How Social Media Can be used in improving growth of financial service providers

Financial services sector contributes to approximately 20% of economic value-add in developed countries. The three main segments of financial services which accounts for 60% of the financial service sector sales are from retail banking, life insurance and property and casualty insurance. All these segments are intangible and it’s difficult for financial services companies to measure them and customized their offerings according to customer’s needs.

Social technologies can help the financial institutions in gaining valuable insights into consumer behavior and anticipating future customer needs which will help financial service companies in anticipating customer requirements in a better way and increase their sales and improve their overall profitability. Social media can be used by financial service companies in following ways:

1. Product Development:
• By making use of social media product development team can monitor digital communities where customers share their opinion about products and services and they can utilize this information for improving their product development cycle.
• They can also collect feedback from customers about their products and services directly through social media and involve customers in their product development.
• Social technologies can also be used for better collaboration among dispersed R&D teams reducing product development cycle period resulting in saving on productivity costs.

2. Marketing and Sales:
• Marketing and sales consume about 20% of bank operational costs. By making use of social media- enhanced customer relationship marketing data, bank can target customers according to their specific needs and improve their efficiency by sending promotional offers of their products to set of target customers.
• Social media can provide financial service providers an excellent view of their existing and potential customers for example with birth of child , parents are more likely to buy life insurance policy , with new car they will be more keen to buy auto insurance policy which will help financial service providers in finding out target audience and customer acquisition.

3. Customer service:
• Both banking and insurance are intangible services and that’s the reason why services given after initial purchase becomes a prominent factor in estimating overall satisfaction of customer with that particular product and brand.
• Social technology can lead to higher customer satisfaction by shifting load of service requests from call centers to social media channels which will help companies to provide better quality and faster service resulting in higher customer satisfaction.
• Social media can be used by institutions to respond to customer requests in more varied ways by allowing them to generate more innovative ideas and informing customers about their product offerings through social media resulting in an improved customer relationship process; enhancing traditional CRM.

4 Operations:
• Social Technology help financial service providers in improving collaboration across geographically dispersed operational centers. Banks and insurance companies can transfer and discuss relevant information on social media which can be used by all other departments and can learn from each other mistakes; improving their overall operational efficiency.
• Social Technology can be used in recruiting function by finding out high skill workers for desired profiles like loan officers, risk managers resulting in perfect profile-skill match helping companies in increasing their efficiency and help the financial companies in reducing their per candidate recruiting costs by approximately 40%.

Blog by:- Rohan Dhall

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