Smart Social Banking – An Opportunity for Banks to Augment their Digital Footprint

In an evolving business landscape of the Banking & Financial Services sector, digitalization, mobility, cloud, and big data analytics have emerged as top IT trends in recent times. As part of the digital revolution, Social Media has already occupied a place of importance for the banks and financial institutions to reach out to their customers and enhance their banking experience.

Over the last decade, Social Media platforms have evolved quickly to become a part of our daily lives and they continue to grow significantly, aided by the accelerated internet penetration.

Presently 4.57 billion people around the world use the internet, of which 346 million new users have come online within the last 12 months. Internet penetration is inevitably followed by an increase in Social Media users which currently stands at a staggering 3.96 billion, which is about 51% of the global population. 99% of social media users access their accounts through a mobile device (Sources: Statista, Kepios Analysis, Mediascope, Cafebazaar, and CNNIC– July 2020).

Social Media has gained immense popularity, particularly among the younger generations, as it not only makes available a choice of content but also a means to create content and share with the world instantly. Although the Banking industry was relatively slower to realize the potential of Social Media, today, many leading financial institutions around the world have smoothly embraced it to facilitate instantaneous and transparent communication with their customers.

Banking activities on social media are currently limited to marketing products, acquiring new customers, providing customer support, and engaging the customers. Social Media has enabled banks to reach out to far more customers than traditional channels, leading to significant efficiencies in customer acquisition costs. Through transparent customer feedback and convenient customer support through the Social Media platforms, banks have scored significant advantages with respect to customer experience.

However, the data-points on the growing internet penetration combined with the business uncertainties stemming from the COVID-19 pandemic, compel for a far more advanced role of Social Media platforms in the Digital Banking experience for the customers. The practice of social distancing is likely to continue even after the pandemic subsides, making the branch visits for day-today banking transactions unpopular. This only reinforces the need for aggressive transformation of Digital Banking services, including Smart Social Banking solutions to enable financial institutions to offer transactional banking services on the Social Media platforms. But few banks are open to this idea yet, owing to concerns about data privacy & security risks.

But the security risks and data privacy issues are not unsolvable. Advancements in Cloud Services, Data Management, and Disaster Recovery, etc., have made it possible for banks to offer safe access to bank accounts and enable secure transactions online, anytime, anywhere. These security best-practices can be adopted to extend transactional banking services even through Social Media platforms. Moreover, Social Media giants like Facebook have already evolved beyond a tool to connect with friends and family, to offer a platform where people can buy and sell goods and services securely. This paves way for a new wave of disruption in the banking space, where financial institutions can partner with Social Media platforms to offer a much more convenient, secure, seamless, and comprehensive digital banking experience to the customers.

Implementing a robust Smart Social Banking Solution as part of the Digital Banking would be crucial to take banking experience to the next level for the new-age customers, and would ensure the following advantages for the financial institutions:

Staying Relevant to Customer Needs

In the era of hyper-connectivity, customer expectations and needs have evolved drastically, and have become more demanding.

With the Fintech coming into the picture with a host of disruptions in the banking space, there is immense pressure on conventional banks and financial institutions to keep pace with the developments and cater to evolving customer demands. Implementation of the Smart Social Banking solution would not only ensure the loyalty and retention of existing customers but also help financial institutions rapidly expand their customer base by reaching out to a younger, tech-savvy population.

Valuable Data and Insights into Customer Behavior

Social media platforms bring with them massive advantages for financial institutions with their inherent, methodical data capture on user behavior and preferences. It helps financial institutions Segment customer base, gain valuable insights on customer behavior, and enable a better understanding of customer needs.

Personalization of Banking Services 

Greater customer segmentation and valuable insights derived from the customer data available readily on social platforms would enable banks to offer a greater level of personalization of banking services. Customer insights are also effective in driving product innovation and ideation to unlock new channels of revenue.

Improve Operational Efficiencies 

With better and more convenient access to digital banking services, customer interaction at the branch would reduce significantly. Not only would this significantly reduce the operating costs, but also pave the way to reduce the number of branches in the future, directly contributing to improving the profit margins.

Effective and Cost-Efficient Marketing Channel

Having the customers on a 24X7, personalized communication channel significantly enhances the online brand presence and recognition, while improving the effectiveness of the marketing programs of financial institutions.

The astounding levels of customer segmentation that is possible on Social Media channels not only makes it possible to effectively target the exact desired profile of customers but also enables personalization of messaging to multiply the efficiency levels that cannot be matched by conventional marketing channels.

Convenient and Seamless Banking Experience

A Smart Social Banking Solution functions as a 3600 solution, for both the financial institution and its customers. It serves as an efficient marketing tool to reach out to new customers, functions as an effective communication channel to existing customers, and as a channel for instant customer feedback, thus providing a convenient and seamless banking experience.

While few banks and financial institutions have moved forward with their digitalization program and included transactional services on Social Media channels, the trend is yet to catch on. With the process of customer onboarding becoming increasingly simpler and online, it certainly presents a possibility of customers moving on to more convenient banking options.

The Smart Social Banking solution, combined with AI-based digital assistants can thus be relied upon to provide an uninterrupted, convenient, personalized and seamless banking experience for the new-age customers.