WHY BANKS SHOULD EMBRACE SOCIAL MEDIA - PART ONE

By Kelvin Mkwawa, MBA - Seasoned Banker.

Conventional marketing wisdom long held that a dissatisfied customer tells 10 people. But in this new age of social media, he or she has the tools to tell 10 million. As technology gradually changes the banking industry, social media plays an important role in achieving banks’ objectives. Furthermore, in the current banking environment, strategic social communication has become an integral component of how banks build relationships with their customers and communities. According to Jeremy K. Balkin, an expert in the engagement of Millennials in the financial services sector, more than 60% of people (Millennials) today choose to bank on their mobile device first and by 2020 it is estimated that some 1.9 billion people will be banking on mobile. Therefore, banks need to move towards providing faster and more efficient solutions for the entire Millennial generation. According to Financial Brand (a digital publication focused on marketing and strategy issues affecting banks), nine out of ten financial institutions in developed markets are using Facebook and at least 50% of them are using at least Twitter or Instagram platforms compared to less than 30% of financial institutions in developing markets.

Social media helps banks to build meaningful relationships with existing clients and engage prospective clients. Social media is also one of the first places that potential clients go to find out more about your business so if the bank is not on social media platforms, it misses out on opportunities to grow its audience. The bank needs an effective, comprehensive, profitable social marketing strategy that integrates with the rest of its marketing activities. It’s not just about what social platforms to use, but how to use them, and when. Hence the bank needs to define a social media strategy that suits its business.

Unfortunately, many banks in Tanzania are lagging behind in their comprehensive adoption of social media because they do not understand how to strategically use social media or do not have confidence in the importance of social media. For those banks that do not use social media platforms yet, social media is here to stay and will continue to be a major player in the banking industry. Customers nowadays are more likely to air their grievances via social media than to call a bank directly so it is imperative to utilize social media platforms. So how can social media help banks?

• Reduce costs and Improve efficiency – To survive in the banking industry, it is essential for banks to have knowledge of what customers think about their products and services. That is one of the main reasons why banks spend so much money conducting surveys and focus groups. The surveys and focus groups are expensive channels to understand what your customers think about your products and services and this is where I believe social media platforms can make a difference to the banks. Social media can help the banks get the customer’s feedback about their products and services easier and cheaper than traditional methods. Imagine the amount of time, efforts and money the bank will save by using social media platforms to get the feedback to improve and be more efficient while positively impacting its revenue.

• Improve Customer experience - Through social media, banks have a chance to understand the customers better, which means they can offer them an improved customer experience. Customer expectations are changing; most of them now expect real time responses and social media provides free platforms for customers and banks to communicate anytime. Ignoring conversation about your bank on social media is very dangerous. It removes the bank’s control over brand image and might damage the bank’s reputation as a customer-centric champion. In one of my previous articles, I stated that by offering excellent customer service, customers will talk about you positively, hence refer your products and services to their friends, family members, and even strangers which in return will bring the awareness of your brand to the masses. When it comes to achieve long term success in banks, nothing matters if you offer poor customer services.

In Part 2, I will share two other reasons why banks should embrace social media platforms.

Written by Kelvin Mkwawa, MBA
Seasoned Banker
Email address: Kelvin.e.mkwawa@gmail.com