Here Comes The New Age Of Social Media Banking

Here Comes The New Age Of Social Media Banking:from Business 2 Community by Griselda Zhou
The decline of Facebook’s value since its IPO in May of this year may be demonstrating Wall Street’s lack of faith in the social media giant’s future financial prospects; since opening at a price of $38 on the Nasdaq share prices have continued to tumble to levels half the original asking price.
Despite this, the worlds’ banks appear to be more positive-minded about the social network’s power with regard to consumer and retail banking.
The vast majority of retail banks now have their own Facebook page, Twitter account and Linkedin Groups as they strive to ‘connect’ with the customer in a more convenient and immediate manner. This is a continuation of the movement towards internet banking, but with a conscious effort to get back to being personal with the customer through ‘F-Commerce’- business carried out solely within Facebook.

There appears to be a general movement demonstrating banks’ knowledge of the need to be on Facebook and Twitter, however research carried out by MePlease has revealed there are vast disparities among the progress and success that retail banks have made to date.
MePlease has developed an index for measuring social media progress across the financial industry whilst also including some non-financials who are leading the social media charge.
The index is compiled of 14 variables to produce two scores, demonstrating the firm’s social media reach (i.e. the potential audience that the firm can broadcast to) and their engagement (the extent to which their audience responds and interacts with the firm through social media).
The ‘reach’ score is compiled using the number of Facebook fans, Twitter Followers, Linkedin group members and Facebook app users in a weighted scoring system using normalised data. It appears Amex and Citi are leading the way for the financial services companies, however they are still a long way behind global social media pioneers Starbucks and Burberry whose reach is several times greater than the best of the financiers.
The engagement score is calculated using the same method of weighted, normalised data compiled this time from 11 variables including; average Facebook likes and comments per ‘brand post’, a variable to measure tweet sentiments, the response time of the firm to tweets and the number of interactions per fan among others.
MePlease feels it is important to make the distinction between social media reach and engagement as they offer varying value to the firm and take very different levels of thought and dedication to grow. Reach is simply a measure of the size of the audience that the bank/firm has to broadcast its message. The larger the audience, the more chance of people hearing about or reading the great news the firm has to share.
However, the true value of social media in a business sense is engagement with the consumers. A fan base of 500 where 80% of which actively engage with the firm through comments, likes, tweets and reshares is far more valuable than a fan base of 1,000 where only 20% ever engage.
The first stage in the social media race is to grow one’s reach/presence as we mentioned previously. Social media is a new avenue for the traditionally conservative banking industry in this sense, yet it appears firms are keen not to let a rival enjoy a runaway success in the early stages.
Amex appear to be gaining a foothold in the market with their ‘Link, Like, Love’ application which connects the user’s preferences and spending patterns to offer discounts on their Amex credit cards in applicable stores. Meanwhile Australia’s Commonwealth Bank has gone a step further by introducing Facebook-integrated banking (“Kaching”) whereby customers can transfer money to friends/family entirely within Facebook. These examples appear to be the first (no doubt of many to come) to fully integrate banking services into social media.

One should note the financial industry as a whole is a considerable distance behind other industries. Both Starbucks and Burberry are streets ahead in the social media race, with huge levels of engagement from their fans and even integration into mobile payment (in the case of Starbucks). Notably, the online fashion retailer Asos (its birth into online fashion was a beacon of adventure in itself) has integrated its sales business into social media where users can buy and sell their clothing all within a Facebook app.
This will no doubt be the start of the race to social media superiority, using the best of the banks’ poker faces to play catch up with each other. What it may well also mean, is a price of $18 a share of a certain “FB:NSQ” will turn out to be a steal!