Social media - how are financial services companies using these new tools to their advantage?

15 September 2011

As Sibos fast approaches Gerry Mellett, product executive of financial services industry sales at IBM, looks at social media opportunities for finance firms in this ever-evolving digital age...

In today’s digital age, customers are approaching financial service providers armed with extensive information from more sources than ever before; a lot of this information is gathered from social media sites and websites. Currently, many organisations, including those in the financial industry, have some misconceptions regarding why customers interact with them via social media sites. A recent European IBM study (1) into consumer shopping behaviour across retail channels, including mobile phones, has highlighted that while businesses tend to think that the most likely reason for a consumer to follow them on a social media platform is to learn about new products or for general information, consumers are actually most likely to interact with an organisation for discounts and purchases.

In reality, social media provides customers with a variety of opportunities such as reviewing products, learning about new products, customer service and event participation. Alongside this, a new breed of customer is dictating a new set of terms in the dynamic between the customer and financial institutions. However, financial organisations can also reap this benefit if they have the ability to respond and engage with these consumers by ensuring they meet consumer preferences.

To achieve this, global financial services firms need to be able to analyse and act upon feedback from social media to give customers what they want: real-time, personalised promotions through their media of choice. Studying the way customers use the web, email, phone and social networks to research and buy enables the organisation to provide instant, targeted offers that yield high response, conversion and revenue rates.

With powerful analytics and coordinated cross-channel marketing, personalised campaigns have become even more precise, and can be delivered through social media for customers. Marketers are closer than ever to speaking directly to customers about products and services and delivering the best offer, automatically, with a more complete understanding of how customers interact and respond to their brands, due to the interaction the customer has with social media.

Putting the customer first

Financial institutions need to look beyond their products, and put the customer at the centre of their business strategy as a means of generating revenues and garnering customer loyalty. While many financial organisations are still learning about social media, the same technique described above can be applied across multiple channels, such as phone, within the bank itself and on its website.

Case study:

For example, Dutch bank ING’s marketing campaigns were losing effectiveness because many of them were not relevant to the bank’s customers. Its organisational structure, processes, applications, and heavy reliance on direct mail were not meeting the needs of a multichannel bank with a strong Internet focus. However, by implementing a centralised campaign management programme, with personalised offers in real time, delivered through multiple channels, ING increased average campaign response rates and expects to reduce its direct marketing costs by 35 per cent per year.

Case study:

Similarly, SNS Bank implemented a customer centric approach to achieve its goal of becoming the best self-service bank in the Netherlands. This has been achieved by developing an innovative multichannel banking strategy that puts the web at the centre of the customer relationship. It launched an integrated public and secure site with state-of-the-art functionality; reorganised its branches into a network of lean, cashless banking shops that serve as a physical extension of the Web and implemented a state-of-the-art cross-channel marketing campaign management platform. With this new strategy, SNS Bank adapts to changing channel behaviour, eliminates channel conflict, and increases marketing effectiveness.

Please also see information on an IBV study on social media:

A 2011 IBM Institute for Business Value study, From Social Media to Social CRM, underscores a perception gap between marketers and their customers and why their customers interact with their brand, specifically through social media. Customers cite tangible value - discounts and purchasing - as the top two social media activities they seek out from their trusted brands. Just feeling connected to, or interacting with a brand is not enough for customers.

Representatives from IBM will be speaking at the following sessions during Sibos in Toronto

SEPA –Will the market finally move?
Monday 19 September09:30 - 10:30 Conference room 2

Social data and Collaboration - Deep Dive
Monday 19 September 16:00 - 17:30 Innotribe space

Leveraging ISO 20022 as a business standard
Tuesday 20 September10:00 - 10:45 Standards forum

Discovering the new Physics of Big Data – Part-2
Tuesday 20 September16:00 - 17:30 Innotribe space

1. Research was conducted by IBM as part of its annual Ipsos MORI online omnibus from 13th - 25th May, 2011 across 4,000 adults aged between 16-64 in Great Britain, France, Germany and Italy who have access to the internet. In GB, 1,026 adults were interviewed, in France 1,015 adults, in Germany 1,006 adults and in France 1,008 adults.

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