Social Media in Financial Services: The Customer as the Advisor

Introduction

Consumers increasingly turn to fellow customers to advise them on their financial services, driven by low trust in traditional advice sources and facilitated by social networking. Online peer groups are influential in purchasing decisions in all industries due to trust in the opinions of fellow consumers. FS providers must engage with peer-based advice to continue to be part of the advice process.

Features and benefits

* Retain a full role in the advice process by learning how to leverage the power of social media as an advice tool.
* Learn how to use social media channels effectively through cross-sector analysis of best practice.
* Build strong relationships with customers by understanding how to use social media to create a sense of community.
* Attract new customers through understanding how to implement consumer driven promotion of products and services.

Highlights

Trust in the opinions of fellow consumers is high and will continue to play a crucial role in the decision making process. Research from Lansons shows that the influence of peers is increasing while that of the traditional media is decreasing. FS providers must recognize the power of consumer opinions and leverage this to their advantage.
Consumers seek out user-generated content and reviews before making a purchase in order to select the best product for their individual needs. The online channel allows consumers to read quickly reviews on virtually any product available. Social media has facilitated this process with consumers obtaining advice from their social networks.
Negative reviews and opinions travel quickly on social media channels of advice. FS providers need to have a presence on these channels to be aware of negative publicity and deal with these comments effectively.

Your key questions answered

* To what extent do consumers turn to their fellow customers for advice and guidance?
* How can the FS industry become part of the social media conversation?
* Why is social media playing an increasingly important role in the FS advice process?
* What can FS providers do to ensure that they still play a full role in the advice process?
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OVERVIEW
Catalyst
Summary
Methodology
INTRODUCTION
Social media has become a channel for advice between consumers
Providers are adapting to a "consumer-driven" decade
Empowered consumers are more demanding than ever
Value is more important than price
Consumers like to share information and ideas via online channels
The demand for social media advice channels is driven by consumers
STRATEGIC CONTEXT
Peer-based channels are increasingly influential
The online community is powerful
The influence of peers is increasing while media influence is decreasing
Social media is now a mass medium
Some consumers have lost their trust in providers to give appropriate advice
The perceived irresponsibility of the banks has damaged consumer trust in their advice
Mis-selling stories have caused further damage to FS providers' reputations
Time-pressured consumers are seeking quick answers
Consumers do not want to be left waiting
Peers offer consumers "tried and trusted" advice
Other customers can offer invaluable advice
There is a "them against us" mentality between consumers and the industry
Friends and family have traditionally been a source of advice
The rise of "collaborative consumption" encourages sharing between consumers
"Trust between strangers" fuels collaborative consumption
Restrictions on lending have fueled borrowing from peers via online sources
The UK as a case study: changes to the regulation of advice
Peer-based advice will gain from changes to the regulation of professional advice
FS providers will need to fight to get their advice across to consumers
STRATEGY IN FOCUS
User-generated content allows consumers to review and choose between products
Online communities allow consumers to share tips and hints
Consumers who share their liked products act as promoters
Ad hoc advice through Twitter travels quickly between consumers
Independent advice and review sites act as "expert" consumers
Formal advice sites amplify the voice of the consumer
Review sites help consumers to determine the best products on the market
Blogs voice ongoing opinions, news, and reviews
FS providers can use a blog to present a human face to consumers
Consumers want to benchmark themselves against their peers
Consumers want to compare their spending with their peers
Peers can offer feedback on a consumer's desired purchases
Price comparison websites help consumers to choose between products
Engagement with social media can tackle the spread of negative reviews
Providers cannot tackle problems that they are not aware about
Providers should take complaint conversations out of the public arena
STRATEGIC ACTION POINTS
Current account providers must engage with and facilitate social media advice channels
FS providers that engage with social media advice channels will continue to be part of the advice process
Facilitating social media advice will help providers to guide the conversation
Enable peer-to-peer payments
Help consumers to compare their spending to that of their peers
Saving account providers should help consumers to compare their goals with peers
Enable benchmarking and sharing between peers
Peer-based channels can be used to celebrate saving successes
Credit card providers can build a community around their cards
Use peer-based channels to promote card reward programs
General insurers need to market consumer satisfaction
Social media advice can be used to advertise customer satisfaction
Personal loan providers must be more transparent with their lending criteria
Be more transparent with lending criteria
Help to advise consumers who are struggling
Pensions providers must be aware of their customers' sources of advice
Peer-based channels can educate consumers on pensions
Mortgage providers should enable more peer advice
Offer advice on repayments
Allow consumers to appeal to peers for help with their mortgages
Life insurers can use peer advice to educate consumers
Use social media advice channels to educate consumers
APPENDIX
Additional data
Methodology
Further reading
Websites
Datamonitor research
Ask the analyst
Datamonitor consulting
Disclaimer
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