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How Ready Are We for Social Banking?

In 2012, New Zealand bank ASB significantly updated its ASB Mobile provision for iOS and Android with email and mobile payment options. This update also delivered a New Zealand first: Facebook Friend payments. It made ASB one of the first banks to leverage social media and, specifically, Facebook to deliver banking services.

Given that one sixth of the world’s population are now active monthly Facebook users, why has the rest of the banking industry been so slow to follow suit?

The social media site turned ten earlier this month and its number of users, and profit, continues to rise. Social sharing is still cited as the main driver for using the site; since its introduction in 2009, the ‘Like’ button has been clicked 3.4 trillion times.

But the very fact it is turning a profit hints that Facebook is changing. Profit for the full year jumped from $53 million in 2012 to $1.5 billion in 2013. This is essentially coming from online advertising: 18.44 percent of worldwide mobile ad spending was spent on Facebook, according to eMarketer. Indeed, over 1 million marketers were active on Facebook as of December 2013, and the network has around 25 million small business pages.

Businesses have been quick to see the benefit of Facebook as a marketing tool – the banking sector included. Some have even gone so far as to leverage social media or Facebook in order to give greater options and flexibility for customer service and customer support. But harnessing the site to deliver new and existing services to customers has been a far less rapid progression.

Are businesses missing a trick? Alex Bray, Retail Channels Director at Misys Banking Systems, a company specializing in online and mobile banking solutions, thinks they are. He argues it is vital for banks to leverage these not-so-new channels: “Be where your customers are – and help customers to interact with your services via social media. Research shows customers would like to transact through social media sites – and have the capability to share financial information of their choice with their network of contacts”.

In the UK, half the population has a Facebook account, so ‘being where your customers are’ has to mean being on Facebook too, since a sizable proportion of any UK business’s customer base will be there. The opportunity is ripe for the picking and, as Facebook’s user demographic changes, it also becomes more potentially valuable.

Research suggests that use amongst teenagers is falling, as Daniel Miller, Professor of Material Culture at University College London, explained in a recent article in The Conversation: “The company has long been accused of hovering up your user data and giving advertisers access to it. This year, concern over this type of activity reached an all time high, when it became clear that the NSA was accessing Facebook information…. What we’ve learned from working with 16-18 year olds in the UK is that Facebook is not just on the slide, it is basically dead and buried. Mostly they feel embarrassed even to be associated with it. Where once parents worried about their children joining Facebook, the children now say it is their family that insists they stay there to post about their lives. Parents have worked out how to use the site and see it as a way for the family to remain connected. In response, the young are moving on to cooler things.”

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The fastest-growing Facebook user segment in the UK is the over 55s.  Facebook now represents a way to reach these customers in a way not previously possible.

Where it once made sense for our banks to be on our high streets, we aren’t using our high streets in the same way anymore; their demise is routinely reported.  We are shopping online, meeting on Facebook and other social sites and, therefore, doesn’t it make sense for our banks to be there too?

One has to wonder what the rewards will be for the banks which dare to address the banking needs of their customers in the place where they congregate.

Author: Carlo Pandian is a guest writer for Viralheat. He is interested in innovative marketing techniques, international finance and technology. Connect with him on Twitter, @carlopandian.

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