Social media refers to a variety of typically open, two-way communication platforms that contrast sharply with the typical one-to-one, closed, ‘command and control’, but a more focused ‘engage and encourage’. Meanwhile, banks that don’t embrace social principles within their digital real estate and fail to develop APIs to optimise their experience through third-party channels will stand to lose.
Listed below are the top social media predictions, as identified by GlobalData.
Social media, like China, is where all the users are. So just as banks rush for China, they are rushing to optimise products and services for existing social media platforms. Many banks have sought to securely integrate otherwise secure site content and functionality into Facebook pages, as ASB Bank has done with its Virtual Branch and BNP Paribas did with its social media account opening.
New money management apps Cleo and Plum optimise their services for Messenger to reduce ‘friction’ in day-to-day interactions. This will increase in 2020, with more and more banking activity happening outside of proprietary banking channels. This will create new strategic questions on how banks can optimise an experience for a third-party platform it cannot control and whether third-party distribution offers a sufficient increase in reach to accept that loss of control.
Banks will need a flexible technology platform to make this partnership work as customers’ channel preferences are changing all the time. Not just the specific mix of channels used but what a “channel” fundamentally is, away from something banks control. This could be an app on a third party’s platform, a chat API for social media, or an API to populate a price comparison site.
New digital banks are truly social in their business models, be it through P2P communities of encouragement and support, trusted ratings and reviews, declining interest rates based on ‘likes,’ or offering more P2P spending comparisons. For incumbents, social will mean incorporating social APIs for pictures of payees or providing emoticons of transactions.
2020 will see the first concrete social media banking services from tech companies
Facebook applied for a patent for P2P spending back in 2013, which has just now been granted. It will allow comparison with peer groups based on friends, occupation, and location and make suggestions on how to improve spending. This is not new, Strands has long offered peer comparisons. Facebook reportedly has 124 other patents in finance-related categories, an e-money license in Lithuania, and is planning to roll out WhatsApp Pay in developing countries.
Messaging platforms will continue the move into banking. Mining messaging platform data, as WeBank and MYbank did, was central to their high-quality credit assessment. 2020 will see many of the leading US and European social media firms attempting to follow the lead of Tencent’s WeChat and become all-encompassing super-apps.
This is an edited extract from the Banking & Payments Predictions 2020 – Thematic Research report produced by GlobalData Thematic Research.
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