Should banks use social networks?
With banks struggling with rising mortgage and credit card defaults it is not a big surprise that some of them have turned to social networks as a way to attract younger consumers.
Information Week recently mentioned how Netherlands-based bank ING Direct has created their own social networking site called MoveOutMoveUp.com , aimed at first-time home buyers, with community-oriented forums and advice pages under categories like
“Oh Baby!” (for new parents) and “Moving in Together,” for prospective cohabitants.
Fiserv , which supplies back-end bill-payment and transaction technology to financial institutions, took a different approach that ING Direct but launching a Facebook application called My Money, which allows Facebook users to carry out basic banking tasks such as paying bills, making transfers, and checking balances.
Social networks are a great way for a bank to reach out to a younger generation. As Richard Jones, Fiserv’s executive VP and CIO put it:
“Our credit unions have a problem. The average age of their customer is now 47 years old and rising. If they want to attract these Generation Y consumers, they have to go where they are, and Facebook is a clear place to find them.”
What I like about Fiserv’s Facebook approach is that their application provides a service that Facebook users can and will use. Facebook users sign up directly for MyMoney if their financial institution supports the application. If it doesn’t, they can submit a request that Fiserv forwards to the credit union or bank. So far 36 credit unions have started supporting MyMoney; Fiserv plans to launch a wider marketing campaign for the application in the fall, to go after its 2,200 member credit unions. Beyond that, the company plans to market the application more widely to its thousands of bank customers.
More than 1,000 Facebook users have downloaded the application, said Fiserv product manager David Reed. “It’s probably exceeded our expectations,” he said. “We did not think it’d take off that quickly.”
Several studies have shown that the younger, Internet-savvy customers of banks prefer to use online-banking rather than have physically go to a branch. “There are college kids who haven’t been inside a bank,” John Zollinger, VP of corporate banking for Whitney Bank.
Finding creating applications that fulfill a need for customers is what successful companies are now doing on Facebook. They have moved past just creating a Facebook application, now they are looking to attract new customers and solve problems that existing customers have with Facebook 2.0 applications.
Regards,
nitin@maximumhit.com
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