Social media in Financial Services, it seems, is not just a passing fad. It is a rapidly emerging medium for customer interaction. Opting out is not really a credible choice for banks. Such is the proliferation of discussion on social media sites (Facebook has an estimated 750m active users and Twitter has nearly 200m), if a bank chooses not to engage in social media, its customers are likely to discuss it online anyway. It is therefore in the banks' own interests to be actively involved in the conversation – not in a bid to control it, but in an effort to show that they are listening to and reacting to the voice of their customers.
The UK banks are starting to respond. In summer 2011, First Direct launched a Facebook page and Santander has been using the site to encourage students to open a Student Current Account with the lure of cash give-aways.
Whilst it is perhaps too early to quantify the benefits of such customer engagements, one thing is clear – without an explicit strategy for engaging with the full potential of social media, banks run the risk of becoming disconnected from their customers. Those banks that are already leveraging the potential of social media have already been successful in delivering low cost marketing campaigns, direct customer input into product design, customer service improvement initiatives and insight into customer sentiment.
Banks have not always been at the forefront of innovation, but the pace of change in today's global economy is quickening. It is clear that for many people around the world, social media has fundamentally changed how they communicate and interact. Banks need to ensure that they are able to integrate social media into the channel mix so that it becomes part of their day-to-day business of communicating with their customers.
By Marty Carroll, Principal Advisor in the UK
Social media in banking represents a huge opportunity, but the business model for monetising social media is immature and, at this time, unresolved. To help bring clarity and insight to this fascinating aspect of customer management at retail banks, KPMG has undertaken a global study exploring some of the biggest challenges facing banking executives as they start to adapt to this new and constantly evolving channel. Each week, KPMG's 'Social Banker' will feature a new article written by some of the world's most recognisable banks and experts from KPMG's network. The articles will be available from November 30th 2011 at www.kpmg.com/socialbanker. Sign up to receive weekly alerts.