Social Media and Banking

Commonwealth Bank of Australia’s (CBA) launch of Kaching for Facebook last week has been heralded as ‘the next move’ in channel strategy and demographic targeting by industry and analysts. While this is a key move in innovative channel targeting for banking, said Guy Cranswick, technology analyst at IBRS, the application programming interface and a CBA-run backend is partially innovative. “The integration or combining of brands is interesting because [it] moves the financial brand out of the centre of action to a function in the background”, he said.

Scott Bales, leader in financial services, mobile innovation, and Chief Mobile Officer at the as yet un-launched Movenbank, believes social media banking belongs to Gen Y and customers of the future and will have less appeal for baby boomers and Gen X customers of today. “I have a feeling that the move Andy [Lark] and Michael [Harte] are making now will have the same effect as the Dollarmite account... it will be a driver of life-time relationships”, he said.

Protecting personal information is vital

The partnership between banking and social media represents a change in the bargain for personal information, says Stephen Wilson, Managing Director of the Lockstep Group, which conducts strategic research and analysis on digital identity and privacy.

The challenge is that the relationship between the social media operator and its users has been opaque and one-sided, he said. “I doubt the typical [social media] user has any comprehension of the information they are gifting to operators. So when the relationship becomes three way [to include] a business like a bank, the bargain for personal information is more complicated”, he said.

Social media banking will require banks to develop new frameworks to educate customers, said Bales. Banks have been fairly good at educating customers about the protecting their information on online banking platforms, he said, but customers will need to be re-educated to protect their Facebook passwords in the same way they would protect their pins and log-in details.

Read More... at FST Media