For consumers, social networking and mobile payments are adding rich new layers of texture to the digital experience. For banks they are potential game changers, complicating the way they interact with customers and manage the payments system. Let’s look at some recent developments in this rapidly changing space.
Social media comprises internet-based communities that allow the creation and exchange of user-created material. Think Facebook, Twitter, YouTube and their many imitators and competitors. Translating social media into social banking is not straightforward. A few thought starters about how social banking is evolving.
- It could spell the death of mass marketing. A small number of banks are already mining their customers’ social networking activity to deliver targeted offers and promotions. That is just the start.
- Banks are tracking social media to become more proactive in their management of issues (e.g. by responding to complaints before they even reach a call centre).
- Social media is about to transform branch banking value propositions. For the typical branch it will mean fewer routine transactions (which will continue to migrate to the internet), but many more complex, face-to-face customer encounters for matters that cannot be dealt with online.
- Overall transaction costs should fall, but some existing revenue streams will dry up as concepts like credit exchanges develop.
- Compliance functions will migrate to the social arena to monitor how banks use social media to interact with customers.
- Trust (or its absence) will be the critical factor in the ability of banks to use social media to enhance brand reputations and build stronger customer relationships.
Read more about these themes at KPMG’s Social Banker – a 12 week campaign focussed on how banks around the world are using social media as a channel to reach out to their customers.
More people are using smart phones, tablets and similar devices to make banking and other financial transactions. More banks are accommodating their needs.
According to KPMG’s 2011 international Consumers and Convergence survey, more than half of the respondents reported having used some form of mobile banking over the previous six months. That compared with around 40 percent in the previous year and less than 20 percent in 2008.
There still appears to be plenty of growth potential in mobile banking — last year 38 percent of our survey respondents were unaware that their bank offered mobile banking services, so there is plenty of work to be done there. In developing countries where vast portions of the population are ‘unbanked’ in the traditional sense, many are now using mobile devices as a quick and reliable way to transfer money across geographies.
Security and privacy concerns emerged as the main obstacles to an even more rapid take up of mobile banking. A surprising 30 percent of survey respondents said they preferred to use alternative payment services such as PayPal™, citing security and privacy worries about using credit and debit cards over the internet.
New technologies such as near field communication that allows contactless payments through mobile devices should drive the uptake of additional mobile banking services.