European retail banks are still hesitating to fully integrate social media into their digital marketing strategies. That’s according to a new report from Ovum. Asia-Pacific and American retail banks are spearheading approaches to social media engagement, believing it to be disruptor of the way in which they interact with their customers. Although their European counterparts are lagging far behind, Ovum expects this to change significantly in the next three years.

Though typically conservative, banks are looking to adopt strategies that will allow them to catch up with current trends and demographics. In addition, as the economic environment is improving and the demand for financial services is increasing, they need to focus on enhancing customer experience, which will translate into increased sales and more effective servicing.

Jaroslaw Knapik, senior analyst within Ovum's Financial Services Technology practice, comments: “Customer needs are changing – this fact is uncontestable. It is now almost impossible to ignore social media. It transcends geographic boundaries, encouraging interaction and collaboration among disparate users united by a common cause, belief, issue, or interest. It provides a powerful marketing platform for understanding and engaging with customers, allowing banks to improve sales and profitability.”

He adds: “European banks in particular find themselves at the back of an underperforming class when it comes to social media engagement, voicing concerns over data security, ensuring data privacy, as well as the potential reputational damage that can come from a mismanaged communication.”

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