Value Creation through Social Media in the Banking sector (2/2)
The use of Social Media has seen a huge increase in the financial sector over the past few years since most banks are nowadays present on websites such as Facebook, Twitter or LinkedIn. However, each of them uses Social Media to achieve a certain goal which is sometimes totally different from what another bank would like to achieve. This article identifies the various sources of value creation observed in the banking: Customers intelligence, Sales & Marketing, Customer Support and Internal Collaboration.
Sales and Marketing
We observed that many companies are using social media to send marketing messages (e.g. product launch, promotion, marketing campaign) as well as to create communities through fan pages, blogs, etc. in order to strengthen customer engagement.
Why do these companies choose Social Media over traditional media?
- High reachability: Social Media has transformed the world into an immense platform where companies are able to reach millions of people
- Low cost in comparison with traditional communication channels (e.g. TV, street ad)
- Large choice of content types: video, photos, text, etc.
- Fast: messages are sent instantly
- Ability to target a specific segment
- Personal: close and social interactions within communities
Banks' Sales & Marketing departments focuses their Social Media efforts on both new customers and existing customers. On the one hand, they uses social media to create awareness within the online community leading to a potential increase in new customer originations and therefore to new deposits, loans and other services and products. On the other hand, banks uses social media platforms to provide their existing customers with information (e.g. promotion, new product) as well as opportunities to engage with their customers through Social Media campaigns or content sharing. The ultimate goal is to increase customer engagement and generate massive word-of-mouth by transforming current customers into advocates. Word-of-mouth has become particularly crucial these past years. Indeed, customers rely increasingly on their peers' advices to make purchase decisions rather than on brand messages as they now have access to numerous opinions through social media networking websites, customers' reviews/ratings.
Social Media has the potential to improve significantly customer service. First because it allows almost real-time issues resolution as it has been faster than ever to respond to customers' requests and questions. Second, Social Media offers opportunities of close interactions with customers so that people may find themselves a lot more comfortable interacting via Internet from various locations than having to go to a bank office. For instance, Bank of America has dedicated an entire team to reach out directly customers to resolve issues. They receive complaints and try to respond in the most efficient way. By resolving customers' issues publicly, it conveys a positive signal to the rest of community and creates a positive buzz around Bank of America.
Many banks also set up crisis management procedures using Social Media. In case of crisis, social media is often a good way to react quickly and minimize brand equity loss. ING Direct once experienced issues with billers. Instead of receiving 300 calls at their call center, they directly issued a message on social media platforms and only 2 persons ended up reporting the problem to the call center. By reacting ahead of customer complaints, it showed that ING were aware of the problem and had it under control .
While most banks have certainly already embraced social media to engage and analyze their customers, social media can also prove to be valuable to enhance collaboration and communication among employees. Social Media has impacted everybody's life and banks' employees are no different. They want to share ideas within their company the same way they run their lives via social media. Banks, which are able to embrace a suitable approach and adopt the best practices, can expect to become more efficient and create a more collaborative work environment. First, collaboration is a lot easier with social media, banks' traditional culture is rigid and the nature of a social media platform can help a bank to open up. Second, it breaks the silos of a bank organization and therefore ensures that interactions exist within the whole bank across departments, locations and hierarchies. Finally, Social Media has also the potential to reduce costs. Indeed, as virtual collaboration increases, it requires less time spent on physical meetings, travels or money spent on huge offices. An excellent example is the case of ING Bank which created its own social intranet called Buzz . The bank's employees are able to create profiles and join communities. By creating a profile, an employee can mention its specific skills or knowledge so that others are able to contact them in case they need a certain knowledge or skill. Employees also create communities that are centered around a certain subject in order to share knowledge quicker and more efficiently.
There has also been an increase in the use of social media by HR department. The main areas identified are:
- Employee communication: Communicate and collaborate on upcoming events (e.g. training, teambuilding)
- Recruiting: Find potential hires on Social Media platforms such as LinkedIn and allow people to express their human capital needs on Social Intranet
To conclude, Social Media definitely helps banks create value for their customers and as well as for themselves. Many banks have already integrated social media within their organization. However in order to harness its full power, most of them will likely need to go through a large transformation phase. Indeed, Social Media impacts most departments and functions of a bank which will need to review its processes and technological capabilities and architecture as well as to train its employees. The key will be to integrate thoroughly Social Media within the organization and provide customers with a seamless customer experience. Last but not least banks will need to consider how they will adapt their social media strategy in order to comply with existing regulations (especially disclosure laws).
Banks Mining Social Networks with Analytics Tools - BankTech
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