Beyond Banking: The Rise of Social Finance
Steve Bell, VP Solutions Consulting, EMEA, Verint
The banking industry has had a major face-lift over the past decade. What once was a sector reliant on face-to-face and telephone interactions, is now being driven by digital platforms. As a result, branches are closing up and down the country. Furthermore, digitally driven banks such as Monzo are poaching customers from their incumbent competitors, promising to deliver quick, simple service amongst other great perks.
With the rise of app-only and digital banking, it’s no wonder that banks are turning to social media as their next step towards modernisation. Even some of the more well-known banking institutions have started to join the revolution, including ING bank and Emirates Islamic bank. Social banking is indicative of the broader trend to give consumers access to the services they want in the way that they want. Santander’s recent launch of voice activated payments is just one example of another mainstream bank doing more to better its customer offering.
Social media is changing the way we all consume information. News used to be delivered each morning via the papers. Now, Twitter gives us updates faster than journalists can report it, and Facebook can identify trends before they become viral. The result is that consumers want their services to be delivered in the same way, and banks need to rise to this challenge.
Social banking enables customers access to banking services using their social media account credentials, usually via the bank’s normal homepage. If you’ve even been asked to ‘login via Facebook’ for a website or service, then you’ve already experienced what social banking could look like. After this login, customers will be able to do all they can do on regular digital banking platforms, such as check their balance, make transactions and more. But the benefits go beyond digital only banking. There are huge potential gains in terms of improved experience, with faster authentication and fewer passwords, ultimately reducing frustration.
As well as the more streamlined service, allowing a bank access to social media also opens them to pools of data about the customer and their habits. This data can be used to deliver personalised offerings, for example, by analysing a customer’s social media a bank may be able to recommend a child account if they can see the customer has just had a baby. These enhanced insights can also help to authenticate you in terms of referencing, linking you to addresses and helping the bank to deduce your eligibility for certain services more quickly.
Understandably, the thought of sharing this amount of data with banks is raising major concerns around privacy. Do we really want our financial services provider, their partners and affiliates, to have a front row seat to your personal life, and the lives of your family and friends? Should important financial decisions be influenced by what we post online? To add insult to injury, fears around cybersecurity are adding concerns about social banking. A hack on your social media account may be frustrating, but if the hacked account is linked to your bank, attackers could have access to far more personal information.
Already, customers are happy to share more data if they feel they’re getting a better return, which is arguably what social banking can offer. But it’ll likely be a few more years before social banking becomes mainstream. But before the banks can begin to offer any form of social banking to their customers, they need to make sure that their background IT infrastructure can support the platform, and is agile and scalable enough to meet the demands. Getting critical infrastructure in place will be integral to the success of banks in the future. What we’re likely to see is that those who don’t have the right foundations will be left behind, particularly with millennials, who are fast becoming the most important demographic group that banks with to target. But those who get the right foundations in place will have the opportunity to grow with the demographic demands, and modernise into social banking, and beyond.