Social media is a frequently used phrase these days and is often meant to describe the content we post on sites and apps like Facebook, Twitter, Instagram, Snapchat, and others. In simpler terms, it can be inferred that social media are web-based sites that allow people to interact and share content with each other. However, if we dive deeper and break it into simpler terms, we can get a more transparent and more precise understanding of the concept of Social Media.
Social media can thus be defined as web-enabled communication tools that facilitate people to communicate, interact, and share information with each other.
One of the areas in which social media is used widely and in a powerful way is to boost demand and create brand awareness. Traditionally, banks used newspaper advertising, in-person events, direct email, and other outbound media channels, but for very little investment, social media platforms can be leveraged to create two-way communication with the customers.
In an era of disruption, the very survival of the bank depends on its ability to maximise customer value by leveraging social media platforms for the marketing of products and services to existing and potential customers. Banks can use predictive analysis to personalise communications with customers and offer them only relevant banking products and services. In combination with customer analytics, CRM can be used to segment customers by various parameters (for example, demographic characteristics, lifecycle stage, occupation, lifestyle, consumer behaviour, risk exposure, etc.) and assign the most suitable product offerings for them.
Social media has enabled the banks to reach a large and fast-growing socially connected audience in a much cheaper and quicker way. Social media is a valuable tool for banks, which can be used for many activities, some of which are:
It is worth establishing that social media marketing is still evolving, but it can help the banks to be more personal, build closer relationships with customers, and offer more targeted products and services. Social media marketing has emerged as an important solution necessary for understanding customer preferences, building customer relationships, and providing personalised customer experiences.
The number of active social media users is increasing expeditiously, and users of all age groups are well represented in the social universe, especially on the big four: Facebook, YouTube, WhatsApp, and Instagram. Chart 1 illustrates the figures reported by Statista that in 2020 over 3.6 billion people worldwide used social media, a number which is set to increase to almost 4.41 billion in 2025. Across all demographics, a growing number of users are relying on online sources, including social media, to support their financial or investment decisions.
Functional benefits of social media for banks
The role of social media is becoming increasingly important as various platforms provide new ways of connecting to people and communities. The volume of banking customers, who are also active on social media, is too large to ignore, thereby making social media an important marketing platform for the banking industry.
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