Financial services providers and social media

Social media has become a buzzword for businesses, but many organisations, especially in the financial services sector, do not know how to effectively integrate social media into their business practices.

Ultimately, financial service providers (FSPs) can use online platforms to effectively engage with their target audience, and increase the bottom line.

This is according to James Saulez, CIO and head of online trading at Global Trader who says that social media in South Africa is often perceived to be a cheap alternative to conventional marketing and brand awareness, with the result that the translation of technology into business innovation is not being achieved.

Saulez says that, although mainstream social media has taken off, the net effect for FSPs is currently low. “Return on equity is measured by the number of followers or ‘fans’, ‘likes’ and ‘shares’ a company has rather than by solid performance and financial acumen.”

Furthermore, he says that if companies want to see real return from social media, it needs to form part of their high-level business objectives. “New customer user channels are being created and managed by junior staff and are driven from a marketing perspective. However, if inconsistencies arise, it often results in customer and call centre frustration and can tarnish a brand if it serves no real purpose.”

He says the financial services industry needs to shift the way social media is approached. “People want to use social media to engage with each other, not their service provider, although some may use this platform to engage with them if necessary. The fundamental question to ask is whether customers are ultimately benefiting from socializing with each other and the organisation and what these new platforms offer that the sales, marketing and customer teams can’t.”

“If social media platforms do not add value in the customer’s use of your products, don’t bother, full stop.”

Saulez provides five considerations on how FSP’s can implement an online strategy:

  • Obtain the customer’s transactional data, which can be aggregated and used to present useful information back to them. The use of data ultimately becomes the core of the platform on which socialisation will occur as it is of interest to the customer.
  • Build a hypothesis around which of your products and services you want your customers to socialise with. Socialisation becomes useful, addictive and desirable once you have insightful data to collaborate around and subsequent social media interactions are tagged to this underlying event.
  • Design must clearly map out how the products feed into your revenue stream and must be implemented upfront and not later. A technical concept of how socialisation impacts on your services and products has to be in the forefront of the model you are using. New ideas and products are borne out of experimenting with new concepts but they won’t work if the design is not centralised around this step with a clear goal behind the socialisation process.
  • Keep customer’s involved, a permanent incentivisation system needs to be built into the system. Rewarding users for engaging in the socialisation process keeps them actively engaging, as it is what drives revenue from your platform.
  • The ‘offering’ needs to be packaged via a deeply integrated CRM process. This involves how to incorporate mainstream social platforms into the over-arching business model and should be the last step on how you productise your social platform, involving unilateral buy-in from almost every department.

Saulez suggests that FSP’s who push the boundaries of sharing data will gain a very valuable competitive advantage. “Financial products are commodities and people want to know why a product was purchased. If people can see the benefit of sharing information, they will. Structuring online platforms in this way makes the difference.”

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Financial services providers and social media