Banks are looking to get in on the worldwide social media party, and find ways to promote their online and mobile banking products at the same time. As happens in the early phase of any new medium, there are a bunch of experiments going on right now.
The recent partnership between American Express and Foursquare is a prime example. Foursquare is a social networking service where members “check in” at their locations using a mobile phone to earn points and find friends. The deal rewards American Express cardholders with discounts when they check in via Foursquare at participating merchants. First piloted in Austin, Texas, the offering went nationwide at the end of June, with retailers H&M, Sports Authority and Union Square Hospitality Group, a holding company that owns various New York City restaurants. This offering is particularly interesting because it combines a financial service, location-based advertising, social media and mobility. That’s four birds with one stone.
Another example is here in Singapore. One of the local banks launched a Wish List application, where you enter the things you’re saving up for (your “wishes”), and then apply funds to each item as your savings grows. You can link it to Facebook to tell your friends what you’re saving for and when you have enough to make the purchase. This is a really fun, innovative development that taps into people’s drive to achieve personal goals. It marks a departure from the standard advertisement of offers, job postings and company announcements that most banks are doing on Facebook.
We’re also hearing that banks are working on developing person-to-person (P2P) payment mechanisms that integrate with social media.
Twitter is a different medium, allowing “tweets” of 140 characters or less, and though global financial institutions are using Twitter as a customer service and product promotion channel, most banks are still resisting it. (Studies show up to 60 per cent.)
Understanding the Limits
Banks understand that consumers aren’t going to seek out the bank’s web site or application in large numbers. Instead, they’re seeing social media as a gateway, a virtual marketplace where the next generation wants to conduct all of its activities. Given the more personal nature of social media, it could help banks build community and connect with consumers in a more direct way.
Here’s a question: How will the Facebooks, Twitters and Foursquares of the world create APIs that make it possible for banks (and other enterprises) to seamlessly integrate social media into their own consumer environments?
Social media is changing the way every industry engages with customers right now, and the financial industry is no different, though security is something to think about. That’s obviously one of the reasons that banks have historically been slow to adopt new media, including the Internet and mobile technology. With the rise of mobile banking in recent years, we know that consumers are ready to conduct transactions, not just look at their account balances. Of course, incorporating mobile banking, with all its security considerations, in to a Facebook or Foursquare, becomes a whole new game, with an extra level of challenges.