Banking and the Impact of Social Media

Banking and the Impact of Social Media

In the age of social media, customers can connect with an audience of millions of people, instead of just with their community of tens or hundreds of people. For banks, the inexpensive and fast social media model offers some convenience for connecting with customers, marketing services and maintaining a reputation as a quality service provider. However, banks face some unique limitations because of the nature of services provided that complicates their social presence.

How consumers interact with banks socially

In this age of social media, consumers face more choices than ever. They also face an increasing model of self-service: If you need a new bank, it’s easier than ever to research neighborhood banks online using sites like Yelp.com or Bankfeeinsider.com. After reading about the customer service, wait time, account types and account fees at six neighborhood banks, you can decide where to open a business bank account without ever even setting foot inside a bank.

You might not even visit the bank’s website. When a business owner uses his or her social networks to make decisions, it takes a lot of power away from the financial institutions, who lose out on the chance to make a positive impression on potential customers.

Once a business owner selects a bank and opens an account, she may engage with the bank on social media. Unless the bank offers incentives via social channels, such as a YouTube video series on making budgets or saving for college, she’s more likely to take to Yelp, Facebook or Twitter to air a grievance with the bank.

How banks can use social media

While banks can use social channels to monitor customer feedback and problem-solve, there are some limitations. A small business owner may tweet a bank asking why their refinancing application was turned down. The bank cannot tweet back the details of the customer’s application, as this would be an ethical violation.

93 percent of consumers surveyed by the Financial Services Club felt that banks must focus on social media over the next five years to stand out within the marketplace. Simple ways to start include:

Developing a bank blog that raises customer awareness of services, either B2C or B2B

Monitoring social networks for community trends, then positioning your bank to creatively

problem solve

Actively listening to customers on social media by soliciting customer feedback via Twitter, YouTube and Facebook – and then reviewing and acting upon the feedback received

Launching a charitable giveaway or contest via social media, where your bank donates to a chosen charity for every new account referred socially

Incorporating social media into your customer service as a first-line of defense

Planning smart for social growth

While there are many ways to incorporate social networking into a bank’s marketing, the right ways will focus on fulfilling a need that is going unmet. For some banks, this may be in marketing and growing a particular sector or service, such as retail banking. Others may need better customer service. Before committing to a strategy, perform a needs analysis to ensure that any social program is actively meeting your bank’s needs, not conforming to a trend.

By John Benson

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