Impact of Social Media On the Banking Sector

In the last decade, growth in the social media has been significant. It has become a vital aspect of several business entities, including the banking sector. It plays a vital role in several banking functions including customer acquisition, product sales, decision analysis, and credit scoring among others.

Some of the areas of concern for banks to use social media include:

  • A shift in banking operations to online and mobile can be complex.
  • Increase in operational costs.
  • Transformation in the way banks operates to facilitate customer engagement among others.
  • Absence of sufficient regulatory guidelines.
  • Risks related to social media.

Banks are changing from establishing a presence in the social media to utilizing the social media for operations.

Banks are implementing a customer-oriented method and customers are increasingly leveraging the social media for its services. For e.g., customers can access the social media for payment transactions, thereby avoiding internet banking portals.

Some of the banks are furnishing simple internet banking competencies using Facebook connected bank app login. Bank apps enable customers to communicate with bank personnel on products/services. Transactions through social media are still a niche segment. Megabanks are looking to expand and scale upwards on current platforms to deliver diverse products and services.

Sales, marketing and customer service nerve centres have been revamped to interface with customers through the social medium.

Some of customers’ social banking preferences are as follows:

Information

  • Location of the branch/ATM.
  • Campaigns for products.
  • Service information.
  • Rewards program.
  • Advice from banks.
  • Security alerts.

Transactions

  • Account status.
  • Balance information.
  • Biller payments.
  • Apply for products.
  • Update account information.
  • Credit processing.

Servicing

  • Service request submission.
  • Chat with the advisor.
  • Knowledge sharing.
  • Community interface.

The digital revolution has impacted consumer behaviour and modified behavioural aspects based on technological modifications.

The new generation of consumers wants social media to provide a unique banking experience. They want banks to deliver transactional processing competencies, thereby facilitating self-service instead of linking to websites.

A transparent social strategy is vital to ensure proper acceptance by customers. Some of the critical factors that need to be looked at while creating the social strategy:

Technology

Establish a relevant platform to create and manage the social media applications. Leverage the social analytical tools/big data technologies to enhance social listening.

Enhancing Competencies

Banks that are new to social media must look at enhancing competencies such as information, transactions, and servicing among others.

Risk Management

Social media provides an opportunity to improve banking operations. However, comprehending the risks and establishing an effective mitigation mechanism is vital.

Consumer Interest Safeguard

Social media governance is going to play a key role in implementing the social strategy in banks. Banks must understand the risks pertaining to personal information sharing in the social platforms.

Customization and Personalization

They would be the critical factors in evaluating a bank offering through social media. Currently, a static page on Facebook providing information on bank products is very basic, but in the future, collaborative customization would become vital.

Customer service personnel would be supported by smart chat tools that can conduct customized needs analysis.

Social media is going to transform the way banking is looked at. Innovation in social strategy is becoming the norm. Banks should also look at new models to expand organically.

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