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SOCIAL MEDIA – THE POWER UNLEASHED
The origin of social media extends beyond the Internet. When Tim Burners Lee created the Web 2.0, he wanted the content to be instantly and equally available to everyone and he also wanted everyone to be able to link to that content without restrictions. This vision of the Web is now a reality and it has manifested itself in ways that Tim Burners Lee never imagined. Many of the Internet savvy consumers particularly in the 18-30 age bracket are as comfortable with social networking and blogging as they are with using the telephone or writing an email.
Social networks are today the main platform for sharing content and have increasingly become the means to manage social relationships. Consequently social networks are grabbing ever more of our internet time and so brands and content producers must be active inside them. Large Social Networks have near unlimited inventory. For advertisers to cut-through they need to be relevant and ideally work inside the network, by bringing users to branded pages, applications or connecting them with content. The environment is now perfect for creating and distributing branded content. Consumers expect to see and are happy to share it if the content is good. Brands are part of the modern fabric of society and have as much legitimacy as consumers to create and share content. In the future web distributed content could potentially become another revenue stream for existing content producers and brands as video sites begin to cut the advertising revenue with up loaders.
Banking in India has a long and elaborate history of more than 200 years. The beginning of this industry can be traced back to 1786, when the country’s first bank, Bank of Bengal, was established. But the industry changed rapidly and drastically, after the nationalization of banks in 1969. As a result, the public sector banks began experiencing numerous positive changes and enormous growth. Then came the much-talked-about liberalization and economic reforms that allowed banks to explore new business opportunities and not just remain constrained to generating revenues from mere borrowing and lending. This provided the Indian banking scenario a remarkable facelift that only continues to get better with time. However, despite the foray of foreign banks in the country, nationalized banks continue to be biggest lenders in the country. This is primarily due to the size of the banks and the penetration of the networks. Features of the Banking Industry at a Glance The banking industry is highly competitive. There is tremendous growth potential in the banking sector, because firstly, the rural masses have the habit of saving and spending only when needed. Secondly, their small credit requirements for agriculture, cottage industry and marriages etc. The banking sector is in a race to see who can offer both the best and fastest services, but this also causes banks to experience a lower ROA. In the long run, we're likely to see more consolidation in the banking industry. Larger banks would prefer to take over or merge with another bank rather than spend the money to market and advertise to people. As the economy is picking up, the rise in capital expenditure will result in growth for corporate sector lending.The public sector bank stocks look more promising than their private sector peers as they have lower valuations at the moment. Also, they will benefit by the government's efforts to reduce the fiscal deficit. According to researches carried out by the Reserve Bank of India (RBI), on an all India basis, 59 per cent of the adult population in the country has bank accounts and 41 per cent don’t. In rural areas, the coverage of banks is 39 per cent, against 60 per Page
cent in urban areas. There is only one bank for a population of 13000.
India - Strategic Map
Stan C HSBC ICICI Bank Karur Vysya HDFC IndusInd Bank Vysya Bank State Bank of India Bank of Baroda Bank of India PNB Andhra Bank Canara Bank Co-operative Banks
Service Quality Low
Regional Geographical Spread
INDUSTRY LIFE CYCLE:
• There are primarily four stages in the life cycle – – – – Introduction Growth Maturity Decline The Industry is currently in the Growth Phase with a number of players entering the market and the existing players expanding in the current market. The industry is soon expected to consolidate with the big players taking over.
Porter’s 5 forces Analysis
1. Threat of New Entrants - The average person can't come along and start up a bank, but there are services, such as internet bill payment, on which entrepreneurs can capitalize. Banks are fearful of being squeezed out of the payments business, because it is a good source of fee-based revenue. Another trend that poses a threat is companies offering other financial services.
2. Power of Suppliers - The suppliers of capital might not pose a big threat, but the threat of suppliers luring away human capital does. If a talented individual is working in a smaller regional bank, there is the chance that person will be enticed away by bigger banks, investment firms, etc.
3. Power of Buyers - The individual doesn't pose much of a threat to the banking industry, but one major factor affecting the power of buyers is relatively high switching costs. If a person has a mortgage, car loan, credit card, checking account and mutual funds with one particular bank, it can be extremely tough for that person to switch to another bank. In an attempt to lure in customers, banks try to lower the price of switching, but many people would still rather stick with their current bank. Financial institutions - by offering better exchange rates, more services, and exposure to foreign capital markets - work extremely hard to get high-margin corporate clients.
4. Availability of Substitutes - There are plenty of substitutes in the banking industry. Banks offer a suite of services over and above taking deposits and lending money, but whether it is insurance, mutual funds or fixed income securities, chances are there is a non-banking financial services company that can offer similar services. On the lending side of the business, banks are seeing competition rise from unconventional companies. Sony (NYSE: SNE), General Motors (NYSE:GM) and Microsoft all offer preferred financing to customers who buy big ticket items. If car companies are offering 0% financing, why would anyone want to get a car loan from the bank and pay 5-10% interest?
5. Competitive Rivalry - The banking industry is highly competitive. The financial services industry has been around for hundreds of years, and just about everyone who needs banking services already has them. Because of this, banks must attempt to lure clients away from competitor banks. They do this by offering lower financing, preferred rates and investment services. The banking sector is in a race to see who can offer both the best and fastest services, but this also causes banks to experience a lower ROA. They then have an incentive to take on high-risk projects. In the long run, we're likely to see more consolidation in the banking industry. Larger banks would prefer to take over or merge with another bank rather than spend the money to market and advertise to people.
Some of the major reasons for the significant growth of the banking industry of India : Consolidation: Achieving Strategic Balance Retail Renaissance: Bonding with Customers The Offshoring Decision Transforming the Finance Function Monitoring Credit Quality Achieving Comprehensive Governance of Risk Management Corporate Governance
THE INDIA SCENARIO - A COMPARISON
Only one Indian Bank in the top 100 Banks in the world India's best and brightest, the SBI, is roughly one-tenth the size of the world's biggest bank - Citigroup Six Chinese banks feature among the top 25 Asian banks while India has only two representatives - SBI and ICICI Bank. Similarly, SBI's consolidated pre-tax profit is $1.9 billion against Citigroup's $29 billion, Bank of America's $25 billion and HSBC's $21 billion The one area where Indian banks are able to compete with their global peers is their return on assets (RoA). Among big Indian banks, ICICI Bank, PNB, Canara Bank and HDFC Bank have a return on assets of over 1 per cent return, while SBI's return on assets is 0.89 per cent. Among Indian banks, HDFC Bank has the highest return on assets -- 1.71 per cent. This is lower than that of Citigroup (1.97 per cent) but much better than the RoA of HSBC (1.40 per cent). Our banks are small but efficient. However, if the economy has to grow at over 8 per cent, they must build the scale. India Inc has already announced over Rs 650,000 crore (Rs 6,500 billion) of investment plans. Without the scale, local banks can't possibly support this growth story.
BACKGROUND OF THE PROJECT
Exploring presence of Banks into social media constituting of networking sites, blogs, online communities, micro sites.
Around 52 million active internet users in India. HDFC bank and ICICI bank among the top 5 sites in India.
54 % of the active users in India in the age group of 24 to 32
1) To identify, explore and understand the Indian youth’s use and expectations of social networking sites and social media in India 2) To extract the view of respondent about the presence of corporate /brands (specifically BFSI sector) in social media 3) Determine the factors that are likely to influence the consumer purchase decision viz a viz social networking sites. 4) To identify what Gen X expects from their bank or financial service provider. 5) To identify best practices in the industry( globally as well as locally) on online presence in social media space 6) To identify opinion makers, online forums and touch points 7) Analyze the future potential of such media for the promotions of products & services, primarily banking.
It is difficult to use one word to describe Gen X. But given the fact that about 25 % of our population falls in this category and have disposable incomes at their command make Gen X an attractive target for any BFS provider. Through this project we would try to understand the attitude of Gen Xs towards banking, their perception and their financial decision making habits. We would also try to get a fair picture of their expectations from a bank, existing gaps and how those gaps can be bridged.
The findings from this research would be useful for various Banks. Based on this study, these Banks could identify the best way to engage with the target group online and build a long lasting relationship.
LIMITATIONS OF THE STUDY
1. It might be possible that the list of factors that influence the consumer purchase decisions might not be exhaustive. 2. The target group for the research is between the age group of 22 to 40.The respondents consists of graduates, Post graduates in various fields such as management, pharmacy , business men, working class etc . The survey may not be able to cover all segments proportionately.
The research is based on Qualitative approach. The process followed is as follows:
1) Draw up a questionnaire and test which gives an understanding of youth’s perception with respect to the following parameters.
Personalization – Prefer sites where you can customize your content? Usability – Flashy sites or the ones which gives content in minimum time? Incentives – Do you require little something for your time? Reviews – How credible are they? Do you go by the number of reviews? Exclusivity – Like sites that are geeky and make you feel you are in the know how? Reasons to be on SNS – networking, entertainment, purchase decisions? Buying phase – Use online for searching for options, deciding upon your choice or buying?
Complaints – Do you use online portals to complain? Why and When? Banking – Choice of bank, involvement in financial matters, awareness levels Financial decisions – Influencers online? Trust a brand or known person or personal choice?
2) Pilot Survey
An initial Questionnaire is designed in order to obtain further information for designing the INDEX questionnaire and also test the appropriateness of some questions, the questionnaire is administered to a few respondents. The choice of respondents is such that it included a mix of age, educational background and other demographic variables. Some parameters that are evaluated during the pilot survey are as follows:
Whether the list of variables generated was exhaustive. Redundancies, if any.
The ease of answering questions & proper comprehension. 3) Conduct in-depth interviews with participants from the target group.
4) Prepare a report with analysis and recommendations.
Internet users aged between 20 and 45. Respondents from Mumbai–mix of 1) Socio-economic groups 2) Employment status 3) Gender 4) Educational qualification Graduates Post Graduates
Expectations from a bank
For some customer service is of prime importance from a bank, for some others it is the trusted name that matters o “Higher returns vs. customer service – I would go for the latter” o “Given same facilities would go for a top of mind brand.”
Customers want to be treated as special persons, someone the bank seeks out and listens to. o “I prefer having a personal relationship with the bank. What if something goes wrong” o “More than as a bank I would like to know a brand through a person at my level and who is accessible to me .I am not worried about the bigger picture.”
Convenience matters. Long drawn out processes don’t work with most people. o “I go with a bank that has more no of ATMs” o “I prefer a bank where the Relationship Manager is more empowered and knows in and out of what the bank can offer me”. o “Speed of transaction matters a lot to me.” o “ Have chosen ICICI. Because it is more internet friendly.”
Influence for choosing a bank
partly on net and partly on references
Brand site as well as 3rd party site
The decision of choosing a bank influenced mostly by word of mouth or familiarity o “I am continuing with the bank that my dad has been using” o “Have been banking with SBI for long. It feels safe. They know what is best for us”
Power of default. o o “All my transactions through company provided account.” “Have not felt the need to open any other account.”
Opinion makers for investment decisions
Working people have better know –how of what they want to know and where to seek information from o “Financial decisions depends on newspaper, few sites like
moneycontrol.com” o “Have regular sites like Bloomberg, CNN, money control. o “They give me exactly what I want .It has organized, relevant interesting
information for me”
o “Investments traditionally in RDs , FDs, Insurance etc. I go to net and check the rates and see whether the bank is of a decent category in terms of
Dependence of youth on internet for banking
Net Banking Traditional Banking
Some find it convenient to do online transactions whereas some find it to be insecure o “I have not visited my bank in past 6 years. Everything is done online” o “I had an experience with a bank (can’t remember the name) for which there was a fake site o “Ultimately I am dealing with the company whether it be online or offline.” o “In India there are lot of people who are skeptical about using plastic money forget dealing with virtual money”
How active and receptive are youth online
Most of them look for interesting information online which may or may not be essential to them
Need to see specific content which has some value for the user o “I like to read relevant information; moreover I like to choose my relevant information”
Would use online mainly for weighing options and mainly to gather facts rather than opinions. o “If it is a cliché like what other sites give feels it’s not worth the time”
People mostly collect information online but purchase offering from a real human being
With respect to banking, people less interested in reading through the website, prefers something more interactive and something which gives them results.
A brand name attached makes a difference for any discussion forum or not ?
Youth feels that brands could have discussion forums but primary criteria is the solution and the content that the site provides o “Brand has to be a solution provider in some form”. o ”Does not influence my decision but helps me build a relationship with the brand” o “Would be nice if they give me information about things happening locally.”
Primary source of information online
User reviews seem to be more sought after than an expert opinion or a brand talking
o “It’s more credible when someone like you and me gives you advice, rather than a brand trying to promote itself.”
o “I compare various sites for reviews. But final decision only after touching and feeling the product:” o “There are times when I have bought the product in spite of the bad reviews because I have trust in the brand.. o “I don’t mind going through brand or expert opinions. There is nothing wrong in having more options.”
If it is a first time purchase, people want the assurance that others have liked the product or service.
Once they are familiar with the brand, they would listen to the experts or the brand itself
Some sites like Gadget Guru , GSM Arena are referred to based on previous experience and credibility. o “I know that 99 % of the time, reviews they give are right” o “Will make a difference to me when an icon talks who is the face of the company”
Most of them are on networking sites to keep in touch and be updated with what is happening with others
Matter of interest to most of them is on setting profile and joining communities Although ads present on these sites don’t make a difference to them , they don’t find it to be irritating or intrusive o “I am using FB for free. Let brands be there .I am not losing anything “ o “I would click on an ad if it appeals to me in my prescribed set of brands.” o “It has to be catchy in terms of an attractive deal” o “If I am in search of something or want to buy something and a related link is put up, then why not “ o “ A bank or insurance present there makes a difference based on the necessity. Those decisions are not ad based.”
Only some are aware of brands having page on Face book and Twitter. o “Recently came to know about ICICI fellows. My friend was mentioning about it
o “Would go through ads on face book only if any of my friends have liked it or commented on it”
Most of them want to be noticed and commented/ complimented upon. o “I know of so many friends who think so much just to put a status message
Most of them don’t complain on online forums until they reach heights of frustration after trying all other ways o “My usual resort is to call the customer care” o “As long as the problem is solved immediately by the company would not complain or go tell friends”
People write mail to the company in a case where they know that the matter could be resolved.
General opinion is that they don’t mind a 24 x 7 portal on the company site provided it is prompt o “How different is it going to be from a call centre? That itself companies are not able to maintain properly how will they maintain it online?
Some say that they do not mind writing(complaint/compliment) on the company site provided the content does not get altered whereas some don’t feel the need for others to see it o “If I have to write on a company site it’s because I am extremely happy and satisfied with their product or if I have a personal equation with the company.”
With good customer service or unexpected approach from company , people prefer writing on forums than calling the company or sending an e-mail o “Once or twice when ICICI , Stan C gave good customer service was really happy. Have written about them on Twitter.”
Something in return of their time?
Brands with Contests Brands without Contests
Most people would like to be involved with Brands who have active Contests & Special Offers etc going on their Social Media Pages. o “I would certainly be a “Fan” or a “Follower” of my Favourite Brand, However, If it runs various contests & Offers on its Page I would be much more actively involved .”
Some People just enjoy being part of a Brand Page because it gives them a sense of belonging towards that Brand. o “When it comes to High End Brands ex : Apple products, I am part of the Fan Page because it feels like being part of a Family and being connected, even though it doesn’t run any contests.”
People look for information online that is in their area of interest. It is more on a need basis.
People need to see content that solves their problems than a brand trying to promote itself.
People don’t appreciate the company trying to sell its products through online initiatives
People like to voice their opinion and their name to be seen somewhere. Customer recommendation is the most powerful form of advertising Instead of being everywhere, people are trying to have presence in fewer communities & platforms.
Give people something to talk about such as a special offer or promotion or a fantastic innovation. The target group can be further classified into Alpha socializers , attention seekers, followers, faithfuls , functionals of which my study
Constituted mainly of followers and faithfuls. Giving customized applications or services to each of them is a challenge Youth exhibiting more of a culture shift. They are ready to be more public, open a nd exploring. People prefer using applications which have flexibility and ease of use. Youth takes their financial decisions only in the late teens User ratings, blogs and Twitter pages would be in the look out in Google search Most of the youth fall under these 3 Aspects of socialization: community, selfexpression and personalization.
The customer just wants to know that his problems matter to these big, faceless entities
If a company makes a mistake and then does something to undo, the company strengthens its reputation in the customer’s mind
Short attractive offers online seem to have a momentary punch
Customers report good experiences in forums more than twice as often as they do via calls or mail. (Jupiter, 2006)
Twitter more of a marketing network and Face book more of a new age networking tool
Social media cannot be a replacement for already-existing channels. A social media can be powerful medium to complete the offline strategies and augment it.
Benefits as a student of Management
• • • • • Got introduced to the vast domain of social media Understanding the best practices in the banking industry The various strategies followed by the marketing departments in banks. The significance of marketing in banking. The various applications used in social media for online reputation management such as Online trackers and search engines • • • The scope of face book , twitter and Linked In for branding and marketing. Exposed to the data base of social media practices by brands in India and abroad. Experience of conducting survey through in-depth interviews in offices, colleges, malls and mystery shopping
Social Media & Banking
Banks can get benefit out of social media in the following aspects:
When we think of banks, we often think of impersonal bankers in pinstriped suits denying customers their request for a car loan or a mortgage. The world is changing, though, and even banks are trying to foster community rather than appear monolithic and imposing. Eg : Young & Free Alberta community
Whether you’re crowd sourcing to find out what customers think of your services or using social media as one tool in your arsenal to enlist customers to help develop new products, a social network is an undeniably powerful research and development resource. Eg : StarBucks - MyStarBucksIdea
Banks that are more active in engaging with their customers over social media channels about their products, real-time search can be helpful in addressing problems with customers. In other cases, a visible Twitter account can be a quick and easy first step in the customer service chain when people want to get specific information.
Marketing and Promotion
Banks that are using social media to brand themselves or to market a specific product or service have found success by integrating social tools into their existing campaigns or creating new ones that capitalize on the spirit of the community. Whether it’s by making the bank synonymous with solid financial advice or giving people the power to do some good in the world, banks have been finding that immersive marketing techniques using social media tools have brought solid results. . Eg : Visa Card
The current financial crisis has led many customers to distrust banks, which is one reason why many banks are now turning to social media as a way to become more transparent to customers and build trust. Eg : Sun MicroSystems – CEO Blog
Statistics of internet users in India
71 million users accessed Internet in year 2009. 52 million active users who accessed it at least once in a month. 20% increase from September 2008 to September 2009 25 million users access internet everyday 80 % of users access internet for information search 66% feel that online display advertisements serve wide variety of products
Email General Information Search Educational Information Search Music/Video on the internet Text Chat Online Jobsites Online Gaming Financial information search Booking railw ay ticket online Online New s Internet telephony/Voice Chat/Video Chat Online Banking 0 10 21 24 21 18 16 13 14 12 20 33 32 49 65 76 80
45 40 46
37 33 33 41
Gender Split up
80 60 40 20 0 Orkut
Male Female Female Male Facebook Twitter
Yearly Report – I –Cube –released jointly by IAMA and IMRB Yearly Report – I –Cube –released jointly by IAMA and IMRB
Age split up
60 50 40 30 20 10 0
Percentage of users
Orkut Facebook Twitter
Age of users
Face book Facebook users in India – 10.4 million.(Dec 2010)3
Global number of users -350 million Growth rate in India since July 2009 - 7.8 %4
Presently the 4th most popular site in India
About 70% of Facebook users are outside the USA.
Facebook -home-page ads on average generated a 10% increase in ad recall 4% increase in brand awareness 2% increase in purchase intent among users
who saw them compared with a control group with similar demographics or
characteristics who didn't.
Business India www.Insidefacebook.com
Twitter Indian Users – 2 mn5
Highest number of active users after the US and Germany.
US banking institutions have made 1163 tweets in 2009. 44.1% were in answer to queries by other Twitter users 24.7% were links to web pages 8.1% were internal news 2.7% were product promotions 2.1 % were industry news
20 hours of new video uploaded to You Tube every minute Six out of seven people watch You tube every month 48.2 million users worldwide as per February 2010. There are around 797 million videos posted on You Tube.
LinkedIn has over 50m members worldwide.7 There are now 11m LinkedIn users across Europe. India is currently the fastest-growing country to use LinkedIn, with around 3m total users.
Among the most popular companies being followed so far on LinkedIn are GE, Ferrari, Netflix, and Starbucks
http://inspiredology.com http://www.numberof.net 7 http://economictimes.indiatimes.com
On Bank’s Website
Tools and utilities like EMI calculator , expense tracker, insurance comparer can be incorporated. Customers could be provided with an option of customizing the site whereby they get to decide which links or icons they want to see.
Banks can incorporate an ATM/branch tracker for GPRS/GPS enabled phones along with providing details of nearby parking lots , nearby restaurants ,shopping malls etc.
Can have a micro site where customers can share their best experiences, user ratings, “tell us what you want to read columns”.
Online chat on the website – on the home page itself ensuring prompt response to queries.
Employee/Customer testimonials can be displayed on the site. Banks Could give customers an option of scheduling all their monthly bills at once
Networking Sites Twitter • Banks should have an official page on twitter with an objective of engaging in conversation with the customers, redirecting customers to Banks own customer care, introducing product launch ,ATM openings etc. • CEO or the senior management can have a presence on Twitter or blogs. Eg Reeta Roy’s blog at www.themastercardfoundation.org/blog
Facebook/Linked In • A Facebook or Linked In page dedicated to information regarding CSR initiatives, recruitment drives
Banks can connect all the social medium to each other . The Facebook profile should be able to update twitter feed. The twitter feed in turn can update the Linked In profile.
Could introduce the concept of virtual world ,role plays, game ,fun with “Learn and earn”. For instance : Stage Coach Island at blog.wellsfargo.com/StagecoachIsland
Provide Real Time Response and Feedback, to keep the customers Engaged. Interact with the customer but do not Interrupt. Ex : Interact with the customer in order to help solve his query, provide him a solution, provide him with relevant information etc.
“Helping you invest “ – users share information and advice backed by trade data. Provide case studies , expert interviews , chat with top management , discussion forums about current, local ,day to day issues with an approach of “Think Global, Act local”. Eg : HSBC UK at www.business.hsbc.co.uk
Run online contests – We could gather around 10 contestants could be asked to attain a saving’s goal. Winner could become the ambassador who communicates through blogs,videos .
The most important implication of this survey is that we have to understand the role of Social Media in the context of banking industry. How much do customers in the banking industry rely on web information?
Even though Social Medias influence in the industry in India is relatively low, there are a lot of customers making decisions based on the user comments they see online. Most of those comments are generated by a small percentage of users, who we can easily identify and court. Since the people posting comments online are also the most enthusiastic web users, we can use social media to reach out to them and make sure their needs are met. A face book or twitter page which directs customers to the bank’s customer care or which announces new product launches and which makes conversations with its customers could help in this regard. In the age of viral marketing we have to be more cautious & innovative.
Some companies have communities of users online as was seen in the case of community for Coca Cola , others are trying to market through online communities as is the case with Dell & some are trying to build communities of their own such as Wells Fargo. In all cases, the companies need to understand what type of community they are dealing with. Online communities have started to fill the gap left by the fragmentation of offline social groups, brought about by changing living and working patterns, and this need is growing rapidly. The rise in corporate communities is a strong indication of the fact that communities work.
The use of tried and tested technology, an understanding of online psychology and the experience built up by constantly engaging in promotion of products & services through such media is going to be the name of the game for future.
Each customer wants to feel special and expects the company to listen to what he has to say Customers want the company to respond to them and make them feel like their concerns matter to these big entities. Customers prefer applications or utilities which solve their problem and which make life easier for them. Keeping it simple, transparent and customer friendly seems to be the key to a healthier, stronger customer base.
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