As social media gains ground, it becomes an integral part of corporate strategies. The first to jump on the bandwagon were the marketing and sales functions. Established brand presence on social media channels and engaged with the customers directly. However, some of them chose to outsource the management of Twitter Handles and Facebook pages and lost the plot. Running campaigns and promotions become a part of the marketing plans and to an extent budgets. The future possibilities look like Social Banking, with potentially unlimited scope for innovation in the financials space.
Getting operations on social media is a new experiment attempted by Kotak Mahindra Bank. The code name Kotak Jifi lets you approach the bank to open an account through Facebook or Twitter. Other channels will get added as they gain momentum I guess. The formalities to open the account still need to be followed. It’s a regularity requirement – and no one can do anything about it. You can give an account opening request online. Do some basic operations like checking your balance using your social media IDs.
How safe are these? Do you really need these channels for banking, when your e-mail is as much on your phone as your social media app? Only time will tell when a certain number of people have tested the function. As I always say these new experiments are new for both the customer and the company. No one can predict the outcome.
Social Network Reach for Banks
How this helps the bank is that it lets them reach your social network. Remember Kotak Mahindra is a late entrant in the banking space. It needs to do something innovative to entice the customers who are either with the other established banks or reaching out to new first-time customers. By going social it is reaching out to a younger population that may be opening its first account. Youngsters who have just started earning or are on their way to earning their first income can be tapped easily on social networks.
People usually tend to stick with the bank they have an account with. Unless the bank really works hard to lose them.
Highlights of Social Banking
Now from the product perspective, I read through their FAQs and the fine print document. Here are some highlights:
- Accounts can be opened only through social media ID. As of now is invite-only and available in limited cities. This means the product has been made exclusively for people who are active on social media. Indicating this has become a key element in customer profiles. Invite only and limited cities part will change as they test and fine-tune the product and expand or drop the offering. It’s like a beta launch.
- It is a Zero Balance but also a zero-interest account. You do need to put in some funds, to begin with that you can use later. Above a certain amount, you can shift funds to a fixed deposit. But if you keep it in a savings account you get no interest. The minimum interest you get on other products is 4%. The bank does not lose anything if you do not keep any funds in it. But you lose the interest component for the idle funds lying in the bank. So benefits those who spend a lot and frequently meet zero balance.
- Many transactions that come for free normally are charged. For e.g. only 10 check leaves are free. You pay from the 11th onwards or fees for cash transactions at the branches. But then give and take some features/charges. This may not be a real differentiator in terms of a banking product.
- Social currency: A key feature of social media is that it lets you broadcast whatever you do to your network instantly. So every time you buy something using your account, your network knows hence increasing their probability of buying the same things. This is where the bank can tie up with many online brands for co-promotion and in the process leverage each other customers. The social media currency would be the equivalent of credit card / frequent flier points in the social economy. I see that they allow trading of this currency too. Again a feature I would look out for to see how it is adopted by the customers.
Security on Social Media Platforms
Should I be worried about the security bit – is my data safe on social media platforms? Well, I would not worry much about it because the data is eventually stored in some server that I have no clue where it is located. If a hacker decides to locate(s) he would locate the server. Irrespective of whether it is a bank or a social media platform server. I trust that both entities take good measures to secure my data. Human fraud again can happen in any of them with equal probability.
Guess there is scope for plenty of Innovation in the Financial Space
Now, I will be keen to see how they bring out specialized features for ‘Social Media Users Only’ customers. As of now they only use these channels to reach out to new customers. Provide the existing banking facilities through the additional medium of social media accounts. Fun would be when they bring out such innovative features that people who are not on social media will jump on to use these features. Let us look forward to innovations in the financial space sooner than later, beneficial to the common man.
Till then, sit back and enjoy the conversations…