HomeOpinion & AnalysisThe impact of social media on banking

The impact of social media on banking

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You would agree with me that social media has taken the world by storm and in this social era, tech-savvy people glibly talk about Facebook, Twitter, LinkedIn, Google+ and others, while dropping phrases such as digital influence, social gravity and social capital. Social media is no doubt trending in Zimbabwe, but before I jump onto the bandwagon of benefit-totting praise-singers, understanding exactly what this phenomenon is all about would be a good starting point. Wikipedia defines social media as “media for social interaction, using highly accessible and scalable publishing techniques and web-based technologies to transform and broadcast media monologues into social media dialogues”. In this two-part series, I consider the impact of social media on the local banking landscape.

To illustrate my point about the topicality of social media, in recent times, I have encountered no less than three events which make reference to social media and how Zimbabwean companies, banks included, can benefit from them. The ZNCC ICT Business Innovation Symposium which was at the time of writing this scheduled for April 3 2012 dealt with “How Facebook, Twitter, LinkedIn and other social media phenomena affect your business and the opportunities therein”. Earlier, Max Soutter a marketing, growth and business start-up expert, spoke at Innov8’s Friday Lunch Time Motivation Series on the topic: Social Media and How it has Changed how Business Works. And, last but not least, wasn’t it not so long ago that Stanford Masie, former CEO of Google South Africa was in Zimbabwe talking about how technology is changing the way organisations do business the world over?

Against the background of this fixation with social media, how are banks in Zimbabwe positioning themselves to benefit from the trend? Most local financial institutions, it would appear, have ICT policies with clear provisions to limit their employees’ access social media at work and this is largely driven by security concerns given the potential for harmful material to compromise and paralyse banking systems. Very few banks, if any, have deliberate ICT policies crafted to leverage social media. Is it because they are afraid of the influence of social media on their businesses or are they simply set in their old ways? After all, banking is supposed to be conservative business, right?

Nilofer Merchant, a corporate director, keynote speaker and Harvard Business Review columnist characterises this apparent lack of organisational interest in the potential of social media in dramatic fashion.

“Like the rising temperature of the water the proverbial frog is sitting in, organisations are feeling the social era all around them, but failing to notice how significant a change it has produced . . . How many companies have figured out how to shift from supply chain management to integrating customer feedback into their product design, distribution and delivery?”

She further argues the world has changed and the way value is created has also changed, but organisationally, we have not changed.

What could possibly explain why banks have been tentative about fully embracing social media despite the apparent benefits?
Security concerns?

Technology watchers observe cyber attacks are increasing in number, even as companies increase investments in improved security technologies and tighten policies. Continued migration of business value online is attracting more capable malevolent actors with various political, economic and fraudulent agendas. Naturally, the security and integrity of their systems would be top-of-mind for bankers, hence the reluctance to embrace open social networks through which undesirable content may be propagated.

However, as digital business becomes more pervasive, cyber risk management will become for most companies what financial risk management is currently for banks.

Self-centred business models?
Is it perhaps simply that banks models are still too focused on selling the traditional products they intuitively think customers want, an approach that was popularised by Steve Jobs at Apple? Legend has it that when Jobs took his original Macintosh team on his first retreat, one member asked whether they should do some market research to see what customers wanted. “No,” Jobs replied, “because customers don’t know what they want until we’ve shown them.” He invoked Henry Ford’s line, “If I’d asked customers what they wanted, they would have told me, ‘A faster horse’!”
Letting sleeping dogs lie?

While the benefits that can accrue to banks from social media are potentially immense, is it possible banks are viewing social media as a double-edged sword which would enable their customers to give brutally honest feedback whose time has not yet come? Could they be letting sleeping dogs lie, in a manner of speaking? Imagine what those long-suffering customers that — month in, month out — are exposed to the scorching sun in winding banking queues, would “tweet” or “like” about their banks if they had access to social media such as Facebook and Twitter!

“If you can find your company on Facebook, Google+ or Twitter, you may have a secret way of getting fast customer service. Why? Because even in 2012, companies are pouring resources into social media, monitoring their online reputations and worried that your grievance could make them lose face. I think it’s just a matter of time before the rest of the world catches on to the fact it will get special treatment by taking its grievances to social media and then the jig will be up,” says Christopher Elliot, a consumer advocate who blogs about getting better customer service.

Omen N Muza writes in his personal capacity. He is a banker and managing director of TFC Capital (Zimbabwe) (Pvt) Ltd, a Harare-based financial advisory company with interests in banking and agriculture as well as the convergence area between them.

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