Retail banks are still hesitating to fully integrate social media into their digital marketing strategies, according to a new report from global analysts Ovum. Asia-Pacific and American retail banks are spearheading approaches to social media engagement, believing it to be disruptor of the way in which they interact with their customers. However, European counterparts are lagging far behind, but Ovum expects this change significantly in the next three years as social media becomes a significant channel for retail banks.
Banks must begin to fully integrate social media into their customer communications strategies, evolving their use of various platforms such as Twitter and Facebook beyond the outmoded “broadcast” model – which seeks to only manage institutions’ reputations – to use social media as a true customer engagement tool. In doing so, retail banks must understand and implement relevant risk and compliance requirements to ensure data security and privacy.
Though typically conservative, banks are looking to adopt strategies that will allow them to catch up with current trends and demographics. In addition, as the economic environment is improving and the demand for financial services is increasing, they need to focus on enhancing customer experience, which will translate into increased sales and more effective servicing.
Jaroslaw Knapik, senior analyst within Ovum’s Financial Services Technology practice, commented: “Customer needs are changing – this fact is uncontestable. It is now almost impossible to ignore social media. It transcends geographic boundaries, encouraging interaction and collaboration among disparate users united by a common cause, belief, issue, or interest. It provides a powerful marketing platform for understanding and engaging with customers, allowing banks to improve sales and profitability.”
He continued: “European banks in particular find themselves at the back of an underperforming class when it comes to social media engagement, voicing concerns over data security, ensuring data privacy, as well as the potential reputational damage that can come from a mismanaged communication.”