The impact of Social Media Marketing on the Banking Industry

By: Dr Sanette Angloher

Social media marketing is an emerging discipline within marketing. Corporates are

now realising the power of this medium as it changes the traditional form of
marketing strategy due to social media being the fastest growing online
phenomenon. A company with no social media marketing strategy is at risk of being
left behind and losing significant market share as social media marketing has
changed the marketing playing field.

According to Papini (2013), recent growth and interest in social media is driving
banks to learn more about the various social platforms available to them, and to
consumers, and how networks like Facebook and Twitter can assist them in:
• engaging with their customers, stakeholders, and employees;
• enhancing their brand by connecting with consumers;
• distinguishing themselves from competitors;
• reducing costs, seeing as these social media communication channels are
relatively low in cost when compared to the amount of customer satisfaction
produced – in comparison to the more traditional methods;
• boosting innovation by learning who the consumer is and what they want,
and then creating products that will serve those needs; and
• increasing revenue.

Social media consists of a variety of internet-based mediums that enable users to

network, share content, interact with each other, and create communities around
common interests. Social media is therefor the media that we use to be sociable
online. Social media can be divided into three main categories:
 Messaging and communication, e,g. blogging and micro-blogging such as Twitter.
 Communities and social groups, e.g. Facebook and LinkedIn
 Photo and video sharing, e.g. YouTube

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Social media marketing is the practice of expanding traditional marketing (off-line)
activities to interact with your target market on a personal, social media level.
Companies are able to access niche markets, understand their markets better and
create loyal customer communities.

Through social media, banks are able to provide better customer service; post
educational information and financial advice; share financial offers and upcoming
promotions; reward clients for recommending them; and allow clients to post
reviews, complaints and questions on their social media profiles. These tools are
now giving banks the same level of personal interaction that is normally found with
in-branch banking. (Papini; 2013)

With South Africa’s internet usage numbers steadily increasing, it was only a matter
of time before our very own banks started looking at adopting this notion of social
banking and how they could make a positive impact on their current and future
customers. With the majority of the country’s population owning mobile phones and
the increase in mobile internet technology, more users than ever before are able to
access the internet. With numbers of registered Facebook users in South Africa in
2012 reaching almost 6.5-million, Twitter over 1.7-million, LinkedIn over 2.2 million,
and Mxit over 10-million, banks did well to start paving the ‘digital way’, as can be
seen from the table below, showing figures of the major banks’ activity on Facebook
and Twitter during 2011:

(From: Papini; 2013)

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The above figures clearly show that FNB is ahead in the social banking stakes. FNB
was able to go from being one of the banks in the background, to the bank that set
the social banking benchmark – all through digital marketing and social media. By
improving their digital footprint and increasing their levels of online engagement,
FNB are leading the way and are known as being the most tech-savvy banking
institution in South Africa.

Social media needs to be weaved into existing and traditional marketing strategies.
The marketing basics still hold and form the stable grounding for any marketing
strategy. Social media should not be seen as a stand-alone tool. The use of social
media needs to be carefully planned together with other media forms to create a
consistent effective marketing strategy.

The benefits of employing a social media campaign are that it:

 Exposes your company’s values to your prospects;

 Demonstrates expertise where expertise is valued;
 Attracts specific kinds of customers;
 Changes how people think — usually for the better;
 Pre-empts competitive marketing efforts — If they copy you, do something
else; and
 Attracts attention beyond simple product or company advertising claims.

One of the main differences between social media and other traditional media
strategies is timing. It is no longer possible to create fixed annual plans. The
technology in this field is changing so rapidly that the strategy needs to remain
flexible. Social media requires active, real time response. Implementation is small
and frequent compared to large media campaigns of the past that had long lead
times. Interaction is now as small as 140 characters, and accessible to anyone with
internet access. Marketers need to combine the long-term planning of traditional
media strategies together with the short-term adaptability of social media strategies.

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Social media is instant and collaborative. Messages are short and need to be
relevant. Traditional media is often more costly and time delayed. Both traditional
and social media have their place in marketing strategy. The table below
summarises the differences between the two forms of media.

Comparing traditional media to social media:

Traditional Media Social Media

Fixed Changeable
Plan ahead, time delayed Real time
Media mix is limited Media forms can be linked and mixed
Rigorous publishing process Individual easy access
Finite Infinite
Limited by budget Cheap, limited by time
Push Pull
Controlled Not possible to control
Once off preparation Requires constant participation
Ideas are guarded Sharing encouraged
Brand created content Mostly user created content
Adapted from Stokes (2009)

The success of a company’s social media campaign doesn’t just depend on the
efforts in engaging in social media. It is dependent on an aligned strategy with your
“offline” or traditional media efforts. Therefore your TV, radio, print, direct mail
strategies all need to be working together to support each other. There needs to be
a common thread and connection between your online and offline efforts.

One of the criticisms about social media’s utility in bank campaigns concern the
original nature of these websites as tools for leisure talk and making friends.
Questions were raised about whether users would log into their Facebook or Twitter
accounts to discuss banks. Another fret- point was the scope of influencers on social
media: just as positive testimony on a website would have multi fold persuasive
power compared to traditional marketing methods, an irate or unhappy client could
just as easily, hurt a bank’s brand equity and positioning. Accountability and security
issues related to such media are other challenges that banks face. (Zunguz, 2013)

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The strategic rules in this new form of marketing are different to traditional
marketing and need to be observed if corporates wish to use this medium
successfully. There are four principles that should be considered when engaging in
social media strategy:
1. Build social authority
2. ‘Pull’ not ‘push’ marketing
3. Identify and use brand ambassadors
4. Participate, do not control

1. Build social authority

A brand needs to develop social authority. Social authority is created when a brand
builds a reputation for being an expert or industry advisor. It is only through this
process of becoming a trusted advisor that social media marketing can become
effective. People are resistant to corporates using social media to push marketing
messages. Participation in the medium should be split 20:80 between sales and
valuable content; any more than 20% sales push and the audience with disengage.
There are many ways a brand can build authority: providing valuable content on
social networking sites; setting up question and answer forums; engaging
consistently on progressive topics; setting up and running industry groups. The
general rule is to be generous with content.

2. ‘Pull’ not ‘push’ marketing

Traditional media focuses on ‘push’ tactics. A television or radio advertisement is
forced on a consumer. With social media, customers have full control of what they
expose themselves to. The content of a brand’s participation needs to be valuable
enough to users to encourage them to ‘pull’ the information. This form of
interaction creates a two-way relationship, which is a valuable way to get to know
your customers intimately.

Capitec provides value add social media content

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Capitec is fast chipping away at the market share of South Africa’s big four banks.
Capitec has experienced earnings growth of 46% to R640m for the year ending
February 2011. The bank has embarked on an integrated social media campaign,
“Live Free”. The Live Free campaign encourages the bank’s social network to engage
and share ways to enjoy life for free. the campaign has encouraged customers to
create the content on the company’s behalf. The fast changing content has users
returning to the social media sites to see what new ideas other customers in the
community have added. The campaign is supported by live events, one of which was
a sandcastle building competition. The content is enticing and valuable to its
community and relevant to its product offering, encouraging users to save.

Adapted from: Financial Mail, www.fm.co.za. 2011.

3. Identify and use brand ambassadors

Building up many connections from a zero base takes a lot of effort and time. Every
brand needs to seek out those customers who believe in the brand, and effortlessly
market the brand on the company’s behalf. If a corporate spends resources on
identifying these natural brand ambassadors, they will help to grow the brand’s
social network. Brand ambassadors are users who already have large connection
networks. They are attracted to specific brands and engage regularly and effortlessly
with those brands. Once ambassadors are identified, they can be engaged in a win-
win relationship. Build the loyalty and effectiveness of their networks by giving them
rewards that build their own social networking authority. For example, a global
mobile phone manufacturer gave its brand ambassadors the first prototypes of its
new phone. The ambassadors chose to comment about their user experience on
social networking sites, building anticipation for the official product launch.

Some companies use employees as brand ambassadors. Employees who are

passionate about their work and the company’s products and services often have a
lot of knowledge to share.

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4. Participate, do not control
As soon as a corporate attempts to control the social media conversation the
audience will be lost. An effective participation strategy requires the corporate
being willing to give up control of the message. The key is to participate in the
conversation, not to control it. Honest participation will help to build trust and lead
to becoming a relevant influencer. Some may argue that giving up control comes
with risks as customers may communicate something negative about the brand. If a
customer has had a negative experience, they will spread that information regardless
of your company’s participation in social media. By ensuring you are actively
participating, that negative message may be easier to detect. It is then possible to
turn a potential bad news experience into a positive experience for the rest of the
network to witness.

When defining and implementing a social media marketing strategy remember that
many conversation threads live forever. It is vital that the resources that will be
implementing the strategy have a well thought out plan. An online community can
be a very value resource but an online reputation can be lost very quickly too.
Marketers are advised to think carefully before they write as it is very difficult to
remove content once it is available on the web.

As social media marketing budgets continue to grow, it’s vitally important to have a
way to assess how your efforts are going.  Assess the following:
 How do your current social media marketing efforts look? – Check all
marketing platforms across the various digital channels, including social
sharing. Look back at targets and use information, such as social media-
supported sales figures, to determine the success.
 Take a look around – Be aware of your environment. Look at the wider
ongoing and upcoming trends, be it in politics, the economy or technology –
it can be useful in helping you decide whether your approach needs to be
altered. Monitor the talk about your business, products and keywords.

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  What are your rivals doing in social media marketing? – Gather valuable
information from brand monitoring. This can then be used to help define
what you can do to better the social media experience your business offers.
 Be aware of the ever-changing social media ecosystem – Keep close tabs on
how any changes could affect your marketing strategies. Always look into the
new and emerging networks – remember they could be ‘the next big thing’.
 What do you need to change? – Decide what can be modified or improved
upon within your social media marketing strategy.

Strategies should be reviewed and adjusted regularly to adapt to this fast changing
medium. Social media marketing requires patience. It is a form of socialising and
building relationships. Relationship building takes time and effort.

So, what are the social media trends to keep an eye out for?

1. Social media will more prominently affect search engine results 

In addition to crawling traditional content of a company’s website and blogs for

relevant keywords, search engines will also pull results from social networks such as
Facebook, Twitter and LinkedIn. Therefore, as we search online, we will start to see
more real-time information in our results from these sites.

Digital Visitor recently conducted research to see which social media sites were
appearing in the first 5 pages of Google for 100 top travel companies. What they
found was that 59% of the companies had a social media profile on page 1, 43% on
page 2, 27% on page 3, 25% on page 4 and 11% on page 5. While YouTube,
Facebook and Wikipedia were the most frequent sites that appeared, Wikipedia
had the overall best ranking position at 10 (page 1 position 10).

If your brand is not yet engaged on Facebook, Twitter, LinkedIn or YouTube, now is
the time to get involved. It will only continue to influence your brands results on
search engines, and the more your content is shared, liked, and tweeted, the better!

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 2. Social media as a customer service tool

Social media allows businesses to quickly and economically communicate to a large

audience. In 2012, we will see more organisations using it as a customer service tool.

Some recent examples include:

 Air Asia used Twitter to calm the nerves and subdue additional fears of their
122,000 followers after a jet skidded off a runway earlier this year.

 Delta Air Lines have ten staff members managing customer service issues 24 x
7 via their @DeltaAssist Twitter channel.  According to Shashank Nigam, CEO
of SimpliFlying (leaders in airline and airport customer engagement), the
airline tweets at leat 60 times each day to more than 18,000 Delta Assist
Twitter followers.

 Holly Burns, Manager of Social Media at Travelocity confirmed that the

majority of their customer service takes place on Twitter and in just two
months earlier this year, they closed more than 70 customer service cases
through social media.

3. Social media and relevance

Social media has become everything to everyone, and as more people and brands
engage via the ever growing number of social media sites, the question of how to
match up relevant information with the right people will become vital for businesses
to succeed.

With over 98,000 tweets per minute, 695,000 Facebook status updates per minute,
79,364 Facebook wall posts per minute and 600 new YouTube videos uploaded per
minute (and this is just the tip of the iceberg) it's essential to provide people with
the information that you know they are interested in or they will quickly be ‘turned
off’.

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 4. More companies will include user reviews and ratings on their
websites

‘47% of consumers prefer to read ‘reviews on a company’s website’ over

magazines, forums, shopping comparison sites, newspapers and social networking
sites’

‘Reviews enhance sales by up to 18%’

There is a flood of statistics across all industries that prove why online reviews are
important for businesses today, particularly how they impact purchasing decisions,
so we will start to see more businesses gathering user reviews and ratings on their
websites.

5. More companies using social media sites for competitions (and some
really creative competitions too)

While there have already been some great examples of companies using social
media sites such as Facebook to run competitions, we will see more companies
launch exciting and creative competitions via social media to make them really stand
out from their competitors.

Competitions are an excellent way of fostering new audiences on social media

channels and indeed on your own website. They provide you with an exciting way to
broadcast messages about your brand and products to a large number of potential
new customers but if using Facebook, be warned, there are very strict rules that you
must adhere to if you want to ensure that your competition is legal according to
their regulations.

How banks commit to social media marketing:

FNB is striving to remain at the forefront of social developments with progressive
marketing and advertising strategies. One of the early adopters of holistic
eMarketing in the finance sector, FNB is a proponent of social media as a way to

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reach their consumers and engage with them. FNB uses Facebook as a way to
communicate with its community of clients and fans, as well as having pages that
promote FNB sponsored events such as the FNB Whiskey Live Festival. These groups
inform consumers about promotions, events and happenings within the financial
services industry, allowing two-way communication and a high level of consumer
engagement.

In an interview with Bellinda Carriera, the Interactive Marketing Head at Standard

Bank Group, she answered the question: ‘How has Standard Bank dealt with the
communication shift presented by social media?’ as follows: “We have integrated
social media into various aspects of our marketing and communications. We
understand that social media is multifaceted and that you can’t just use it for
marketing purposes, you have to deal the full spectrum e.g. create and manage your
own platforms as well as listen and monitor your brand everywhere. We have
therefore incorporated social media marketing into our Digital Marketing team, it is
an integrated part of their digital marketing strategies for all campaigns that they are
involved in. We have then also created a specific unit to deal with Social Media
strategy, platform creation and management as well as our Online Reputation
Management Programme. This unit uses our Social Media agency as well as a large
network of contacts internally to manage the content on our social media platforms
as well as deal with any reputational and/or servicing issues in the social media
space.”

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According to Bellinda, the single, most fundamental shift that social media has
brought into business can be summed up in one word: ‘vulnerability‘. Business is no
longer in control of their messages, of their reputation and, even in some cases, of
their products and processes. Their customers have a more powerful voice and can
find each other, they have rights and they are more discerning… this power shift has
created a much more vulnerable state for businesses who need to work harder to be
relevant and whose shortcomings are being exposed every day. But vulnerability,
although often perceived as a weak condition, doesn’t have to be… Vulnerability is
one of the most important catalysts for true change, to face it requires bravery,
honesty and maturity… all of these factors are core components of a successful
social media strategy. If a business can embrace this change, learn from others’
mistakes, hire the right social media experts and be brave, honest and mature, then
social media will be the most important fundamental shift it will make this decade.

Standard Bank's executive for personal and business banking, Peter Schlebusch, took
jabs at FNB's marketing messages via social media platforms such as Twitter, while
the legal eagles rushed to file a complaint with the Advertising Standards Authority
of SA against FNB for claiming that it was the only bank to offer free online,
cellphone and telephone banking. Standard Bank then started running print adverts
making it clear that it is not only FNB that offers those services.

FNB's "Steve" radio adverts purvey a message of convincing customers to switch

bank accounts, while the group's CEO Michael Jordaan and the bank's Twitter
persona, RbJacobs, lure potential clients to cross the floor.

The aggressive strategy seems to have worked as the group has grown its customer
base by 5% in the past year.

Bankers have been pushed to be innovative by FNB's marketing that asks people,
"Does your bank do that?"

Nedbank introduced a money market investment account, and its radio advert asks
customers, "Does your investment account do that?" Another radio spot seems to

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poke fun at FNB's "Steve" radio ads, while FNB's seems to take a swipe at Absa's pay-
off line.

Jordaan has been building his profile and has over 10000 followers on Twitter.

At the other banks, CEOs have not adopted social media to the same extent.

Banks are fighting each other to increase their footprint in South Africa and in Africa.
In less than a month of Capitec Bank launching its 500th branch, Nedbank said it
added 121 branches and 389 ATMs. Its partnership with Togo-based EcoBank may
see it having a presence in more than 35 countries outside SA when it exercises its
rights option in three years.

FNB, which increased its number of EasyPlan branches to 151, recently launched a
Tanzania branch and is looking for opportunities in Angola, Nigeria and Ghana.

The most visible strategies among bankers include Absa cutting or slowing its
advances growth while focusing on reaping the most rewards from existing clients -
its non-interest income is the focus area - and managing its cost base.

FirstRand is aggressively trying to capture new clients as it grows its net interest
income more robustly.

Nedbank has been aggressive in capturing new clients. Faizal Moola, a banking
analyst at Avior Research, believes Nedbank is more focused on winning market
share in the corporate market whereas Firstrand is more focused on the retail sector,
such as unsecured lending.

Absa is seen as less hostile in its fight for market share, according to analysts, who
think it might be taking its stance from its parent company, Barclays.

Standard Bank will be the last of the big four to release its financial results. Its recent
trading update said it anticipates that normalised headline earnings for 2011 will be
about 20% higher than the previous corresponding period. The group is likely to also
benefit from retrenching more than 1000 staff members.

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Sources:

Evans, L (2010). Social Media Marketing, Strategies for Engaging in Facebook,

Twitter & Other Social Media. Que Publishing. Indianapolis.

http://www.mikesaunders.com/2011/08/02/standard-banks-approach-to-social-
media-interview/ (accessed 12 June 2012)

http://www.businesslive.co.za/southafrica/sa_markets/2012/03/03/big-banks-are-
fighting-for-market-share-on-all-fronts (accessed 12 June 2012)

http://www.digitlab.co.za/2013/01/social-banking-welcome-new-era-managing-
money/ (accessed 10 January 2013)

Reed, J (2011). Get up to Speed with Online Marketing. Prentice Hall Financial
Times. Dorchester

Stokes, R (2009). eMarketing – The Essential Guide to online Marketing, 2nd Edition.
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Waters, J (2010). The Everything Guide to Social Media. Adams Media, Avon.

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