Retail banks continue to leave social media low on the agenda as a tool for engaging with customers, despite fragile consumer confidence, and are putting themselves in a dangerous position, reports Ovum.

Datamonitor’s technology arm found in a report that 60 per cent of the world’s retail banks have no plans in place to use social media in any way – currently just six per cent of retail banks use social media to deal with customer queries, and only a further one per cent can see themselves using it in this way between 2011 and the end of 2012.

Social media is even being disregarded as a marketing tool, with only 14 per cent of respondents using it for this purpose, and 12 per cent planning to use it to promote their business by the end of next year.

“We feel that this attitude from retail banks towards social media is a major issue in an era of aggressive competition,” commented Ovum analyst, Martha Bennett. “The banks without a social media strategy are being short-sighted and are placing themselves in a dangerous and vulnerable position compared to competitors who have realised that social media can and must play an intrinsic role in their business.”

First Direct in the UK, Citi, Bank of America and Wells Fargo in the US, and Rabobank in the Netherlands are using social media, although they admit they are still finding their way and their strategy is work in progress.

“These banks have been justifiably held up as industry leaders for their use of social media, however there is not universal acceptance that social media is ether important or suitable for retail banks.”

Bennett said consumers are not averse to being contacted in this way, or using it to make enquiries. She believes social media is a way of rebuilding the confidence in the sector that has been lost.

Virgin Media Business has also conducted research into social media, fining that Britain’s high street banks are being tweeted around 180 times per day on average.
“Britain’s biggest banks have made a lot of progress over the last few years, significantly improving the experience that customers get when phoning their call centres,” said Phil Stewart, customer service director. “Despite more than five million people in the UK signing up to Twitter, we found that most banks aren’t engaging with customers on the site.

“Whether you like it or not, social networking sites seem to be becoming the new sounding board for complaints about companies. In fact, research by the Institute of Customer Service recently found that nearly a tenth of Brits expect businesses to have a presence on Twitter.”

Stewart added that with 55 per cent of people in the UK expecting a response to an online complaint within 24 hours, “it’s a challenge that the banks need to take up”.

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