Social Networking and banking in China

Written by Zennon Kapron || 21 Sep 2011

This week we are attending the Sibos Toronto event which is put on by SWIFT. The event is arguably the largest financial services event in the world, bringing together banks, technology vendors and industry thought leaders.

One of the key topics running throughout the conference is the concept of ‘big data’ and social networking. Clearly the industry is a bit behind in its thinking on this as most banks have social networking accounts and presences, but most aren't really using them effectively although everyone realises that the amount and richness of social networking data is too big to ignore, the question is how to analyse and use it.

In a very simple scenario that was discussed during the week, banks can ‘listen’ to data to understand retail customer feedback on how a bank is doing in the market. This approach is very rudimentary as typically customers will complain about a bank online, but not necessarily praise a bank.

A more sophisticated solution would be using social media data to predict life events and better serve customers with a package of products and services to meet their needs. One of the presenters gave the example that a bank might look at a customer’s credit card statement and see hospital charges, purchases at store for infant clothing and some home renovation charges.

Pulling that data together, it would seem that the customer is about to have a child. If the bank understood this, they could then suggest products and services focused on a customer who would be in that situation (e.g. a college saving plan for the child).

In China, social networking is, in certain respects, even more advanced than the Western world. Chinese youth today are increasingly communicating over renren and weibo more than they are in person and the % of the population using social networking in China is increasing rapidly.

Chinese banks are also faced with many of the same challenges as their western counterparts. Although the younger generation that is using these online platforms tends to be less wealthy than the older generation, so less profitable for the banks, they increasingly represent the ‘new normal’ in banking customers. More innovative banks like China Merchants Bank are starting to understand this and cater to this increasingly online and socially-networked crowd.

Also, you might think that the use of social networks is limited to retail banking, but it’s actually not. A recent survey by MHP Communications, a UK PR firm, noted an equity trader who had requested access to Twitter in order to be able to speak to his clients on a more real time basis. When you start to see these services being used on the trading floor, where they would typically be shunned, it’s a clear sign of their growing importance.

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