Image credit: iStockphoto/Petar Chernaev

A more social bank – is it the future?

We all know by now just how much social media has taken over our lives, but could it take over the way we bank too?

Previously, banks have been slower to embrace the possibilities of social media than other sectors, perhaps because there’s a worry it will make them seem less professional. But as the platforms have matured, there’s been a growing recognition that they need to be a vital part of how financial institutions operate, particularly when it comes to reaching younger customers.

I’m not just talking about running a Twitter account that can respond directly to enquiries or complaints. Person-to-person payments, for example, is one area where social channels offer great potential.

It’s something that’s already big in China, while in the US, Facebook recently extended the payment services offered in its Messenger app, allowing users to send payments directly from within the app, without the need to switch to a third-party solution.

But could this just be the tip of the iceberg? I was interested a couple of weeks ago to read about a proposed new service from a UK-based car insurer that would have offered young drivers discounts based on trawling their Facebook pages, looking at the language they use in their posts for signs that could give an indication of their risk levels.

The social network put the brakes on the plan after it was found to breach its privacy policy, but it’s an intriguing insight into how social data could be used throughout the finance sector. In banking, for instance, could it be used in the future to help make decisions in areas such as loan and mortgage applications, or offer responsible savers more attractive rates?

Given the capabilities of today’s big data analytics and machine learning, anything’s possible. While there will naturally be privacy concerns to contend with, and these type of services are still very much in the experimental stage, who knows what the social future holds for the banking sector.

Written by Jack Dougal