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Banks missing out on social media benefits

Financial institutions aren't leveraging social media, missing out on an opportunity to improve customer relations, according to analyst Ovum.

Social network

Banks are not fully taking advantage of social media, nor do they have plans to do so in the near future, according to a report.

Some 60 per cent of the world's retail banks have no plans to use social media like Facebook or Twitter at all, according to the research from analyst firm Ovum.

Ovum cited the UK's First Direct as one financial institution using social media in some way, but it also noted the bank's strategies were still in their incipient stages and much improvement was needed.

The report comes at a time when consumer confidence in banks is especially fragile.

Banks, according to Ovum, are wasting an opportunity to recuperate some of that lost trust, since social media has proved to be an effective communication tool.

"We feel that this attitude from retail banks towards social media is a major issue in an era of aggressive competition," said Ovum analyst Martha Bennett.

"The banks without a social media strategy are being shortsighted 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."

Bennett also pointed out that consumers are not totally against the idea of receiving promotional messages via social media, or to using it for customer service enquires.

"A massive opportunity to rebuild the confidence in the sector that is so desperately needed is being ignored," she concluded.

Currently, only six per cent of retail banks use forms of social media for customer queries. The figure is a little higher when it comes to using social media for marketing, a strategy that 14 per cent of retail banks have embraced.

Recent research also showed many small businesses were not using social media either.

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