Introduction: Social Media in the Financial Services Industry
Social media has become a key underlying component in all practices of global business. In particular, the financial services industry is facing challenges in regards to social media operations and how these operations affect the industry's reputation. Many retail banks are closing their physical branches, often times due to changes in consumer demand. In 2012, there were 2,200 bank branch closures in the U.S. and more recently in 2013, 348 bank branches closed in the United Kingdom. Since the digitization of banking has recently become popular, the necessity to improve social media communications has also become more evident.
Banking, insurance, credit, and investments all rank within the bottom six industries when ordered by trust. As financial services have shifted toward mobile banking, the process has become dehumanized and also more focused upon rates, fees, and product benefits for customers. However, competing solely based upon price and product benefits is entirely undesirable for banks and insurance companies. Social media is one way that financial institutions can regain trust from their consumers; it serves as a space where companies can differentiate themselves from competitors and foster a deeper connection between the brand and its audience.
Since financial brands are prone to negativity from disgruntled customers, social media engagement for these companies typically consists of addressing complaints and apologizing. However, effectively communicated with and cared for customers are more likely to recommend a brand so long as they receive a response, even if the issue goes unresolved. Customer care interactions conducted through social media can cost organizations as little as $1 per interaction compared to the $6 cost of an equivalent phone interaction. In the long run, social media outlets support marketing functions by allowing financial institutions to convey a more real and likable brand.
Various financial bodies set requirements that brands must follow in order to maintain security and privacy within the industry. Still, so long as financial brands adhere to these regulations, they will be able to reap the benefits of utilizing social media. Being active in this space where many consumers are present allows more direct customer service to take place. Consumers ultimately wish to engage with brands that utilize humor and informal language, and are generally more personable. Increasing this type of communication while still balancing the responsibility and character of each brand could greatly benefit the financial services industry and its reputation.
Featured Resources
Export.gov: Finance
Export.gov offers a wide range of current industry information and trade leads to help exporters of U.S. goods and services gain the necessary knowledge to compete successfully in overseas markets. This information includes trade events, market research, trade agreements, statistics and data, publications, industry associations, and points of contact within the financial industry.
Categories: Financial Services , Industries
PricewaterhouseCoopers: Financial Services
PricewaterhouseCoopers provides background information on the numerous global industry sectors. This specific site page focuses on the financial services industry and includes an up-to-date industry environment description, overview of challenges facing the industry as well as potential solutions, free downloadable publications including annual reviews, and events.
Categories: Financial Services , Industries
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