Marketing Intelligence & Planning

Understanding the role of social media in bank marketing

Miljana Mitic Alexandros Kapoulas
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Received 3 January 2012
Revised 11 May 2012
Accepted 23 May 2012
Marketing Intelligence & Planning
Vol. 30 No. 7, 2012
pp. 668-686
r Emerald Group Publishing Limited
0263-4503
DOI 10.1108/02634501211273797
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0263-4503.htm
Understanding the role of social
media in bank marketing
Miljana Mitic
Management School, South East European Research Centre,
an International faculty of the University of Sheffield, Thessaloniki, Greece, and
Alexandros Kapoulas
Business Administration and Economics Department,
CITY College, an international faculty of the University of Sheffield,
Thessaloniki, Greece
Abstract
Purpose – The purpose of this paper is to investigate the role of Web 2.0 and social media in
relationship marketing (RM) in banking. The aim is to understand why some banks resist the Web 2.0
trend, how this is aligned with their RM approaches and what the alternative paths for advancing
customer relations could be. The paper focuses on the practices of banks in the less-researched yet
dynamically evolving South East European (SEE) region.
Design/methodology/approach – A qualitative case study approach was employed for this study.
In total, three case studies were constructed, describing practices and RM approaches of retail banks in
SEE. Data used for the construct of case studies were collected through in-depth interviews with top
management, documentation and banks’ official web sites.
Findings – Primary reasons for refraining from social media included: low customer demand for such
form of interaction with banks; concerns over safety of Web 2.0 for banking; and lack of alignment
with current RM strategies. While social media were not discarded for the future, they were deemed
more appropriate for smaller or younger banks seeking innovative ways to capture market share.
Practical implications – The paper identifies requirements for the adoption of social media in bank
marketing and offers insights on possible alternative RM strategies that combine electronic channels
with a personal approach to banking.
Originality/value – Case studies offer insights on marketing practices of banks in the SEE region.
The paper unveils challenges banks encounter in their RM efforts and their vision of the future of RM
in a contemporary online setting.
Keywords South East Europe, Banks, Social media, Web 2.0, Relationship marketing, Retail banking
Paper type Research paper
1. Introduction
Launched in the early 2000s in the form of innovative online applications that facilitate
online content sharing, Web 2.0 rapidly evolved into a phenomenon elevating online
communications to a new level (Constantinides and Fountain, 2008). What began as
an array of platforms for online interactions with focus on entertainment quickly
escalated into a global phenomenon where connectedness to the online networks
is everything and the aptitude to “follow,” “like” or “share” means power. The
astonishing popularity and the fast rate of adoption of social media lead enthusiasts to
speculate on the potential goldmine for marketing that lies within the complex web of
user commentaries, testimonials and communities, linking consumers with products
and brands (Beer, 2008; Eccleston and Griseri, 2008; Hardey, 2009).
Inspired by the power of social media to engage users in virtual relationships,
organizations began seeking ways to immerse into “people’s internet” and learn to
leverage the “likes,” “shares” and “comments” for profit making (Andriole, 2010;
 Culnan et al., 2010). It is not uncommon nowadays to see businesses launch “Facebook” Social media in
pages, “Twitter” accounts, “YouTube” channels and blogs in the effort to preserve bank marketing
relevance among competition and to create or strengthen bonds with customers.
Proponents of social media speculate that its interactive nature and rich format are
potent to support relationships between organizations and consumers
(Nair, 2009). For example, Starbucks, Nike, Coca-Cola and Dell (to name a few)
successfully use social media to obtain customer feedback, create new products/offers, 669
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strengthen customer loyalty and engage in online dialogue with followers (Beuker,
2009; Gallaugher and Ransbotham, 2010).
Pioneers in social media marketing are also emerging in the industry of retail
banking. US banking organizations such as Citibank, Bank of America, ING Direct and
USAA demonstrate active presence in social media, oriented toward building rapport
with customers and providing interactive online service support via Web 2.0 tools and
channels (Cocheo, 2009a; Cohen, 2010; Klimis, 2010; Stone, 2009). However, enthusiasm
for social media and its power to improve relations with customers is not equally
shared among all players. Considerable part of the industry displays rather reserved
stance toward social media. According to Klimis (2010), European banks appear to be
more reserved offer fewer examples presence in Web 2.0 channels. The question of why
certain banks opt to pioneer social media marketing while others resist the trend
remains open.
This paper addresses the issue of social media adoption in the retail banking
industry. The aim of this paper is to offer insights into why certain retail
banking organizations refrain from incorporating social media in marketing. Research
presented in this paper explores the phenomenon of social media in banking from the
perspective of relationship marketing (RM) theory. Paper highlights factors and
elements that shape banks’ decisions to abstain from the social media trend and how
these factors are linked to the banks’ interpretations of the RM approach. Paper starts
with an overview of the existing literature on RM in banking and Web 2.0 adoption,
a presentation of research query and research method, and three case studies on RM
practices by retail banks in South East Europe. Lastly, research insights and possible
implications for marketing practitioners are presented.

2. Online communications and RM in retail banking

Challenges to the RM approach in the online setting
RM approach advocates development of long-term relationships with profitable
customers for the purpose of enhancing business value and strengthening
organizational competitiveness (Gummesson, 2002; Grönroos, 2002; Sheth and
Parvatiyar, 2000). It is argued that RM can lead to greater profitability, customer
satisfaction and loyalty, and open the doors to cross-selling opportunities (Malhotra
and Agarwal, 2002; O’Loughlin et al., 2004; Rootman et al., 2008). RM proved to be
especially relevant for the industry of financial services (Das, 2008; Dawes and Brown,
2000). According to Das (2008) and Proenca et al. (2010), considering high levels
of competition, little room for genuine differentiation among offers, and sensitivity of
information exchanged between customers and financial institutions, RM approach
can contribute to enhanced customer experiences.
With the rise of online communications, financial service organizations began
investigating the possibilities for leveraging speed, convenience and efficiency of
digital communications in RM ( Johns and Perrot, 2008; Hughes et al., 2007; Kapoulas
et al., 2002; Lang and Colgate, 2003). The launch of online service platforms such
 MIP as e-banking enabled banks to connect with clients remotely in the online setting
30,7 ( Johns and Perrot, 2008). Adoption of customer relationship management (CRM)
systems enabled collection of vast volumes of customer data and enhanced assessment
of lifetime customer value (Buttle, 2004; Sciglipaglia and Ely, 2006).
Nevertheless, critics noted that excessive automation and “digitization” of financial
services gradually distanced customers away from their service providers ( Johns and
670 Perrot, 2008). Online presence served primarily to enable simple remote transactions
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and did not entail in-depth interactive communications on which relationships would
be built. At the same time, information on competitive offers became readily available
on the internet to everyone and opened the gates to “cherry picking” behavior among
customers. This eroded customer loyalty, paradoxically leading to counter-productive
effects on the RM efforts and diminished customer interest in the long-term bonds with
banks (Barbesino et al., 2005; Durkin et al., 2007; Liang et al., 2008).
It was argued that while the adoption of online technologies offered invaluable
advantages for transactional services, it left little room for “deeper” interactions with
customers (Durkin et al., 2007; Kapoulas et al., 2002). As argued by Huges et al. (2007),
remote services were criticized for being “a replacement for personal understanding
and contact” and were short of adhering to the principles of RM. Relationships in the
industry were commonly established on the series of person-to-person interactions
between individuals (i.e. the customer and the bank teller). Remote technologies
removed the social context from the exchanges (Durkin et al., 2007; Egan, 2003;
Gummesson, 2004; Proenca et al., 2010). Theorists and practitioners faced the dilemma
of how to effectively incorporate RM approach in the online setting (Barbesino et al.,
2005; Durkin et al., 2007; Liang et al., 2008).
Literature argued that to adhere to the RM principles, bank’s online presence should
accommodate timely, comprehensive, precise and personalized information and
should accommodate real-time communication with clients in order to establish
grounds for relationships (Liang et al., 2008; Liang and Chen, 2009; N’Goala, 2010).
Introducing the “social” element to the online exchanges was highlighted as crucial for
achieving the “affective customer commitment,” which is the key to relationship
building (Argyriou et al., 2005; Koutouvalas and Siomkos, 2006; Kupp and Anderson,
2007; Menon and O’Connor, 2007; O’Loughlin et al., 2004). Marketing theorists and
practitioners pointed at the importance of seeking new forms of online
communications that could accommodate these requirements (Kapoulas et al., 2002).
The popularity of Web 2.0 raised questions of whether social media could be
the answer in the search for digital formats that could support RM approach online
(Stone, 2009).

Social media in financial services: opportunities and challenges

Social media are becoming integral part of consumers’ lives and can enhance
understanding of consumer needs and preferences based on the information shared in
Web 2.0 channels. This opens new opportunities for market segmentation and niche
targeting (Bielski, 2008). Interactive platforms are used to share information about
offers and products quickly and efficiently, and offering customers the ability to give
feedback to the organizations and engage in a discussion with the community (Stone,
2009). It is argued that customers are responsive to this form of online communications
as Web 2.0 is essentially “people’s internet,” designed to facilitate communication
through friendly interfaces and networking platforms (Pannunzio, 2008). These
characteristics of social media are believed to correspond to the requirements for RM
 strategies and respond to the needs of the financial services industry (Cocheo, 2009b; Social media in
Johns and Perrot, 2008; Pannunzio, 2008; Stone, 2009). bank marketing
Nevertheless, there is a lack of firm empirical evidence validating these
assumptions in practice. Although examples of social media implementation in
banking are emerging (especially in the USA and western Europe), the industry is still
in the early stage of establishing social media presence and using Web 2.0 tools for RM
(Bielski, 2008; Cocheo, 2009a; Hardey, 2009; Klimis, 2010). Majority of retail banks are 671
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skeptical to the promises of Web 2.0 to revolutionize marketing, stating concerns over
information privacy, loss of control over data and possible negative implications on the
corporate image (Klimis, 2010; Pannunzio, 2008; Stone, 2009). There are concerns over
how reliable social media are as platforms supporting relations between banks and
their customers and how compliant they are with the industry’s safety standards
( Jaser, 2010; Scarborough, 2010). Critics argue that metrics measuring the effectiveness
of social media engagement and its impact on customer relationships are still vague, as
there is no hard evidence proving the benefits of social media for the RM ( Jaser, 2010;
Pry, 2010; Vemuri, 2010).
It appears that the arguments “for” and “against” adoption of social media in
financial services’ RM approach are still equally tentative and are based on the
assumptions that are yet to be properly investigated. A great deal of knowledge about
the use of social media in marketing and RM is sourced from the experiences of firms in
industries selling tangible products and services (i.e. Starbucks, Nike, Dell, etc.)
(Beuker, 2009; Gallaugher and Ransbotham, 2010). At the moment research focussing
the issues of social media in financial services is limited (Klimis, 2010; Stone, 2009).
Experiences and perspectives of the players in the industry need to be investigated
in-depth and used to clarify the role of social media in the RM for financial services.
There is a need for research which would explore why (and how) certain financial
service organizations adopt social media in their marketing strategies, why others
resist the trend, and what could be learned from their practices and approaches.
By exploring the possibilities of new online channels, the knowledge about
RM implementation in the contemporary online setting can be advanced.

3. Methodology
The goal of this study was to arrive to a better understanding of why certain retail
banks resist the trend of social media. The objective was to identify the reasons for
abstaining from the engagement in social media and how these are linked to their RM
strategies.
Academic literature on RM in the financial services industry is abundant with
references to online services (e.g. e-banking) and electronic media networks, but
offers few insights on how social media are accommodated in the realm of RM.
Following this, our study was of exploratory nature (Carson et al., 2001; Creswell,
2003). Due to the exploratory and inductive nature of this research, the study was
performed using qualitative methodology (Carson et al., 2001; Creswell, 2003). Research
was undertaken through qualitative comparative case studies. According to Yin (2003),
case studies allow researchers to obtain in-depth understanding of the complex web of
elements and factors that shape the way a phenomenon is accommodated in the
organizational context. This method is especially appropriate for the research aiming
to explore the “why” and “how” aspects of business approaches, rather than to measure
the extent of theory adoption in practice (Perry, 2001; VanWynsberghe and Khan, 2007;
Yin, 2003).
 MIP Case studies were based on the evidence gained from multiple sources, allowing the
30,7 researcher to obtain a holistic view on the practices and assumptions constructing
the phenomenon (Perry, 2001; Yin, 2003). By incorporating multiple comparative case
studies, researcher was able to contrast and compare differences and similarities in
practices among several organizations in the industry (Eisenhart, 1989; Remenyi et al., 2002;
Stavros and Westberg, 2009; Yin, 2003). Repetitive patterns obtained from case studies
672 pointed at the common perceptions about the phenomenon shared by the industry
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(Yin, 2003). Value was also ascribed to the originality of the individual cases which helped
identify unique practices (Yin, 2003). Case study method was also used in similar exploratory
research efforts in the domain of online RM (i.e. Kapoulas et al., 2002; Stone, 2009).

Focus on South-Eastern European (SEE) region

Case studies illustrate the perspectives of banks operating in the SEE region. Financial
services industry in the SEE region is an interesting subject for research considering:
(1) high level of competition among the banks in the region (Arnaboldi and Claeys,
2008);
(2) diversity of banks in the region (from large international banking groups to
small local banking organizations) (Arnaboldi and Claeys, 2008); and
(3) industry’s transition in terms marketing approaches (moving from product-
oriented to customer-centric marketing) (Argyriou et al., 2005; Lymperopoulos
and Chaniotakis, 2005).
RM practices of banks in the SEE region have not been sufficiently researched or
discussed in the existing literature (Das, 2008). Attempts were made to illustrate RM
approaches and electronic banking issues by banks in particular SEE countries
(e.g. Greece – Argyriou et al. (2005); Romania – Danciu (2009)), but there is no evidence
of the existence of similar studies about the rest of the SEE. This suggests a gap in the
knowledge about RM practices and online bank marketing strategies for the region.
Moreover, the subject of Web 2.0 adoption in SEE countries is also lacking support
from the academic research. As noted by Klimis (2010, p. 19): “European retail banks
have made a reluctant start with social media and other digital marketing tools,” and
there are speculations about the “technology divide” between western Europe and the
South, which could extend to social media (Lopez Zafra, 2002). Considering growing
importance of social media for the industry (discussed earlier), it is important to
investigate whether social media marketing is relevant to the banking business in the
SEE and how banks in this less-researched region react to the Web 2.0 trend. Social
media could be of particular importance for the banks in SEE, considering their
transition toward more customer-centric forms of marketing.
Research was based on three comparative case studies. Each case study illustrates
the practices of a single bank in the distinct country. By comparing and contrasting
views of the banks from different SEE countries (two EU members and a developing
country), researcher was able to identify factors that are common for the banks in the
region. Additionally, this allowed exploring the replication of patterns across cases in
the region (Perry, 2001; Stavros and Westberg, 2009; Yin, 2003).

Data collection and analysis

We relied on two principal criteria for identifying the banks that would be suitable
candidates for the case studies. Our primary criterion was to form case studies around
 the examples of banks not active in social media (i.e. banks who do not have official Social media in
blogs or pages in the online communities and do not engage is marketing in these bank marketing
channels). This criterion is directly linked to the objective of the study (Yin, 2003)
and our aim to uncover the reasons behind the lack of social media engagement for
some banks. Our second criterion was to include banks which are among the leading
financial institutions in the SEE region (based on the volume of their business and
market coverage). Literature noted that banks at the top of the industry commonly 673
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emerge as pioneers of social media (Klimis, 2010). By examining industry leaders

not engaged in social media we could draw direct contrast and comparison with the
literature and arrive to the abstraction of knowledge (Stake, 2000; Stavros and
Westberg, 2009).
Approximately 20 banks from the SEE region were identified to correspond to our
criteria and were invited to participate in the research. Three banks subsequently
agreed to participate in formulating the case studies. Profiles of the banks used in the
case studies are presented in Table I.
It is important to clarify that at first sight banks seem to differ dramatically in the
volume of their businesses (e.g. Bank A serves 9 million accounts while Bank B serves
only about 850,000). However, it is important to account that the numbers for each
bank are proportional to the size of the country each bank serves. Therefore, taking
into account the proportion between the volume of bank’s business against the size of
the country, all three banks are essentially similar and are leading financial institutions
in their respective countries. This rationale allowed for cross-comparison between the
cases (Stavros and Westberg, 2009).
Data necessary for the construct of case studies was obtained from the multiple
sources: in-depth semi-structured interviews with banks’ top management, banks’
public documentation and official web sites. This enabled researcher to obtain
comprehensive understanding of the strategies of each bank and to construct rich and
descriptive cases (Kapoulas et al., 2002; Yin, 2003; Stavros and Westberg, 2009).
In-depth interviews with banks’ top management (“elite” or “key informant” interviews)

Bank A Bank B Bank C

Country Greece FYROM Romania

Number of 9 million 4850,000 41 million
retail
accounts
Number of 4500 425 4250
branches
in the
country
Retail Deposits, loans, cards, Savings, current Deposits, loans, savings,
services insurance, investments, accounts, deposits, loans, cards, investments,
offered payments, online and mobile transfers, cards, insurance, transfers,
banking, private banking investments, online online banking
banking
Affiliation Subsidiaries in 18 countries in Member of European Member of European
Europe banking organization banking organization Table I.
with subsidiaries in over with subsidiaries in ten Profiles of banks
20 countries in Europe countries in Europe in case studies
 MIP played important role in constructing case studies as they allowed to obtain original
30,7 insights directly from the banks’ decision makers and spokespeople (Knapik, 2006;
Kapoulas et al., 2002). These insights were used later to illustrate the practices of each
bank.
Data analysis was performed by conducting thematic analysis of the text from
interview transcripts, documentation and banks’ official web sites (Hancock and
674 Algozzine, 2006; Stavros and Westberg, 2009; Yin, 2003). Analysis was conducted
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across the following themes:

. bank’s approach to RM and online marketing;
. views on the role of Web 2.0 and social media and its role in RM;
. views on the requirements for social media adoption in the banking sector; and
. alternative online/offline approaches to RM.
Patterns and links across themes and cases were identified and outlined, which helped
construct case studies and describe marketing practices of each case (Hancock and
Algozzine, 2006; Yin, 2003).

4. Presentation of findings: case studies

Bank A[1]
RM approach. Bank A’s marketing program is framed around three essentially product-
centric market segments: “youngsters and students,” “families and employees” and
“private banking.” Such approach to market segmentation is typical for the industry
(Kapoulas and Mayer, 2004). It is founded on the prevailing belief that RM efforts are
efficiently optimized once the market is divided into distinctive customer groups, each of
which requires different type of marketing approach (Liang and Chen, 2009).
“Private banking” is the focal point of the RM program and focusses on promoting
“trust, confidence and professionalism” for the loyal high-value clients. The goal of this
program is to offer clients reliable high-quality services, easy access (through wide
network of branches and affiliates), expertise and “person-to-person” approach to
finance management. Marketing efforts for the “youngsters” and “families” focus on
promoting remote channels of service delivery (mobile, phone, internet, card payments,
ATM outlets, etc.). The rationale for different marketing strategies across segments is
based on the belief that high volumes of low-profit accounts (such as “youngsters” and
“families”) require greater optimization of the costs of servicing. Such marketing
strategy is quite common in the industry, and banks generally aim to create a balance
in the customer portfolio by streamlining the services in the mass retail sector and
offering value-added services only to high-profit clients (Kapoulas et al., 2002; Liang et al.,
2008).
However, bank’s efforts to focus on online marketing in the “youngsters” and
“families” segments were met with limited success. Customers demonstrated greater
preference for the traditional in-person format of service delivery. Management argued
that “non-familiarity with the electronic systems of the existing generation” also
contributed to the low results of online services adoption. This was confirmed by the
literature, which revealed that that only 10-18 percent of customers in Greece use
online banking services (Santouridis et al., 2009), and that 89 percent of customers
state “deficiency of information” as the primary reason for low online banking uptake
(Mavri and Ioannou, 2006).
 Rationale for the lack of use of social media in RM. Bank A is not active in social Social media in
media channels. Although Bank A claims awareness of the discussion that takes place bank marketing
in the social media about banks’ business, its public image and banking industry in
Greece, it does not engage directly in the social media activities.
Bank A’s management believes that social media are not reliable or “serious” for
banking. Management highlighted that social media do not permit control over content
necessary for preserving the integrity of the bank’s image. Pry (2010) highlighted 675
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similar concerns, stating that when dealing with dynamic online channels, banks
should be cautious. In social media, the ability to edit the content and share it across the
networks is in the hands of wide audiences, and this opens the possibilities for fraud.
Banks are especially at risk from such actions, considering the sensitive nature of their
services (Pry, 2010).
Bank A expressed belief that social media marketing would be more suitable in
Greece for smaller banking institutions which seek alternative ways to differentiate
from the competition and gain market share. N’Goala (2010) confirmed that new
market players or banks striving to initiate bonds with customers are more likely to
seek opportunities for differentiation through novelty marketing. However, Bank A
believed that it experiences no need for such approach, as it is well-known in the
industry, has long-term presence in the Greek banking sector, and has extensive
customer base built on solid relationships. Support for this strategy was offered by
N’Goala (2010), who argued that banks with steady presence and strong bonds with
clients should avoid opportunistic behavior (i.e. engagement in novelty marketing) and
should instead focus on promoting reliability in the organization and its services.
Bank A explained that the pressures imposed by the ongoing economic recession
also affected bank’s choice of channels for the RM. Recession demanded very careful
approach to communications with clients and increased the need of assuring clients
in bank’s credibility, stability, trustworthiness and ability to withstand the economic
challenges. Similar trend was observed by Stone (2009, p. 102), who discussed
the “collapse of trust in financial services” on the global level, which imposed threats to
relationships. As highlighted by Stone (2009, p. 104): “The importance of staying close
to customers in ‘interesting times’ has increased.” For Bank A “more conservative banking
approach” and “traditional” marketing “by definition left the modern tools out.” Similar
observation was noted in the study by Klimis (2010, p. 16), stating that: “The response
from the retail banking sector has been more hesitant, due to the serious and conservative
profile that banks traditionally maintain.” Nevertheless, there is evidence that in other
European countries even conservative banks opted to explore the opportunities of
social media marketing in order to reach out to customers and re-instate their trust,
pointing at potentially missed opportunities by Bank A (Stone, 2009; Klimis, 2010).
Bank A’s management expressed strong belief that at the present moment the bank
cannot rely on electronic means for enforcing relationships with clients. According to
management, there is still a need for person-to-person interactions in banking, which
are considered to be the foundation for relationships in the industry (Liang et al., 2008).
As noted by Kapoulas and Mayer (2004) and Liang and Chen (2009), person-to-person
approach is still very relevant in retail banking and it is still sought by customers.
Management also noted that Greek customers have strong preference for person-to-
person interactions and “traditional CRM” when it comes to banking. Customers
consider it “easier” to visit bank’s offices to place instructions than to rely on remote
service alternatives. There is a belief that “mentality of Greek people” demand a
certain doze of non-formal social exchange to accompany service consumption. This
 MIP non-formal social aspect is believed to be the key to establishing trust and
30,7 relationships between customers and service providers. It is believed that this stems
from the particularities of the local culture.
Literature confirms that culture plays an important role in the adoption of remote
services and that relationship development depends on creating the sense of affiliation
between customer and the company through social interactions (Sigala, 2006; N’Goala,
676 2010). Countries such as Greece have a collectivist culture where strong emphasis is
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placed on social bonds (Dodd and Patra, 2002). Hence, it is not unusual bank’s
customers demonstrated greater preference for in-person style of interaction with the
bank. Based on these assumptions, Bank A viewed the need for RM efforts to be based
on direct in-person communications and opted to focus on the traditional form of
RM without presence in Web 2.0 and social media.
Alternative approach to RM. In order to attempt to broaden relationships with
customers via electronic means, Bank A developed an alternative strategy. In early
2011 Bank A opened a range of mini-branches in high-traffic commercial areas in big
cities, which serve to promote exclusively electronic services (e-banking, phone and
mobile banking, ATM, APS, etc.). These stores specialize in assisting customers with
the use of remote banking services. They have personnel who guide customers through
the processes of electronic services, assist during difficulties and help customers not
acquainted with electronic banking to familiarize with electronic alternatives. The goal
of these mini-branches is to create friendly environment which would re-create the
atmosphere of the traditional branch-based banking but would promote exclusively
electronic services.
The idea behind this initiative was to help introduce customers to the electronic
banking services in non-intimidating and friendly manner. It stemmed from the
observation that rate of remote service adoption among clients was low, and clients
needed re-assurance in their safety and trustworthiness (Mavri and Ioannou, 2006;
Floros, 2008). The goal of this initiative was to “remain close to the customer”
throughout the process of shifting to electronic services and to “continue to build
relationships of trust” in line with bank’s long-standing RM tradition. This allowed
Bank A to introduce customers to electronic services, support existing relationships
and initiate new ones, while maintaining control over channels of communications.
Insights from the literature provide arguments in favor of such approach.
According to Liang et al. (2008), in cases when bank customers experience lack of
confidence in certain type of services (i.e. online banking), value-added services that
lessen information deficiency can contribute to greater trust in the organization and
enhance the likelihood of positive rapport. Providing better information about services
was also linked to greater reliability in the service provider (Santouridis et al., 2009).
As argued by Santouridis et al. (2009, p. 235): “Banks in Greece have to make
a substantial effort to improve the quality of their internet-based services, when it
comes to the provision of personalization facilities and the performance of the
promised service.” Following this, Bank A’s alternative strategy appears to suit
the needs of the local consumers. Nevertheless, due to the novelty of this project,
it remains yet to be seen whether this initiative will prove effective for RM and as an
alternative to social media engagement.

Bank B
RM strategy. Marketing strategy of Bank B can be described as product centric and
based on “push” promotions. According to bank’s management, the rationale for such
 marketing approach is based on the belief that due to relatively small size of the Social media in
country (population of around 2 million) and low level of economic development, retail bank marketing
sector is considered as a market of secondary interest. According to management’s
insights, banking industry in FYROM is mainly oriented toward corporate clients in
order to promote investments that would support country’s economic growth and
development. Corporate clients are seen as more attractive segment, as they offer
greater flow of resources into financial institutions. Therefore, marketing in the retail 677
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segment is primarily focussed on attracting new clients and expanding the number of
clients served. As a result, Bank B has relatively under-developed RM program in the
retail segment.
This is not uncommon in the banking industry. The effectiveness of the RM
approach in retail banking has been under investigations for years (Carson et al., 2004).
The possibility for balancing transactional and RM in banking continues to be the
subject of debate (Kapoulas and Mayer, 2004; Walsh et al., 2004). The question of
whether RM is applicable in the retail segment for all banks also remains open.
However, the example of Bank B could imply that RM is less relevant for certain banks,
which opt to adapt their marketing strategies to the circumstances of the local markets
rather than to follow global trends. Thus, in certain cases, RM is still viewed as a rather
gratuitous strategy.
Nevertheless, the need for more customer-centric approach in the future was
recognized by Bank B’s management. However, plans to modernize marketing were
continuously postponed due to greater “priority on investments with quick returns”
and focus on corporate clients. Similar managerial attitudes were noted by Kapoulas
and Mayer (2004), who observed that bank managers often regarded investments in the
RM from the view of “performance metrics” (cost, time and profits), missing to see
the larger picture of the possibility to improve the overall customer experience.
The question of efficiency of relationships was also raised by Liang et al. (2008) and
N’Goala (2010), who argued that lasting relationships are not always profitable in retail
banking. Thus, as illustrated in the example of Bank B, concerns about the investments
in RM in the retail banking sector are still valid today. There is still a need to justify the
worthiness of such investments in certain markets.
Rationale for the lack of use of social media in RM. Bank B does not have official
presence in the social media. The reasons for lagging adoption are multifaceted.
According to bank’s management, the idea of using social media marketing in
banking is yet to be introduced in FYROM. Management noted that while social media
engagement is developing across bank’s affiliates in other European countries, “there is
no room here” for such initiatives yet. From managers’ observations, the Web 2.0
community in the country was believed to be in embryonic stage and the use of
“Facebook” or “Twitter” for professional purposes is not so widespread. Unfortunately,
current academic literature does not offer empirical evidence about the scale of social
media adoption in this particular country, which would permit constructive contrast
and comparison. Nevertheless, the issue of readiness of markets to adopt social media
was mentioned by Stone (2009). Stone (2009) observed that many organizations are still
struggling to make Web 1.0 work and face difficulties with database marketing.
Certain markets and organizations are expected to be less ready to pursue engagement
in interactive online channels (Stone, 2009).
For Bank B, another obstacle to social media engagement was the difficulty of
obtaining financial resources for investing in such type of marketing. Management
explained that in order to justify investments, bank would need to prove that there is
 MIP a sufficient “critical mass” of customers who “demand” this type of interaction with the
30,7 bank. As stated by top management: “There must be a math in there.” However, in
the view of Bank B, there is no such demand in the country yet. Furthermore,
management considered expansion into online marketing as an expense which cannot
be justified at the moment because it “does not offer an immediate recovery” on
investments. Literature recognizes the problem that investments in interactive
678 marketing are often viewed as redundant by managers in retail banking (Kapoulas and
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Mayer, 2004). Despite “increasing economic role of the Internet” (Liang et al., 2008), for
some banks online marketing remains an investment that requires further
consideration and stronger evidence of economic worth, and the case of Bank B
illustrates that.
Literature also recognizes that the economics of social media marketing in
banking are still debated. Scarborough (2010) identified common opinion among
bank managers that: “It is more efficient for customers to go directly to a bank’s
website, than to communicate through social media” (p. 24). Insights by Klimis (2010),
however, disprove this belief, suggesting that using social media to support
customer queries could be up to 87 percent more affordable than traditional banking.
For Stone (2009) this is a common trap organizations fall into. Stone (2009) criticized
banks for creating their marketing strategies on “poorly predicted future needs,
based upon simplistic generalizations” (p. 107). In Stone’s view, the dynamic
nature of Web 2.0 does not offer banks the luxury of waiting for the demand for such
form of interaction to be explicitly expressed by customers. Hence, it is argued that
banks should take a proactive stance in seeking to relate to the “Customer 2.0” (Stone,
2009).
Bank B’s management also expressed concerns over safety of social media when it
comes to communications between banks and clients. Considering high security
standards in the industry the domain of online communications, social media are seen
“in the light of potential risks rather than in the light of their promotional
effectiveness.” These concern were also justified by Pry (2010) and Scarborough (2010),
who urged for careful assessment of safety of social media for banking.
The issue of control over content in social media was also identified by Bank B as an
argument against social media adoption. Bank B shared examples when online forums
were used by the customers to express their dissatisfaction with the bank’s and its
policies. Bank viewed this as a purposeful attack to damage the bank’s image.
Management theorized that online forum could have been used instead by customers to
share constructive ideas on how bank could improve its services. In management’s
view, this indicated that customers have not yet realized the full potential of online
communications, and how online tools could be used to initiate positive dialogue with
organizations for the sake of improving service experiences. Although literature warns
banks about the risks of opening gates of communication to wide audiences (Stone,
2009), it also urges banks to overcome the fear of dealing with customer criticism in the
social media. Klimis (2010) argues that even large international banks face negative
exposure in social media, but the industry must learn to use it to its advantage.
According to N’Goala (2010), banks must learn to transform customer complains into
opportunities for cooperation, rather than to view them as threats and sources of
conflict. Literature urges banks to demonstrate the willingness to engage in a
constructive dialogue with customers. To achieve this, literature suggests developing
procedures and steps for tackling negative reviews in social media (N’Goala, 2010;
Pry, 2010).
 Bank C Social media in
RM approach. Bank C described its marketing philosophy as client centric. In 2009, bank marketing
bank launched a project to re-structure its marketing to become a “customer-centric
organization.” The motive for radical transformation stemmed from the realization
that in time of global economic crisis bank should be more “flexible to changes” and
should “focus on retaining existing customers instead of recruiting new customers at
any price and risk.” Based on this, Bank C demonstrates rightful motives for initiating 679
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RM (Carson et al., 2004; Durkin et al., 2007; Proenca et al., 2010).

Bank C identified “relationships,” “innovation,” “networking,” “interaction” with
customers and focus on profitable market “niches” as elements on which marketing
strategies should be based in the future. The pillars of Bank C’s RM approach are
“targeting profitable customers,” “using the strongest possible strategies for customer
bonding,” spreading RM philosophy across the organization, and “building trust as
a marketing tool.” These elements are commonly identified in the RM literature as well
(Carson et al., 2004; Durkin et al., 2007; Danciu, 2009; Proenca et al., 2010).
According to bank’s management, the key element of bank’s new RM initiative is
trust. Trust was highlighted as an essential component for establishing and
maintaining fruitful and prosperous relationships with customers (Gummesson, 2002;
Carson et al., 2004; Durkin et al., 2007; Gill, 2008; Liang and Chen, 2009). In order to
fortify relationships based on mutual trust, bank strategically re-defined its clients as
“partners.” Bank C segmented its retail business into three main client groups: “mass
market,” “affluent” and “pensioners.” Nevertheless, evidence from the literature
suggests that more efforts are required to fully incorporate RM. For instance, Danciu
(2009) criticized Romanian banks for using too vague and broad parameters for market
segmentation. Danciu (2009) noted that transition to RM is a long-term process and
that the evidence presented by majority banks in Romania still leaves room for further
development. Based on this, it could be speculated that although on a good path, Bank
C needs further efforts in RM.
Rationale for the lack of use of social media in RM. Bank C’s online presence is
structured across several layers: bank’s web site, bank’s e-banking platform and
advertising on popular high-traffic web sites. Such strategy is considered typical for
the Romanian retail banking (Danciu, 2009). Bank’s management recognized that
bank’s current forms of online marketing require further improvements so as to
accommodate the needs of modern consumers. Bank C identified customer requests for
“prompt feedback” and “fast” interaction as well as the need for more “accessible”
communications as areas where greater attention is needed “in order to be able to
satisfy market requirements and also to keep up with the competition” (Stone, 2009).
According to bank’s management, bank is currently exploring possible new online
venues for supporting interactions with customers.
Bank C does not have official presence in social media at the moment. According to
bank’s management, social media are “not a part of the current marketing plan,” and
bank is “not ready to sustain such activity” at the moment. These arguments are also
commonly recognized by the literature on social media adoption in banking (Stone,
2009). Bank C is cautious about entering the field of social media. As stated by
management: “We are planning to switch from the usual channels to new media and
Web 2.0 strategies,” but “there is a time for doing things properly.” There is a fear that
bank’s immediate entry in social media without thoroughly developed strategy
could contribute to a “negative buzz” among customers and the online community, who
could experience discomfort with bank’s presence in social channels and could create
 MIP negative impressions about the bank. According to Stone (2009), such reaction is
30,7 common for banks, as “the industry is still wary of the Internet and the potential
disruption in could create” and “the industry is likely to approach the new generation
of Internet technologies with caution” (p. 113). Bank’s management explains that it is
“natural to expect threats for which we are not prepared to react” and to “expect worst
case scenario” due to the novelty of social media and inability to predict its dynamics
680 for banking. Pry (2010) also noted that for banks “there are real risks to jumping too
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quickly into the social media frenzy,” and that “bank must think carefully about how
to present itself through this media” (p. 24).
Nevertheless, Bank C admits that considering tightening competition in the
industry and the popularity of social media, engagement in Web 2.0 could be “a risk
that the bank should assume instead of remaining in the shadow.” Management
speculates that marketing via social media could help create “more personal approach”
in interactions with customers and could contribute to greater brand awareness
and “refreshment” of bank’s image (Stone, 2009). According to bank’s management,
“the local environment is moving pretty fast online” and other banks in the market are
already experimenting with Web 2.0 presence. Management noted that social media
community in the country “is already large and is continuously developing,” and this
new “market” requires innovative marketing strategies. These observations were
confirmed by Onete et al. (2010), who noted that Romanian consumers are active in
social media. Online communities have already been recognized for their role as the
opinion leaders in certain industries, which signals the urge to make marketing more
“social” (Onete et al., 2010).
Bank C theorized that possible steps in social media marketing could encompass:
first, creating and sharing content about bank’s products; second, developing
“call-to-action tools, forms and applications” to encourage customers to interact with
the bank via social media; third, introducing interactive contests and surveys so as
to engage customers in development of products/offers; and finally, focussing on
word-of-mouth promotions with collaboration of well-known social media contributors
(e.g. bloggers). Similar approaches were suggested by Stone (2009) and Sashi (2012),
who highlighted the importance of initiating collaboration with Web 2.0 communities
as a way to initiate relationships. Trust, empathy, engagement and recommendation
are recognized as key for initiating relationships with customers via social media
(Stone, 2009). Interestingly, Stone (2009) also noted that bloggers are playing increasingly
important role for the financial services industry, and that their engagement will be
crucial for banks aiming to adopt social media marketing.
Bank C also theorized that possible target group for social media marketing would
constitute of the population of internet-savvy 18-45-year-old consumers. Stone (2009)
and Klimis (2010) noted that such assumptions are common, given that internet access
points are often “monopolized” by customers in this age segment. Nevertheless, Stone
(2009) argues that banks often fail to recognize that Web 2.0 is more likely to meet the
needs of the “older generation” of customers, who have greater degree and longer
history of involvement with banking products. This presents a possible implication for
marketing practitioners in banking.
Based on this, it appears that Bank C is well-informed about the trends in the use of
social media in banking. As concluded by management, as long as any form of online
marketing is customer oriented, bank would be eager to explore. However, final
decision would rest on whether “such strategy will be approved in terms of resources
and action plan.” According to bank’s management, it is too early at the moment to
 speculate about the timing and tactics of bank’s entry in social media, but this option Social media in
should remain open for the future. bank marketing
5. Discussion and conclusions
Case studies presented above demonstrate different takes on the RM approach
by banks in SEE region. Despite divergence in their RM strategies, banks shared
some common believes about social media and its significance for the banking 681
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industry.
Banks shared belief that social media “lack control over content.” Although
literature recognizes this issue, it argues that “this is more a perception than a reality”
(Stone, 2009, p. 109). As argued by Stone (2009), word-of-mouth among customers
cannot be controlled even in the non-digital banking reality. The transition from Web
1.0 to Web 2.0 should not be centered only on the issue of who possesses the control in
communication (Stone, 2009). Instead, banks are urged to learn how to think “the social
media way” and become accustomed to Web 2.0 tools that enable managing
relationships with customers in the Web 2.0 setting. As suggested by Stone (2009,
p. 109): “A small cultural transition is all that is required.”
Furthermore, banks indicated concerns over the lack of safety regulations and
standards in social media. Conservative banks remain skeptical toward social media,
stating concerns over information privacy, loss of control over data and possible
negative implications on corporate image from engagement in Web 2.0 (Klimis, 2010).
The entertaining character of popular online social networks often clashes with the
“serious” nature of banking business, and thus marketing via social media could be
a risky strategy in the efforts to establish relationships with clients (Jaser, 2010;
Pry, 2010; Scarborough, 2010; Vemuri, 2010; Garrett, 2011).
Nevertheless, as suggested by Bank C, this might as well be a risk worth taking.
Banks agreed that engagement in social media will eventually become necessary for
the industry, as more and more players are experimenting with Web 2.0 marketing in
response to tightening competition and battles over market share (Klimis, 2010;
N’Goala, 2010). Findings from this study imply that social media will be especially
attractive for banks seeking to improve their competitiveness in the market and to
establish rapport with clients (i.e. new, small-size banks).
In banking industry, the initiative to embark on Web 2.0 marketing must be
supported by the evidence that customer are interested in and demand interaction with
banks via social media. Additionally, initiatives should be supported by the evidence
that investments in social media will bring positive returns on investments and would
enhance the effectiveness and efficiency of the RM programs.
Case studies also revealed insights on the possible tactics for social media
engagement for banks. These include, first, creating interactive and relevant content;
second, encouraging clients to interact with bank via online social networks; third,
encouraging customers to actively contribute ideas to enhance bank’s offers for
mutual benefit; and finally, collaborating with online community to create awareness
about social media programs. Similar points were also identified in the literature
on social media in bank marketing (Mendelsohn, 2010; Pannunzio, 2008; Stone, 2009;
Vemuri, 2010). These suggestions contain important insights for marketing
practitioners, as they offer more pragmatic view on the possibilities of incorporating
social media into RM strategies. For banks aspiring to embark on the voyage in
Web 2.0, these tactics could be used as starting point in designing social media
strategies for RM.
 MIP Note
30,7 1. Banks participating in this research desired to be referred in the paper anonymously.
Therefore, each bank was assigned with a fictitious name containing a letter from the
English alphabet: i.e. Bank A, Bank B, Bank C.

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About the authors

Miljana Mitic is a PhD candidate at the South East European Research Centre (SEERC) and
Management School of the University of Sheffield. Her research topic is titled “Scope for
Implementing Web 2.0 Communications in Relationship Marketing Strategies by Financial
Services Institutions: Exploring the Opportunities in South Eastern Europe”, for which she was
awarded a research scholarship by the University of Sheffield. Her papers on the topics of Web
2.0 communications and RM in retail banking industry and qualitative research methodology in
marketing have been presented at the 5th Annual Doctoral Student SEERC Doctoral Conference
and 3rd Annual EuroMed Conference. Miljana Mitic is the corresponding author and can be
contacted at: milmitic@seerc.org
Alexandros Kapoulas joined CITY College’s team in September 2007 as Lecturer in Marketing
for two years, then was appointed to Academic Director of Postgraduate Studies where he served
for two years as it is a rotating position. Before joining CITY College he was the Division Leader
 MIP in Business Courses at North College, a partner college of the University of Huddersfield, UK.
He has also been a part-time lecturer for five years in the Derbyshire Business School, University
30,7 of Derby, UK where he taught marketing and management modules at all levels. He has won the
best paper prize in the Financial Services Marketing stream at the Academy of Marketing
Conference and findings from his research have been published in the International Journal of
Bank Marketing and the Journal of Customer Behaviour. He has also published in various
686 Academy of Marketing and EuroMed Conferences. His academic career so far has given him the
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relevant knowledge to contribute substantially to the research, teaching, leadership,

management and administration of BAED.

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