The world has become smaller with the advent of e-communication means. Social media has made that world even smaller, connecting people across the globe. Many companies have begun to use the social media to expand their market, promote their products and understand consumer behavior. Retailers are widely taking advantage of the virtual society to reach out to the customers of the 21st century. Many apps have been created to facilitate the same. It’s like in the real world businessmen usually prefer to locate their shops in the crowded parts of the city, where they can sell their products. The financial sector is yet to set foot into the scene. The delay is causing the sector to lose customers. It is still too primitive in its approach and continues to run on the concept of “confidentiality”. The social networking sites clearly give the impression to be very explicit. And, this is what precisely threatens the financial companies.
The other difficulty, besides lack of secrecy, is the continuous evolvement of the social media. It is a bit tough on the part of the financial institutions to change the schemes that frequently. They require a more fixed system to deduce the equilibrium rate of interest and understand the optimal amount of loans to be given out. Separate software needs to be developed for the banks to keep up with the pace of technological progress. Also, some amount of government intervention has to be allowed by the social network users to prevent the banks from toppling down suddenly. The positive aspect of that is the cyber crime rate will be reduced.
Additionally, the integration of social media and mobile technology has made the expectation of 24×7 services sound very natural. People are increasingly falling into the habit of availing anything anywhere at the press of a button. The isolation of the banking segment from the mobile virtual society is getting highlighted as a big disadvantage to the gen-x. The same gen-x constitutes the customers of the financial institutions. So, alternatives available on the internet will be more preferable since banks still don’t allow internet banking by using the logins to social-network accounts.
Karthik Nagendra of Outsourcing Center reports, “Australia’s Common Wealth Bank has created an app that allows banking within Facebook . Using the application, account holders can make peer-to-peer payments to friends on Facebook by using their mobile numbers or email IDs. Users can make payments for Facebook events or request payments from friends. In addition, the application allows customers to check their account balance and transaction history and transfer money between accounts from within Facebook.”
The social media can help the financial sector not only by providing a large consumer-base, but also by helping in direct interaction with the customers, obtaining their feedback, understanding market trends, estimating the right rates of interest, developing new schemes and making the banking system more user-friendly. It is in the best interest of the banks to embrace the demands of the changing times wholeheartedly and enter the social media. The first one to accept will be the one to gain.
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