Social Media Amplifying Banking Services
Typically, banks accept and embrace changes only when faced with extinction and this is one of the reasons why Banks are perceived as laggards when it comes to innovation and imbibing innovative technology. This attitude is evident across all phases of banks’ evolution-crawling from archaic bank, branch banking, drive-thru banking, door-step banking, ATM banking, online banking, mobile banking and branchless banking.
As we witness the current phase of banking sector’s evolution, social media is being adopted by banks to shape their future. Although delayed, when compared to other industries, few of the banks have taken a lead over the rest when it comes to social media banking, popularly Facebook Banking.
Global statistics indicate there are now close to 1.79 billion (expandedramblings.com) active Facebook users who spend little more than 20minutes per day on this social media platform.The millennials (15-34 years)are the most active age group on Facebook registering a 91%while 62%of them post about what they are doing, where they are or who they are with.
Know Your Customer (KYC) norms are widely followed by banks more so for regulatory and compliance fulfillment rather than to literally “Know Your Customer”. Banks not only struggle to get insight into existing customer’s demographics but have also failed to identify and target potential customers.This has forced many banks to “Go Where Your Customers Are”, that is, social media especially Facebook.
The two banks that have excelled in using social media to avail a variety of banking services are Deniz Bank, Turkey and ICICI Bank, India. In 2012 Deniz Bank claimed: “The First Facebook Bank Branch of the World”(Press Release –Deniz Bank)when it started offering a range of banking services on Facebook, which included 24/7 money transfers and monitoring of customer’s credit cards, deposits and credit accounts. All this was possible by means of “Customers First” application available on the bank’s website to reach out to 31 million Facebook users in Turkey.
Similarly, ICICI Bank in 2013 launched its Social Media Bank App on Facebook to engage with 65 million active Facebook users in India.(Press Release – ICICI Bank) The App achieved a million likes in just over ten months and almost 2.2 million after just fifteen months. The App comes with a spectrum of features like Check Account Summary, Check Mini Statement, Cheque book request, Stop Cheque request and Upgrade debit card. Before using Facebook for customer engagement, 24% of the online mentions of ICICI were negative and only 19% positive. Now, 49% are positive and just 6% negative.The bank realized that a key part of using Facebook banking is for the customer servicing and not for just engagement.
Some banks are trend setters in the banking domain by using social media data as critical inputs in credit decisions. Facebook offers a mine of data to spot behaviors and patterns that can inform a broad picture of credit risk. Monitoring of customer’s posts help to learn about product needs and preferences. Using Facebook the bank becomes enabled to access demographics and interests: favorite books, music, movies, relationship status, employer etc. Basically, all profile information is available to banks for segmentation and targeting. They know where their ‘followers’ are in their lives: Are they single or married? Are they newly engaged and saving for a wedding? Are they looking for a property to purchase in the near future?
In addition to Credit Bureau checks, scores and history, one simple credit worthiness check is finding out if a borrower actually has a social media footprint. Facebook has become almost omnipresent that it can set off a red flag if a person doesn’t have an account.To deepen their insights into individual customer behavior, banks have already started to request access to clients’ Facebook account and see whether users have a stable friends network—a sign they may be less of a credit risk than users who change friends frequently. (cnbc.com) We are not very far from times when we could be denied credit or offered differentiated products and services based on social media footprint.
The need of the hour for product development firms is to direct their IT capabilities on social media enabled solutions, be it for launching various banking products and services or mining social media data to aid in customer profiling and credit decisioning. Banks are desperately trying to respond to these threats in the market but the required innovative and disruptive technologies to capitalize these opportunities are just not available.