Throughout the first decade of the 21st century, social media has been growing exponentially and that is why financial technological companies have inevitably integrated these communication platforms into their service offerings. While social media began as communication platforms to integrate people from across the wide range of the internet, it has become something much more than that. Not only in the banking industry but essentially in every other industry, it is essentially important for companies to establish a relationship with customers and create a positive brand image in the eyes of society.
Social media is already changing the way financial institutions interact with their customers. Even communication platforms such as WeChat and Facebook have already started to provide financial services such as transferring money safely from one account to another. Even though first adopters have been skeptical to trust social media platforms with their money and bank accounts, you can imagine the wide market size that they are able to penetrate. Ultimately, their goal is to simplify the transaction in a platform that you are already using all the time anyways. Even if you use a different bank than your friends, you will be able to make transactions without worrying about bank account number or excessive fees for transferring money to a different institution. Hence, if banks want to continue having a competitive advantage in the world of FinTech, they will have to consider including features of social media in their service offerings.
With the fast pace of social media, customers are getting used to receiving a real-time response to their issues. In the world we live in individuals have more bargaining power over companies as they can take any bad experience to their personal Twitter and Facebook accounts to affect the company’s reputation. As a result, banks understand the importance of solving a particular situation before it escalates to the general audience. In the industry of banking where information privacy is so sensitive, even a slight rumor about breeches in information security could lead to significant consequences for the company.
The networks that social media offers are great to share charity causes, entrepreneurial start-ups that require funding, projects on a developing stage, or could even work as a credit source. This is precisely why peer to peer lending and crowdfunding have been revolutionizing with the growth of social media platforms. For example, KickStarter has enabled hundreds of projects to get the necessary funding to kick off as they are able to sell their product before even developing the product itself. Customers like the idea so much that they are willing to risk their money because they expect the company to deliver on its promises. With hundreds of users sharing this initiative over social media, it has become increasingly simple to contact a large pool of lenders (you no longer have to knock on doors or call old friends to raise capital). Peer to peer lenders have been able to grow significantly as they base their core marketing strategies on social media. P2P lenders or other FinTech apps have advertised their ventures on Facebook, and it has become particularly interesting for young adults to use these platforms to hold their savings and make some return in the meantime.
Not FinTech companies are using social media features to provide financial services, but also traditional banking corporations such as American Express have been able to integrate social media into their daily activities. They do not only use Facebook and Twitter for customer services but actually use the platforms to conduct transactions. They have five Facebook pages as well as three Twitter accounts. They allow customers to sync their credit cards to the social media platforms, and then provide deals based on likes, shares, and their online activity. Also, using hashtags such as #AmexWholeFoods will get them credit on purchases made in the particular store. On YouTube, AmEx allows customers to live stream concerts that only cardholders get access to. Furthermore, American Express partnered with Airbnb, and they created a new type of account that can only be opened with your AmEx credentials and it will give you reward points and a “AmEx verified” status that will look positive in the eyes of Airbnb hosts. These are all great marketing techniques that are going to prove effective because people are already talking about them on the web. Even if other banks already have similar partnerships, nobody will know because they are not mastering the marketing tool of social media. More millennials and young adults will feel related to a fast pace company that provides innovative services and benefits to its customers.
As a regular user of social media I can tell that the future of the financial services industry is to fully integrate banking with social media. Those companies that fail to adapt quickly to the market preferences will have difficulties retaining their current customers, and those like AmEx which are already making a first move, will capture more clients as they manage to understand their needs.