SOCIAL MEDIA to boast financial services in PNG: 3 Important Business Lesson

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"Unique opportunities exist for social media to improve performance within consumer financial services in areas such as insurance, credit accounts, loans and personal investment"

We stand on a precise, stepping into a new era, a time of enormous changes and uncertainty characterized by emergence of a truly borderless, interconnected global economy. Dr. Robert Rosen founder of Healthy Companies International described 21^st century economy as being the world’s youngest economy, fueled by the spread of free markets and democracy around the world.

Ours is a unique place in history.  One that had a brief taste of the Industrial Revolution. Then  to the wake of an intercourse with the powerful grips of the 21^st century Electronic Information Revolution and Global Economic Interdependence.   A dynamic and ongoing process, globalization, involves   the integration of markets enabling individuals and corporations to reach the world farther, faster, deeper and cheaper. We live in a networked, interconnected world with computer device embedded in telephones, cars, televisions and household appliances. The internet and electronic commerce are dramatically changing how we do business.  

As in all other business sectors, unique opportunities exist for social media to improve performance within consumer financial services in areas such as insurance, credit accounts, loans and personal investment.

Financial products are tangible and often complex; consumers find it difficult to make comparisons across offerings, even within the same category, and often seek out an advice (either professional or knowledgeable acquaintances). In the wake of technological revolution, social media provides a way for consumers to learn from peers and ask questions in a safe environment.

Social technologies cans also provide organizations to have valuable insights into consumer behavior and attitudes that they can use to refine products and branding. Consumers are increasingly willing to interact with financial service providers who have online presence on the especially on popular social sites like Facebook, Twitter, Google+, LinkedIn, YouTube, Pinterest, Delicious and other less popular ones. 

Getting customer insights from social media. 

Social media can be great tool for financial institutions anticipate future customer needs. Demand for many financial products is tightly bound to significant life events such as buying a home, switching job or customary obligations. Social media can provide a window into these events, allowing sales representatives and advisors to engage customers early in their financial journey and keep track of life events to identify cross-selling opportunities.

Potential benefits of social technology as well as key challenges are discussed.

     Enterprise collaboration

There is an even larger opportunity for social technologies to create value for financial companies through enterprise collaboration-using social technologies for internal communications and knowledge sharing.  

Large number of banking and insurance company employees is interaction workers whose jobs involve independent judgment and direct interaction with other employees. They are employed in complex organizations with network of branches, multinational operations, and multiple lines of business, and have much to gain through improved communications and collaboration.

2 Customer information and fraud detection  

Most social technology implementation in the sector so far has been in the marketing and customer service, usually using well established social platforms to reach consumers. According to Digicel statistics, the site is set to become more entrenched in our daily lives.  The number of registered PNG Facebook users online currently hovers around 65,000.

Others such as Twitter, LinkedIn, and YouTube are also common in PNG, though not that popular.

Some of the most sophisticate financial institutions globally have begun to explore social media as a source of consumer data and information that were previously not available-such as age, education attainment, and current or past employers –can be used to build a more accurate risk profile to calculate credit scores and prices insurance premiums. Although only a few international firms are using social technologies for this purpose, it has significant potential and will likely be an aspect of many firms’ social technology strategies in the future and PNG is not immune to global ICT revolution.

The largest opportunities for consumer-facing financial institutions are in the customer insights and sales and marketing.

Social technology can enhance fraud detection well as decrease incentives for fraud by tracking connections in social media.

3      Other areas where potential benefits exist

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Product development teams can monitor digital communities where customers share

opinions and views on products and services, and they can use this information to shape the

direction of product development.

Operations and distributions represent a significant share of total cost for consumer

banking and insurance companies. Social technologies can help improve collaboration (and

raise productivity) across large, geographical dispersed operational networks.    

Sales and marketing constitutes a significant cost for financial institutions. Institutions

spend hundreds of kina to acquire each new customer. Social technologies have greater

potential to make this spending more productive, particularly for customer acquisition, and

to reach a large number of customers and potential customers in less intrusive and more

effective way.   

Key challenges

There are challenges for financial institutions associated with the rise of the social economy. Regulations and privacy, not being a center of discussion today, may become issues to be talked about. These are ongoing issues in the global financial fronts. Issues requiring management, and social technologies can have disruptive effects including the emergence of new players that provide their service on social platforms.

Social media complicate compliance; companies must document how they comply with regulations that govern what they can say about their products or how they solicit customers, whether the customer comes to sales office or visit a company social media page. Often regulations inhibit use of social media; in insurance for example, only licensed agents are allowed to approach customers. Also publication of insurance and banking services content is strictly regulated and often requires lengthy disclosures about investment risks. Players in this market   will need to invest in technology solutions

and processes that enable them to use social technologies whilst complying with relevant regulations.

Finally, many financial service companies may face organizational barriers that could inhibit productive use of social technologies.    Given their size and complex structures, large banking and insurance players may find it challenging to shift quickly to new operational models that would let them capture the productivity benefits that social media make possible.

Social technology is here to stay. It is where people congregate, share information and, increasingly, consider and execute purchases. Social technologies have proven their value in improving organizational performance. Financial services have enormous opportunity to reap the benefits of social technologies, but will need to invest in the talent and capabilities to do so. It will be money well spent.