Currently, most banks in China focus their social media initiatives on informing customers about key banking information (such as annual reports and customer security education). In part, this reflects a reluctance to migrate traditional promotional channels to a new – and somewhat unproven – technology. But it is also because social media is both fast and largely irrevocable and therefore is often seen as a double-edged sword for risk-averse banks. As a result, few domestic banks are actively using social channels to promote products, preferring instead to focus on improving the customer experience.
However, SPD Bank and a growing number of peers in the Chinese market also acknowledge that social media offers a range of significant benefits to banks. These include:
- Developing active customers: Traditional customer communication generally comprises of surveys, phone calls and customer complaint monitoring, all of which place customers into a reactive role of responding to bank communications. Social media, however, enables customers to take the initiative to provide timely and proactive feedback. Moreover, social media allows customers to provide comments across the bank’s existing offerings, rather than focusing on a specific product or service.
- Understanding the customer: Existing modes of customer communication tend to view customers in one dimension: as a bank customer. In reality, however, customers are multi-dimensional and motivated by a range of different influences. Social media enables banks to achieve a more holistic view of their customers based on their social interactions, and therefore allows banks to develop more targeted approaches to new product promotion, collect more valuable customer information and create a better customer experience.
- Achieving rapid response: One of the biggest challenges of customer communication is that it almost always occurs after an event has already happened (consider, for example, a customer complaint which generally occurs post-event). But with social media, banks and consumers can capture, analyze and respond to customer issues in near real-time and perform greater levels of risk control. The process also allows the bank to avoid further customer misunderstandings by responding to – and immediately mitigating – systemic challenges.
- Track market trends: In the past, product design and positioning was often developed and implemented from the bank’s perspective of what customers want. Social media, however, enables the bank to capture customer demands and suggestions which the bank can then analyze to develop customer-centric products and services. Social media also allows customers to take a participatory role in product development through suggestions and feedback.
- Reduce the cost of communication: Traditional media channels are frequently limited by factors such as spread, reach, coverage and scope – all of which lead to higher costs. Social media, on the other hand, is highly scalable and reach can often be expanded with little to no incremental costs. And as social media increases in popularity, the cost-per-contact will continue to decrease significantly.
However, Chinese banks are also keenly aware of the risks involved in participating in social media. As a result, the use of social media in domestic banks is still in trial mode and most – if not all – are taking a ‘wait and see’ approach.
But given the rapid adoption of internet-enabled mobile phones and electronic products in China, there is little doubt that social media will soon be a core channel for Chinese banks.
By Ms. Xie Hong, General Manager, Mobile Finance Department, Shanghai Pudong Development Bank (SPD Bank)
|| China will almost certainly be one of the most exciting stories to watch as banks start to gain comfort in social media. For one, Chinese customers are becoming both increasingly affluent and technologically-savvy. Indeed, many of China’s social networks can boast far higher membership numbers than many of their western peers. In fact, if current trajectories continue, it won’t be long before China’s banks take the lead globally in the use of social media. |
||Sharat Potukuchi With huge diasporas around the world, Chinese banks – and others in similar situations – may find that social networks provide a cost-effective and compelling opportunity to communicate with overseas customers or foreigners with Chinese bank accounts. If properly approached, social media may also provide foreign banks with a valuable marketing channel that can enable them to quickly grow their brand in new markets.|
||Sanjaya Krishna As Harry notes, China is clearly on the cusp of a dramatic evolution in the way banks adopt social media. However, with many Chinese banks under at least partial state ownership, they will need to pay close attention to key issues such as governance, transparency and accountability. Few western state-owned banks have managed to get this right so, once again, there is significant opportunity for China to lead the way.|
||We believe there is a great opportunity for emerging market banks to leverage social media to reach the masses of unbanked or underserved customers in rural or hard-to-reach regions of the world. Already, there are more mobile phones in Africa, parts of Asia and South America than there are bank accounts and – before too long – the majority of these handsets will be able to access social networks. Clearly there is significant opportunity here.|
The views and opinions expressed herein are those of the authors and do not necessarily represent the views and opinions of KPMG International or any KPMG member firm.