Why banking must become social (again)by
Retail banking has had to evolve considerably over the last few decades. Banks used to have it relatively easy - customers were loyal, local and trusting and kept the same bank account for their whole life. Now with bank branches closing each week, Brett King, an advocate of digital banking and author of Bank 2.0 says: “Banking is no longer a place you go, it's simply something you do."
Online banking has also replaced the traditional face-to-face banking experience – nothing is more evident than the recent news that Barclays has axed 1,700 branch jobs, saying fewer staff are needed because more people are banking online. Banks that want to stay ahead of the curve can use tools like social media to create a virtual ‘place to go’ and create a sense of community to replace the lost communication customers used to get in a bank branch.
Social media offers a way for banks to communicate more directly with their customers, understand them more clearly and keep them happier. Gone are the days when it used to be a social experience to visit your local bank where you were likely to be on first name terms with your bank manager. Consumer behaviour has changed and people just aren’t visiting their bank that often - today, nine out of 10 transactions at the bank are electronic, removing that valuable human contact.
Today's smartphone-equipped, web-savvy consumers are time-poor and expect a quick response, a choice of communications channels and access to relevant and accurate information. Communicating through bank specific social media as well as the generics including Twitter, and Facebook seem obvious channels for enhancing customer relationships and offering a social element, yet few banks using them to their full potential.
Another reason that banks need to become more social is to listen to customer’s needs to build trust and advocacy, responding in more personalised ways including their communications and their products. Compared to a few decades ago, retail banks are now faced with customers who are less loyal and more disengaged yet much more demanding. According to Datamonitor, 56% of consumers were less trusting of their banks following the banking crisis, and nearly a third wanted to switch bank accounts but were either put off by the switching process or just thought there was little difference between the banks.
Customer is always right, and not afraid to tell the bank it’s wrong
It is clear that many customers are not happy with their bank. According to Which?, more than a quarter of people have had a problem with their bank account, with a fifth who made a complaint saying it was not resolved satisfactorily. Until recently, few customers are actually leaving their banks - only seven percent had actually switched bank accounts in the last two years – primarily due to the complex process required to do so.
However, this trend is expected to change now that the new bank switching service has come into play which will force banks to speed up the time it takes to shift current accounts between each other. As the battle to offer more incentives for switching heats up banks will need to be more diligent about how they compete in the market to retain and attract new customers.
Social media makes banking social again
Social media platforms enable banks to communicate directly with customers, offer a localised view of the brand and a sense of community to replace the traditional face-to-face experience. To do this effectively, banks must use relevant platforms and ensure they engage with their users daily, giving them a seamless ‘virtual’ banking experience, such as the same branding, language and prior knowledge of the customer. According to Christophe Langlois, founder of social media resource website Visible Banking: “You must understand the popular social media channels like Twitter or Facebook, design and implement a smart ... strategy based on quality content, engagement, response and call to action.”
Most UK high street banks have been relatively cautious in their approach to social media, with many large banks simply issuing pre-approved tweets and other social media content, without necessarily directly engaging the customer in conversation. Banks need to start small and ensure they create a social media strategy that supports their business objectives while also demonstrating they’re reactive and responding – where necessary – to what people are saying about them or to them. This process, especially when integrated with the bank’s CRM can lead to better communication and more loyalty from customers.
For example, Barclays bank uses its Twitter handle @Barclays for general company news and @BarclaysOnline specifically to interact with customers, staffed by named employees Monday to Friday. The company also uses a range of social media platforms, including Facebook and Google+, all providing valuable local information, such as communicating bank closures, ATM problems, local offers and competitions and can give personal communication in what can feel like an anonymous environment.
Clearly communications on social media channels need to be properly managed to ensure data privacy is protected and any compliance regulations are adhered to. Banks need to devise social media guidelines so that those interacting with customers provide the same level of customer service that they would in a call centre or bank branch, such as language used and speed of response.
Competition in the retail banking sector will only become more intense as smaller or non-traditional players like Tesco and Post Office come into the market, and people take advantage of quicker and easier switching. Banks are already aware of the power of social media, but need to deploy the right strategy and ensure their social media voice mirrors the bank’s philosophy and better connects them with their customers. By integrating social media into their CRM systems, banks will eventually be able to get that all powerful single view of each customer.
Nic Merriman is CTO of financial services at Avanade UK.
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