Social Media in Financial Services 2010

Published by: Datamonitor

Published: Feb. 22, 2010 - 56 Pages

Table of Contents

Overview

Catalyst

Summary

Methodology

Table of Contents

Table of figures

Table of tables

INTRODUCTION

Digital networks are now more extensive than physical ones, and this has impacted consumer attitudes towards information

The reach of social media knows no boundaries

The reach of social media is truly global

FS providers hold false beliefs about the value of social media

Myth: Social media is a fad

Myth: Social media has limited appeal beyond younger demographic segments

Myth: Information shared via social media can only have limited impact

Social media may not directly drive sales, but still adds value

Sales will be driven through viral marketing

Another reality: Social media will not solve all problems

Not all consumers are online and not all have the fast connections required for some elements of social media

THE FUTURE DECODED

Trend: Social media permeates every part of consumers' day to day lives

Social media is now the most popular online activity

Time spent on social media varies from country to country

Insight: Consumers are already using social media for their financial needs

Online media is the most popular source of financial advice for consumers in the US, BRIC and APAC

Key takeout: consumers are using social media therefore providers need to at least increase their visibility

Insight: Social media is developing quickly and aligning with consumers' needs

Social media is fundamentally challenging previously held beliefs surrounding consumer behavior

Power has shifted from businesses to consumers

Social media is breaking down privacy barriers which have typically shrouded consumers' personal financial situations

Key takeout: nothing can be taken for granted with social media; consumer demands will continue to surprise

Insight: Consumers are revealing huge amounts of information through social media

The global nature of social media creates an opportunity in terms of information available

The value and amount of feedback consumers are able to give is much greater than that previously recorded

Consumers are keen to offer this qualitative information directly to providers, but currently lack the platform to do so

All information can be utilized

Technology is only part of the solution

A holistic approach combining technology and culture is key

Key takeout: FS providers must recognize the value of a customer-centric approach

Positive brand perceptions are key to improving customer retention and recommendations

Key takeout: providers must beware of a backlash if they misuse consumers' personal information

Trend: Social media is no longer the reserve of the younger generation

Growth of Twitter usage in the workplace also highlights social media's increasingly professional reach

Insight: Adults are using social media to help with financial decisions just as much as youngsters

The popularity of online resources as an aid to financial decision making is evident in all segments

Online resources for aiding financial decisions are used most by the 25-34 segment in almost all regions

Online resources are more popular than traditional sources of advice for 18-34 year olds

Price comparison sites, in particular, are as readily accepted by older consumers as they are by younger ones

The rise of financial account aggregators has contributed to the popularity of the online channel in aiding consumers' personal financial management across all segments

Key takeout: FS providers must not assume social media is only useful for targeting Generations X and Y

Trend: Social media can be very damaging if ignored

Insight: Higher accessibility to product recommendations mean FS providers have to work harder to retain customers

Those who favor online media are more likely to investigate other products in the next six months

Insight: Widespread negative publicity has the potential to do serious damage if not counteracted

'People power' should not be underestimated

Key takeout: FS providers must remember consumers talk about the very good or the very bad

ACTION POINTS

ACTION: Social media must be at the centre of banks' communication strategies

Integrate technological data-mining techniques and social media to create a holistic customer retention strategy

Any social media strategy is worthless unless accompanied by a committed company culture

Motivate your employees

Reward your employees

Engage your employees the same way you expect to engage your consumers

ACTION: Banks must find their place in the 'new community'

Transparency and community building are important in building trust

Social media is not just for smaller, more agile players; there is social media to suit all

APPENDIX

Additional data

Methodology

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

List of Tables

Table 1: Social media audience and time consumption by country

Table 2: Sources of advice by country

Table 3: Indication of receptiveness to the online channel for financial advice, by country

Table 4: Indication of receptiveness to the online channel for financial advice, by age

Table 5: Indication of receptiveness to the online channel for financial advice amongst different age segments, by region

Table 6: Indication of receptiveness to different channel for financial advice, by age

Table 7: Consumers who have bought products via a price comparison site in the last six months, by age

Table 8: Impact of different advice sources on likelihood of investigating other products in the next six months

List of Figures

Figure 1: Digital networks are now bigger than physical ones

Figure 2: Social media's reach is global

Figure 3: FS providers hold false beliefs about the value of social media

Figure 4: Social media's reach is vast

Figure 5: Social media can boost sales

Figure 6: Social media permeates every part of network users' day to day lives

Figure 7: Time spent on social media has increased year on year

Figure 8: Time spent on social media varies from country to country

Figure 9: Consumers have revealed the online channel's usefulness in making financial decisions

Figure 10: Online media is the most popular source of financial advice for consumers in the US, BRIC and APAC

Figure 11: Blippy has proved that social media has fundamentally changed consumer behavior and broken down privacy barriers

Figure 12: Providing a page where customers could provide feedback would most improve brand perceptions

Figure 13: First Direct has pioneering in the FS space in terms of feedback gathering

Figure 14: Consumers with greater trust are less likely to switch

Figure 15: 18-24 year olds are under-represented at Twitter (while the 25-34 year old segment is over-represented)

Figure 16: 25-54 year olds have driven Twitter growth

Figure 17: Growth of Twitter usage in the workplace also highlights social media's increasingly professional reach

Figure 18: Adults are using social media to help with financial decisions just as much as much as youngsters

Figure 19: Online media is most popular amongst the 25-34 segment in almost all regions

Figure 20: Online resources are the most popular source of advice for FS amongst 18-34 year olds

Figure 21: 35-49 year olds top price comparison site usage figures

Figure 22: The rise of financial account aggregators has contributed to the popularity of the online channel

Figure 23: Recommendations from personal acquaintances or opinions posted by consumers online are the most trusted forms of advertising

Figure 24: Those who favor online media are more likely to investigate other products in the next six months

Figure 25: Campaigns such as 'Move Your Money' highlight how social media can be used against banks

Figure 26: Stop HBOS in the UK also threatens the bank's reputation

Figure 27: Social media must integrate itself and interplay with all other channels in order to add value

Figure 28: Any social media strategy is worthless unless accompanied by a committed company culture

Figure 29: It is clear that Coca-Cola 'gets' social media

Figure 30: Being a Mobank customer is very much like being part of the 'in group'

Abstract

• Using extensive secondary and primary research, recent trends in social media and consumer appetites for its use in the FS space are identified
• Identification, and in-depth analysis, of assumptions commonly held by FS providers regarding social media's reach, purpose and value
• Discussion of the dangers associated with lack of adoption
• Provision of concrete actions for FS providers to take in order to integrate social media into a holistic retention strategy

• This report provides key insights into the opportunities presented by the social media platform and threats if ignored or misused.
• Primary and secondary data is used to profile how providers are, or are not, using the medium to their advantage, and highlight missed opportunities.
• The report provides actionable strategies as to how social media can be harnessed to better relate to consumers and boost long-term profitability.

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