Despite fragile consumer confidence, most retail banks do not view social media as an important tool to engage with customers, putting them in a dangerous position, analyst firm Ovum claims. An analyst for the company, Martha Bennett, says banks without a social media strategy is a major issue "in an era of aggressive competition".
“The banks without a social media strategy are being shortsighted and are placing themselves in a dangerous and vulnerable position compared to competitors who have realised that social media can and must play an intrinsic role in their business.”
A new report from market analyst Datamonitor’s technology arm reveals that almost two thirds (60 percent) of the world’s retail banks have no plans in place to use social media in any way. Currently just 6 percent of retail banks use social media to deal with customer queries and only a further 1 percent envisage using it in this way between 2011 and the end of 2012.
Meanwhile only 14 percent use it for marketing, with a further 12 percent planning to use it to promote their business by the end of next year.
The report says there is a handful of retail banks that have begun to use social media such as First Direct in the UK,Citi, Bank of America and Wells Fargo in the US and Rabobank in the Netherlands, although they are still feeling their way and their strategy is very much a work in progress.
“These banks have been justifiably held up as industry leaders for their use of social media, however there is not universal acceptance that social media is either important or suitable for retail banks," says Bennett.
Across the Tasman, National Australia Bank (NAB) has a “break up” campaign, which Ovum says has demonstrated how banks could utilise social media not just a marketing tool, but also to manage and understand their customers over the social media channel.
Last year, ASB Bank opened its ‘virtual branch’ on Facebook, saying it is the first bank in the world to open a branch network online, with real-time person to person banking application.
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