4 ways social media data tracking is shaping the banking industry
Social media isn't just changing the way banks communicate with customers; it's changing the way the banking industry can track trends, allowing companies to respond quickly to economic opportunities and understand potential threats by making the most of timely insights. With 72 percent of internet users on social media, the opportunities for social media marketing are significant across industries. The following are four ways that social media data is influencing the banking industry.
In a world where bankers vie for competitive advantages, social media data can track near-real-time economic trends and provide insights to those who can capture and analyze the data stream.
For instance, a study by the European Central Bank found that Twitter is an "economically significant" predictor of international stock market sentiment. The researchers found that Tweets containing phrases with the word "bullish" indicate increased returns the next day, even before Google searches can pick up on the trend. These increases were generally short-lived, with prices returning to regular levels within a few days.
Social media data can also be used to plot socioeconomic trends. Research published in PLOS One analyzed 19.6 million geo-located Tweets from across Spain to produce an accurate picture of regional unemployment.
The industry is already taking notice of these applications. In the days before the Scottish independence referendum, the Bank of England mined Tweets to monitor the likelihood of a bank run, according to Bank Underground. The organization also has a task force exploring how information from the Internet, including social media, can be used to make better, real-time economic predictions about unemployment and inflation.
2. Better and faster competitive threat analysis
Non-bank financial technology startups, also known as FinTech startups, are disrupting traditional financial services by offering fast and innovative approaches to banking, thereby wooing away customers. Social media data can offer insight into which of these products and services are gaining the most customer interest, giving banks an opportunity to invest in popular services, compete with upstarts and understand how to market offerings to customers most interested in innovative products and services. Millennials in particular are prime sources of information on social media since this generational cohort is both an increasingly important target market for banks, and an active group on social media. In fact, an astounding 63 percent of millennials say that they keep up with brands via their social networks, and 46 percent say that they "count on social media" when they buy online. The opportunities to capitalize on social media marketing abound.
3. Instantaneous feedback on marketing campaigns
MasterCard made headlines last fall when it signed a two-year partnership with Facebook to mine anonymized data in Asia Pacific markets. Overlaying that and other social media information on top of its own purchasing data, MasterCard's "Priceless Engine" can immediately detect trends and test the effectiveness of ads, according to The Daily Mail.
Consider MasterCard's first test of the engine: It promoted offers related to American pop star Justin Timberlake in Australia. Using social media data and its new technology, MasterCard was quickly able to discover that adding a red carpet to a black and white ad increased the response rate by 30 percent. An insight like this would have taken months to realize in the past, The Daily Mail reported.
Over time, MasterCard hopes to reach customers at "the zero moment of truth," presenting them with customized offers at opportune moments. For example, customized offers could make the most impact right before customers make a purchase, or when they are most receptive to offers, Sam Ahmed, group head of MasterCard marketing, Asia Pacific, said in a video.
4. Building a better 'customer experience'
It's not just ads that can be tweaked using information from social media. As mobile channels grow, banks with highly rated apps are using social media to track the popularity and effectiveness of their mobile tools and make changes as quickly as possible, according to an American Banker investigation.
The few banks that consistently score above four out of five stars on app reviews achieve this popularity by tracking everything from reviews in online application stores to customer feedback on Twitter and Facebook. High-scoring Chase combines traditional and social media analytic tools to ensure their app results in a positive customer experience, and they make changes to meet this objective when necessary, American Banker noted.
The key with social media data is to capitalize on it quickly. One of its biggest advantages is the immediacy, so banks need to act quickly on their data-driven insights to optimize the opportunities for successful social media marketing and gaining other strategic business value. Learn more about the possibilities for leveraging data and analytics in banking to create targeted offers and maximize customer satisfaction, loyalty and retention in a brief demo.