Social Media Technologies in the Retail Banking Industry

By Conor Donnelly

My name is Conor Donnelly, a MSc International Business Student at the University of Ulster in N.Ireland. I graduated from my undergraduate degree, BSc (Hons) HRM & Marketing with a Diploma in Area Studies in July 2011 having also completed a year studying abroad at Roanoke College, VA.  I  am currently in the process of writing my dissertation;

"A shallow case study investigation of retail bank use of social media technologies in the UK, Ireland and Finland."

The aim of this research is to investigate the varying uses of social media platforms by retail banks in the UK, Ireland and Finland.  Finland is traditionally more advanced in terms of banking technology so it will provide an interesting comparison between the three countries.  The results will demonstrate what social media platforms the different banks use, how they use them, what techniques they employ to implement their social media strategy, or if they even have an online presence at all.  This research will also help identify the social media strategies of retail banks in these countries and allow me to compare and contrast the varying case studies.

Social media represents a new area of study.  In the last couple of years, social media has emerged as an ever growing popular communication tool.  In many cases online accounts such as Facebook and Twitter have been replacing everyday activities such as SMS messaging and email, with many taking to their social networks to communicate.  As there is such a large percentage of the population online, it is not uncommon for a business to use social media platforms such as Facebook, Twitter or Google+ to communicate their product or service.  Other platforms, such as LinkedIn, provide a professional network for businesses to establish connections with peers, employees and forums for professionals to meet and discuss ongoing issues.  In terms of telecommunications, Skype has be enjoying success by undercutting traditional phone operators and establishing themselves as the best option for long distance calls, not just in the business world.  

    

The internet has already had a significant impact on the operations of retail banks, an example being the growing number of online banking users.  A vast array of banks have yet to take advantage of the true potential of social media.  Consumer preferences and expectations will continue to rise, and it is crucial for banks in maintaining their competitive edge to adapt to the change in demands from their customers. 

There are a number of reasons for a retail bank to have an online presence in terms of social media.  An effectively managed social media strategy allows for the firm to enhance their brand, therefore driving more traffic to their website which helps in the recruitment of new customers.  Having an online presence also gives a bank the opportunity to reduce costs in areas such as sales, marketing and customer service. It also allows the firm to identify dissatisfied customers straight away and allow for the problem to be dealt with immediately.

Retail banks can ill afford to be left behind as many businesses look forward with the use of Facebook, YouTube and Twitter.  It is crucial that banks meet their clients where they are, and with Facebook currently having 900million users, there is a clear indication that social networks can have a significant influence.

Social media is a fast-growing technique in the business world.  Many industries are researching ways to improve engagement with their customers and ways to create stronger relationships.  Most global retail banks are online, but the way they are managed can have an effect on their relationships with customers and how they are perceived to others.  Having an effective social media management strategy allows for any banks to generate interest in their brand and encourage discussion between satisfied customers.  

There are a number of social media benefits for businesses, these include; 

• Branding – the more impressions a consumer gets of your business, the more likely they will remember and act upon it in the future.  Regardless of the sector, brand awareness is vital for continued success.

• Reputation Management – It is beneficial for a company to know what their customers are saying about them, even if they are not in the conversation.  Having an online presence allows a company to know what their customers are thinking and gives them the opportunity to act accordingly.

• Customer Service and Feedback – Providing support to customers is crucial to the success of a business and social media is no exception to the rule.  If a customer reaches out to a business, it is crucial they respond, regardless if it is positive or negative.  It gives the opportunity to interact with a customer on a personal level, therefore removing the faceless aspect of a phone call or email consultation.

• Competitive Analysis – it is vital a company does not fall behind their competitors.  Social media makes this process easier as it provides completely transparent content from a rival company.  It gives a firm the opportunity to keep tabs on their competitors, noticing any future promotions and how their conversations with consumers.

A great deal of responsibility comes with the implementation of a social media strategy.  Like any strategy in the business world, a poorly managed operation can have a detrimental effect on the company.  Ineffective management can damage the reputation of the company and a great deal of commitment is required to respond to feedback and producing new content for consumers to keep them engaged. 

There are many examples of social media techniques used by retail banks throughout the world that could also be adopted in the UK and Ireland.  An example of a bank using podcasts to engage with consumers is the Bank of Nova Scotia in Canada.  In these podcasts, banking experts are brought together to discuss topics including; global economic reports, perspectives on small business, getting value from your bank account and the Canadian economy.  These podcasts provide their customers with more value from their consumer relationships and a greater insight into the ongoing matters in the banking industry.

These advantages give reason towards carrying out this study.  These are some of the reasons for banks in the UK and Ireland to invest more in their social media strategy.  This research will help indicate what areas need to be improved to ensure the retail banks can gain as much as possible from their social media strategy.  In addition to this, there are no such studies of banks and their use of social media currently.  It represents a very new and topical area and the banking industry represents a key industry to investigate as they are being heavily influenced by technology and the need for developing brand awareness due to the increasing level of competition in the industry.

Blog post by Conor Donnelly (18/08/12)

Twitter: @conorjdonnelly

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