By Kariuki Ngari, Acting Head of Retail Banking, Standard Chartered AME, and Managing Director and Chief Executive Officer, Standard Chartered Kenya
Social-media platforms represent valuable frontiers that banks and financial institutions must exploit to gain market share with the Millennial and Gen Z demographic. With Millennials having been a bankable audience for a few years and with Gen Z quickly approaching, it is mission-critical that banks leverage these burgeoning platforms to cement newfound relationships with their target consumers.
Platforms including Instagram, Facebook and YouTube have seen no shortage of demand from brands across the globe for prime advertising space but also, and more importantly, opportunities to engage with their target customers and potential new ones. This trend has only grown over the years, hallmarked by the introduction of popular, up-and-coming platforms, such as TikTok, and the emergence of social-media influencers with flocks of dedicated followers.
While similarities between the banking sector and social media may seem limited, several comparisons can be drawn between the two. Chief among these is the very nature of social media, which greatly complements the values that traditional banks and fintechs (financial technology firms) strive to instill. The overarching value that is associated with social media, and which serves as the make-up of a majority of these platforms, is that of community. The same is true for progressive, emerging technologies deployed by banks and FIs, such as open banking and omnichannel banking, which are anchored on the values of community building and knowledge sharing. This paves the way for banks and FIs to make genuine connections with their target consumers while raising awareness around their product and service offerings. A sense of community and trust also plays a vital role in how banks communicate with consumers through these platforms, wherein transparency, humanity and sincerity are pertinent.
Likewise, the collaborative spirit fostered across social-media platforms, wherein partnerships and sponsorships with global brands are prevalent, parallels the banking industry’s move towards more cooperative-based efforts. These collaborations are accelerating the rate of innovation seen across the sector and are resulting in the introduction of transformative technologies. A prime example of this is Standard Chartered’s strategic collaboration with Airtel Africa, a leading provider of telecommunications and mobile money services, to provide customers with increased access to mobile financial services.
The digital appeal of social media to Millennial and Gen Z consumers has also translated into an increased appetite for digital financial solutions and, more importantly, the inherent accessibility and functionality of said solutions. Coupled with the restrictions of the COVID-19 pandemic, the digital drive is even more apparent. According to a recent Accenture study, 50 percent of consumers now interact with their banks through mobile apps or websites at least once a week, compared to 32 percent two years ago.1
Regions with an inherently young, digital-savvy population, such as Africa, pose a wealth of potential in captivating the next generation of banking consumers. The sub-Saharan region alone is responsible for more than 45 percent of mobile money payments globally, with transactions valued at about US$456 billion in 2019.
At Standard Chartered, we capitalised on this trend in Africa as we looked to meet the needs of the continent’s young, digitally savvy population with our digital bank and the subsequent introduction of SC Keyboard, a solution that allows consumers to access a variety of financial services from within any social or messaging platform without having to open the banking app.
The opportunities that lie in fostering a social-media presence are not limited to marketing and communications. These platforms also allow consumers to voice their concerns and share constructive feedback on an FI’s products and services, ultimately feeding into one of the main goals of any successful retail bank: consumer satisfaction. According to the PwC (PricewaterhouseCoopers) Banking 2020 Survey, the use of social media to monitor consumer preferences would be among the top areas of significant effort for banks over the subsequent five years.2
Traditional banks and fintechs alike have already begun to gain market share in this space. In late 2020, a US-based digital bank partnered with Charli D’Amelio, TikTok’s most-followed account with more than 100 million followers, to promote the launch of their banking application. Standard Chartered also recently partnered with social-media sensation Burna Boy to host an exclusive virtual concert live across Africa for its customers on the SC Mobile App.
The two-way functionality of social media also poses a unique opportunity for banks and FIs to address consumer concerns and demands through targeted products and services. The wealth of data and insights available on social media also allow banks and FIs to tap into specific pain points as well as identify room for growth, provided directly from their current and prospective consumers.
A key facet that holds true for the Millennial and Gen Z demographic is personalisation, which, yet again, materialises in their use of social media and increased engagement with personalised content. If banks and FIs are to cement relationships with these consumers, they must do the same with their product offerings. The PwC Banking 2020 Survey showed that allowing for increased customer choice in configuring product features, including pricing, was also among the top priorities for banks over the following five years.3
Another area in which Standard Chartered has capitalised on the social-media surge is in its launch of nexus, a proprietary banking-as-a-service (BaaS) solution. Through nexus, digital platforms and ecosystems such as e-commerce, social media or ride-hailing companies will be able to offer loans, credit cards and savings accounts—co-created with the bank—to their customers under their own brand names.
This trend does not apply to banks alone and has also been successfully adopted by tech giants and F&B (food and beverage) brands. Recent metrics show that Amazon and Netflix derived 35 percent and 60 percent of their sales, respectively, from hyper-personalised recommendations, whilst Starbucks’ incremental revenue increased threefold through hyper-personalised offer redemptions.4
It is already evident that customers place a high value on a bank’s ability to embed themselves into their personal lives. A recent survey of more than 275,000 consumers conducted by KPMG found that a company’s ability to deliver a personalised experience is directly related to its brand loyalty. What’s more, customers consistently ranked banks with great personalisation capabilities as best in class.
The trends shaping the banking industry are the same as those that are inherent to social media. Placing greater focus on personalisation, accessible solutions and relevance to the online community poses significant opportunities for incumbent and insurgent banks and FIs to grasp the trust and loyalty of Millennial and Gen Z consumers, a feat that will reap tremendous benefits if successful.
References
1 Accenture: “Banking Consumer Study: Making digital more human,” Alan McIntyre, Edwin Van der Ouderaa, Peter Kirk, Anne Bertelsen and Kieran White, December 8, 2020. (https://www.accenture.com/ae-en/insights/banking/consumer-study-making-digital-banking-more-human)
2 PwC: “Retail Banking 2020: Evolution or Revolution?” (https://www.pwc.com/gx/en/banking-capital-markets/banking-2020/assets/pwc-retail-banking-2020-evolution-or-revolution.pdf)
3 Ibid.
4 Deloitte: “The future of retail banking: The hyper-personalisation imperative,” November 2020. (https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/financial-services/deloitte-uk-hp-the-future-of-retail-banking.pdf)