Through Kariuki ngari, Acting Director of Retail Banking, Standard Chartered AME, and Managing Director and CEO, Standard Chartered Kenya
To engage this newly bankable audience, financial service providers need to overhaul targeting strategies, supported by two-way communications and tailored offers.
In an ever-changing world, banks and financial institutions (FIs) are continually challenged to keep up with changing consumer behaviors, changing channels and the dissipation of traditional outlets. Social media is a growing, and yet the most timely, challenge facing banks and financial institutions, along with the ever-changing preferences of Generation Z (Gen Z) consumers. To engage this newly bankable audience, financial service providers must undergo an overhaul of targeting strategies, supported by two-way communications and tailored offers.
Social media platforms represent valuable frontiers that banks and financial institutions must exploit to gain market share with millennials and millennials. Millennials have been a bankable audience for a few years and Gen Z approaching quickly, it is essential that banks leverage these growing platforms to solidify new relationships with their target consumers.
Platforms such as Instagram, Facebook and YouTube have not lacked in demand from brands around the world for top notch advertising space, but also, and more importantly, opportunities to engage with their target customers. and new potentials. This trend has only grown over the years, marked by the introduction of popular and promising platforms, such as TikTok, and the emergence of social media influencers with herds of dedicated followers.
While the similarities between banking and social media may seem limited, there are several comparisons that 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 companies) strive to instill. The primary value associated with social media, and which constitutes the makeup of the majority of these platforms, is that of the community. The same goes for emerging and progressive technologies deployed by banks and FIs, such as open banking and omnichannel banking, which are rooted in the values of community development and knowledge sharing. This paves the way for banks and financial institutions to establish real connections with their target consumers while increasing awareness of 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, where transparency, humanity and sincerity are relevant.
Likewise, the spirit of collaboration fostered on social media platforms, where partnerships and sponsorships with global brands are prevalent, parallels the shift in the banking industry towards more cooperative efforts. These collaborations are accelerating the pace of innovation observed across the sector and resulting in the introduction of transformative technologies. A prime example 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 Millennials and Gen Z consumers has also translated into an increased appetite for digital financial solutions and, more importantly, the inherent accessibility and functionality of those solutions. Coupled with the restrictions of the COVID-19 pandemic, the digital reader is even more apparent. According to a recent Accent study, 50% of consumers now interact with their banks through mobile apps or websites at least once a week, up from 32% two years ago.1
Regions with an inherently young and digitally savvy population, like Africa, offer tremendous potential to captivate the next generation of banking consumers. The sub-Saharan region alone is responsible for over 45% of mobile money payments globally, with transactions valued at around US $ 456 billion in 2019.
At Standard Chartered, we have capitalized on this trend in Africa as we sought to meet the needs of the young and informed population of the continent with our digital banking and the subsequent introduction of SC Keyboard, a solution that enables consumers to access to a variety of financial services. from any social or messaging platform without having to open the banking app.
The opportunities of promoting a social media presence aren’t limited to marketing and communications. These platforms also allow consumers to voice concerns and share constructive feedback about an FI’s products and services, ultimately fueling one of the primary goals of any successful retail bank: consumer satisfaction. According to PwC (PricewaterhouseCoopers) Banking Survey 2020, using social media to monitor consumer preferences would be one of the major areas of significant effort for banks over the next five years.2
Traditional banks and fintechs have already started 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 over 100 million subscribers, to promote the launch of their banking app. Standard Chartered also recently partnered with social media sensation Burna Boy to host an exclusive live virtual concert across Africa for its clients on the SC mobile app.
The two-way functionality of social media also offers banks and FIs a unique opportunity to respond to consumer concerns and demands through targeted products and services. The wealth of data and information available on social media also allows banks and FIs to tap specific hotspots as well as identify growth opportunities, provided directly by their current and potential consumers.
A key facet that is true for Millennials and Gen Zers is personalization, which, again, materializes in their use of social media and increased engagement with personalized content. If banks and FIs are to cement their relationships with these consumers, they must do the same with their product offerings. the PwC Bank survey 2020 showed that giving customers more choice in configuring product features, including pricing, was also a top priority for banks over the next five years.3
Another area where Standard Chartered has capitalized on the rise of social media is the launch of nexus, a proprietary bank as a service (BaaS) solution. Thanks to Nexus, digital platforms and ecosystems such as e-commerce, social media or ridesharing companies will be able to offer loans, credit cards and savings accounts, co-created with the bank, to their customers under their own brand.
This trend doesn’t just apply to banks and has also been successfully embraced by tech giants and F&B (food and beverage) brands. Recent metrics show that Amazon and Netflix made 35% and 60% of their sales, respectively, from hyper-personalized recommendations, while Starbucks’ incremental revenue tripled from hyper-personalized offer exchanges.4
It is already evident that customers place great importance on a bank’s ability to fit into their personal lives. A recent poll of more than 275,000 consumers conducted by KPMG, a company’s ability to deliver a personalized experience is directly linked to its brand loyalty. Additionally, customers consistently rank banks with excellent personalization capabilities as the best in their class.
The trends shaping the banking industry are the same as those inherent in social media. A greater focus on personalization, accessible solutions, and relevance to the online community offers historic and insurgent banks and financial institutions significant opportunities to capture the trust and loyalty of millennials and millennials. Z, an achievement which if successful will reap enormous benefits.
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)
4 Deloitte: “The Future of Retail Banking: The Imperative of Hyper-personalization”, November 2020. (https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/financial-services/deloitte-uk-hp-the-future-of-retail-banking.pdf)