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Social media points way forward for banking: CapGemini

In its 36-page 2014 World Banking Report, the consultancy revealed that social media was “increasingly headed in a direction” where it would become a “bona fide channel for executing transactions”.

The report claimed that institutions that failed to engage with its customers - especially the younger generation - using social media and other content-sharing sites - would be left behind as others take the lead in the market.

It said the provision of personalised and tailored information was becoming more critical, although the banks CapGemini surveyed said they were concerned about privacy, security and the popularity of any given internet-based platform when it comes to the amount of information, and what information, they provide customers.

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The report added: “The biggest barrier is a lack of clarity on the regulations governing banking activity on social media, as it raises risks across numerous functional and operational areas of the bank.”

Adviser view

Chris Budd, managing director of Bristol-based Ovation Finance, said: “Banks will not lose people if they do not engage them using social media - people still need a bank account.

“But people who need advice will not get that from a bank, unless they are very wealthy. Our own clients do not want social media engagement: they want face-to-face advice from us.

“The regulator has made being an IFA more expensive, and the implication is that it is not cost-effective to service people below a certain minimum wealth. That’s why some advisers and providers are developing internet-based means of delivering low-cost guidance, although the lines between advice and generic guidance can be blurred. It is a regulatory minefield.”