New Delhi: July 15, 2017
With Web 2.0 technologies, consumers are changing their behavior, and they are demanding a more user-friendly, networked banking experience, one that provides a greater level of trust, transparency, and interactivity. The banks’ goal, ultimately, is to attract new, digitally savvy customers by building their confidence in banks through increased involvement. The greater loyalty such efforts will generate, across all customer segments, will help banks increase revenues and compete more successfully. We have identified three key opportunities that await those banks that are willing to take the leap.
1. Reaching customers. In developed markets, virtually every member of Generation C uses the Internet — and almost two-thirds use social networks — to access information, entertain themselves, and stay in touch with friends and family. Already, 12 percent of this cohort read dedicated finance and investing blogs and participate in online investing forums. Despite these changes in consumer behavior, most banks still use their websites primarily to provide information and enable standard transactions, limiting real communication to branches and contact centers.
New Web technologies have significantly opened up the possibilities for better communication over the Internet and through smartphones. Banks could start blogs, for example, enabling discussions of specific economic developments, new services, or the latest research of interest to target customers. Active participation in social networks could increase loyalty among existing customers and attract new ones. Wells Fargo in the U.S. is an early adopter of these technologies. Its website offers several blogs covering such topics as general financial information and environmental sustainability, and includes a blog especially for students. It also offers YouTube videos about the company, Facebook pages, and the ability to contact the bank through Twitter.
2. Reducing costs. By closing the online communication gap, banks could make real gains in efficiency and effectiveness, since shifting communication to the Web has the potential to drive down the frequency of more costly methods of communication. The most innovative banks will find ways not just to communicate with customers, but to use these new channels to boost loyalty and develop cross-selling and up-selling opportunities.
The classic approach to channel management aligns the complexity of a product with the cost of selling it over a particular channel. Typically, for example, banks try to sell low-margin products through low-cost channels. Web 2.0, however, offers banks the opportunity to change this dynamic, by using the inherent low cost of online channels to sell complex, high-margin products.
Banks can leverage a variety of technologies to reduce the cost of sales. Online forums that bring customers together to discuss various products and explain them to one another can reduce reluctance among buyers. Blogs can be set up to target particular customer segments, introducing them to relevant products and using case examples to help explain those products. Both Deutsche Bank and BBVA already let customers speak directly to bankers and financial advisors through video chat, providing greater convenience at a significantly lower cost than a branch setting.
3. Restoring confidence. Given the turmoil in the financial-services industry over the past several years, it should come as no surprise that consumers have lost confidence in their banks and bankers. The cause isn’t just lack of faith; dealing with banks remains inconvenient, and products are often overly complex. The “I love my bank” marketing campaign and “straight talk” blog of U.S. online entrant Ally Bank symbolize the industry’s eagerness to win back skeptical consumers.
Web 2.0 technologies can play a major role in building customers’ confidence in their banks, simplifying the process of conducting transactions and finding information, and helping customers understand complex financial products. One recent survey indicated that growing numbers of consumers are turning to online advice from peers as a source of valued financial information. Banks could also produce video clips for their websites to explain products and offer access to financial advisors through video calls. And they could host online communities and finance-related forums on their websites that would enable customers to discuss financial products with one another and with bank representatives.
There are plenty of instances across the globe of banks and BFS companies resorting to out-of-the-ordinary marketing and sales campaigns spanning social networks. Apart from being a huge platform to market products or services, social media also provides great insight into consumer behaviour patterns, likes/dislikes as well as evolving market trends.
Turkey’s Akbank established a Facebook fan base of over 508,000, making it one of the “most liked” financial institutions in the world. Akbank, which has 913 branches and 15,300 employees serving over eight million customers, is effectively reaching 6.35 per cent of its base through its Facebook page, far outpacing the industry average of 0.14 per cent.
New delivery channel
Social media platforms have altogether created a new delivery channel that has started to rival its conventional counterparts. Consumers can use social media for their banking needs in the form of banking applications inside their social networks, buy/sell tips and even customised financial products/services.
Some leading banks have started full-fledged customer service through their Twitter feeds and Facebook posts. Near real-time responses have proven to be a great customer experience enabler, positioning the brand as one that immensely values its customers. It also helps in gathering customer feedback and rewarding loyal customers.