The banking sector has undergone some drastic changes and with traditional retail banks being confined by red tape – the challengers are innovating a lot faster and providing some real competitive advantage to their customers – particularly the younger, more digital demographics. Retail banks are having to speed up their digital strategy in order to keep people on board so it’s a very exciting time for banking in terms of social media. Here are some of the strategies global finance firms are adopting to keep ahead of the curve.

1) Customer Service

Customers today expect real-time responses from their service providers – gone are the days where customers are willing to sit on the phone to a chap from India for 20 minutes just to make a complaint.  Now, when the unreasonable customer is unhappy with a service, they will head to their social channels to vent out frustration. Banks of course don’t like unfiltered negative publicity so are obligated to provide a reasonable solution ASAP.

This type of public customer interaction requires caution. The biggest challenge is maintaining security standards when customers mistakenly provide personal information for all to see. As a result, banks have had to implement social media policies to ensure data is kept secure.

Implementing chatbots/instant messaging may be a better solution for banks wanting to get more social with their customers. The chats are private, encrypted and efficient which could assist customers quickly whilst adhering to their social media guidelines – not to mention reduce negative posts on public forums.

Kasito have already begun the revolution by launching software which enables banks to provide answers to common requests via Facebook Messenger.

2) Marketing

Social media marketing can no longer be associated in a company’s overall marketing strategy as a “nice-to-have”, forcing banks to adopt not only a data-driven approach but also a dynamic mindset that can handle an ever-changing social environment. Social media provides better segmentation, real-time marketing, reduced acquisition costs and quicker time to market – all factors of a solid marketing strategy.

Young online retail P2P lenders such as Lending Club and Prosper, and small business lenders such as Kabbage and OnDeck have grown exponentially by using online and social media as their core (sometimes sole) marketing channels.

More traditional firms are proving that you can avoid red tape to invest in social media integration. American Express provides the ability to link up a client’s Amex card with a customer’s social media profiles on platforms such as Facebook and FourSquare, and then delivers deals based on likes and check-ins. The firm has won awards for this social initiative.

ICICI Securities took advantage of the rising interest in gamification by launching a social extension called Hangout over Twitter, Facebook and YouTube. It came with two characters, each representing a different type of investor, who offered advice and tips to visitors. These characters also gave users the chance to play a series of challenges on Facebook and YouTube.

The characters helped humanise what appears at first to be an incredibly difficult and dull process, and made stock brokering much more accessible to Joe Public. They were also a great way for the brand to educate its audience, and validate its authority.

3) New Product/Service Development

Social media is not just being used to deliver new products and services, it is also being used to design and develop them. Turkist bank DenizBank has revolutionised the banking model by offering banking services through Facebook. Customer can access their bank account using their Facebook details to initiate wire transfers and manage daily expenses by monitoring their credit cards. Barclaycard have also launched the Barclaycard Ring Mastercard, which invites customers to share their views on their service and to help design and pick the most popular features for a new product.

4) New Business Models

Chinese social media platforms are leading the way in creating new business models using social media –  producing some exciting results. An interesting overview from Bloomberg on the scale of this innovation can be found here; you can pay rent using Alipay from Alibaba, bank using WeChat’s WeBank and buy mutual funds from Baidu.

Lenders can now also now use social media to credit rate applicants, and banks are asking people to use social media for references. This opens a huge door of opportunity for people would not have been given a second look previously.

Social media is changing the way the financial services industry operates; the future is bright for customers with digital efficiency, lower costs and better customer service. It remains to be seen who will ultimately emerge as the dominant force in finance, the traditional retail banks or the FinTech challengers.

I’ll leave you with a great piece of video content from challenger bank Tandem which asks why we have put up with shoddy banking service for so long.