If you are thinking of taking a loan or a term deposit, it may be useful to see what your pals on the social media have to say.
New-age/Gen-Y customers are more inclined to trust the advice of friends and acquaintances on financial products and services for decision-making. And, they are embracing social networking, social bookmarking and social shopping more than ever as a medium to gather this information, share experiences and make decisions, according to study by the Institute for Development and Research in Banking Technology (IDRBT), an arm of Reserve Bank of India.
The study, containing guidelines and framework for use of social media by banks, has asked public sector banks to tap business from potential customers through social media. An estimated 20 million youth enrolled for higher education last year, and if this trend continues in next five years, banks will have 100 million social-media savvy potential customers.
According to B. Sambamurthy, Director, IDRBT, young customers offer a huge value proposition. “It’s cool to be on social media. It is no longer an option but a business imperative,” he feels.
This, however, does not mean that brick-and-mortar branches will disappear. The two channels can reinforce each other. Adoption of social media for business is a win-win situation for banks as well as customers. Customers can instantly access and obtain opinion about a bank’s product, loan rates, and the quality of service which would help them to take a call. And both positive and negative feedback would be available at one go.
For banks, there could be diverse gains. “It helps in differentiating banks and making them more relevant to customers,” the IDRBT framework states.
Compared to other channels, new business leads, via consumer referrals/influences, can be obtained at lesser cost. Access to vast personal data of customers is also a big business opportunity.
Private banks lead
Currently, private banks are leading in the social media. According to the ‘Financial Brand’ survey of July, ICICI Bank, HDFC Bank and Axis Bank are among the top 10 with social media presence. The services on offer include product details, stop payment option, request for cheque books, exclusive offers, and balance enquiry.
The scope of offerings is fast expanding.
Public sector banks are now speeding in this direction. According to RBI Deputy Governor, Anand Sinha, social media is becoming a key component of strategy of banks to increase over all business.