Social media given the cold shoulder by banks

Ovum, the technology arm of market analyst Datamonitor, has disclosed in a report that most retail banks have not adopted social media as a primary tool to engage with its customers.

In ‘The impact of social CRM on retail banking’, the study reveals that 60 per cent of the world’s retail banks have no plans in the pipeline to utilise social media in any way. As it stands, a mere six per cent of retail banks have implemented social media to deal with customer queries, while only one per cent plan to use it in the next two years. In addition, only 14%  have used it for marketing purposes.

Martha Bennett, an Ovum analyst, warns of the consequences in this strategy, “The attitude from retail banks towards social media is a major issue in an era of aggressive competition. Banks without a social media strategy are being shortsighted and are placing themselves in a dangerous and vulnerable position compared to competitors who have realised that social media can and must play an intrinsic role in their business.”

First Direct in the UK; Citi (“Citibank points the way via Twitter), Bank of America and Wells Fargo in the US; and Rabobank in the Netherlands are among a handful of banks that have commenced with social media but are still in the nascent stages.

Meanwhile, the National Australia Bank’s (NAB) ‘Break up’ campaign has shown how banks can utilise social media not merely for marketing purposes, but also to manage and understand their customers through social media. This was started through a social media channel and eventually built up to a major campaign.

“Consumers are not averse to receiving promotional messages via social media, or using it for customer service enquiries so a massive opportunity to rebuild the confidence in the sector that is so desperately needed is being ignored,” added Bennett.