Banks told to cash in on social media

Banks have largely failed to exploit the social media phenomenon

Banks should develop social media strategies to improve the customer experience and build trust and loyalty, according to a new report from Datamonitor.

The analyst firm pointed to research showing that half of UK consumers are now using online social tools to make financial decisions.

Sites like Twitter have become powerful marketing tools used by many multi-national companies, the report said, while sites such as LinkedIn have become an important place to network for business purposes.

"Consumers are now viewing social networking sites in a far more serious manner," said Anna Large, an analyst at Datamonitor and author of the report.

"They are no longer a way of passing the day chatting to friends, but for swapping important information with a new anonymous network, publishing work, and reading product reviews and political blogs.

"The fact that 50 per cent of UK consumers are using online tools to make their financial decisions indicates that banks need to start appreciating the power of sites such as Twitter and Facebook."

Large explained that banks could use social sites to build awareness of their brands and generate customer trust and loyalty, suggesting that they will see more customer recommendations by establishing a sense of community and providing real-time customer service.

"Simply using social media in itself will sweeten consumers by showing them that banks are coming to them and communicating through their preferred channel, " she said.

Large warned that if the banking industry continues to ignore social media it will suffer the consequences.

Banks tend to believe that negative comments made through social media channels pose little risk to their brand reputation, because they assume there is so much information being exchanged on social networks that its value is diluted, she said.

"Banks would be naïve to believe that consumers don't listen to recommendations made online," Large added.

"We don't now just rely on the say-so of our friends and family; instead we want to know about other consumers' experiences and are using digital networks to satisfy that need."