switch.
  • If a customer has an issue that he is vocal about, you can pick it up quickly and address it before it escalates or snowballs into an actual exit from this bank.
  • Social Media makes the bank easily accessible to its customers. They can engage with the bank at any time and from wherever they are!
  • And sometimes, Social media networks are perfect for customers themselves providing solutions to issues. The Bank can simply watch it all happen.

These are just some of the advantages that banks can derive by getting on Social Media in a big way. Not all of them are aboard that bandwagon yet. Some banks have risen to meet this challenge – JP Morgan, for instance has sent out some 1, 00, 000 tweets and its customer service wing has more than 30,000 followers on Twitter. Other banks such as HSBC, Barclays and Citi and the like have presences on Social Media. But being there is just the beginning – there are banks that allow transactions to be done through their social media network. . A great example is the ICICI bank in India. They have an app that lets Facebook users link their accounts with their debit cards. Through this, they can either borrow or lend money among their friends or re-charge and top up their mobile phone accounts or buy movie tickets, etc.

There are about two billion people who use social media – and they expect banks to engage with them right there. They look for information about products or services, offers, events, advice and even treat that space where they share feedback and expect quick and efficient customer service. But the sad reality is that this kind of expectation meets with a typical situation where most questions go unanswered or unaddressed by businesses.  This has to change.

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