This is a contributed piece by Steve Bell, VP Solutions Consulting, EMEA at Verint
Imagine if you could log into your bank account via Twitter or Facebook and split bills by sending money to someone on your friends list. It may sound futuristic, but it could soon to be the norm. Some of the big names in the financial services sector have already started to roll out these tools, including ING bank and Emirates Islamic bank. While others are a little slow to catch up, Santander’s launch of voice activated payments is evidence that banks are working towards a better experience for customers.
As social media reinvents the way we all consume information, it also transforms the way we expect our services to be delivered. Twitter provides news faster than newspapers; Facebook spots the trends before they go viral. The result is that consumers want information and services to be delivered as quickly as their social platforms, and banks need to rise to this challenge. Digital giant WeChat is a great example of this - with over 700 million monthly users, what began as a messaging app now doubles up as a mobile wallet, allowing you to check in for flights, pay utility bills and more.
Social banking will allow users to access banking services using their social media account credentials via the bank’s normal homepage. They will be able to perform a range of procedures, such as check their balance, make transactions and much more. The benefits to the consumer are huge: improved experience with a faster route to authentication and less passwords. It will also reduce frustration by allowing users to more efficiently multitask when managing their finances.
The pools of data that social media offers means that service providers can tailor their offerings to customers – personalising their deals and timing their marketing to suit the individual. For example, access to this data may allow a bank to suggest the best rates available for mortgage when someone is looking to buy their first property. The enhanced insights from your social media profiles could link to your current place of work or address, and would help bank managers make quicker decisions in terms of granting business loans or mortgage applications. A win-win for banks and consumers alike.
Yet there are major concerns around privacy when it comes to linking bank accounts to social media. Would you want your financial services provider, their partners and affiliates, to have access to your personal life, and the lives of your family and friends? While social banking could help quickly authenticate your account, there are concerns that important financial decisions shouldn’t be influenced by what you post online. The increased ease of access and potential third party interference that comes with social banking is raising eyebrows for many. An additional concern is around cybersecurity: while a social media hack may be frustrating, if this account is linked to your bank, it could have far more devastating consequences.
It will likely be several more years until social banking becomes fully mainstream, and consumer concerns around privacy will continue to evolve. Already, customers are happy to share more data if they feel they’re getting a better return, which is arguably what social banking is offering. It is undeniable that all things digital and social are integral for financial services to keep up with smaller Fintechs. To keep ahead of the competition, there will need to be a major shift in operating models to deliver the new products and services, with a central focus on efficiency and security.
Before banks can even begin to think about offering social banking to customers on a unilateral basis, they must ensure their IT infrastructure is agile and scalable enough to be able to meet the service demands. How effective their IT systems are will be indicative of the success of all digital projects; especially social banking. What we’re likely to see over the coming years, is that those who don’t update their infrastructure will be left behind, when the younger generation becomes the main customer demographic, with a thirst for social banking.
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