Today, banking is one of the most disrupted industries. Many business giants, such as Tencent and Alibaba, empowered by their strength and expertise in technology and innovation, are competing with established players to provide banking services. The biggest challenge for the banks now is working out how to safeguard their leading positions in the industry - and social media could help.
As of January 2016, there were 2.37 billion active social media users accounting for 37% of the world’s population, with an annual growth rate of 10%.1 Statistics also show that total retail sector spending on digital advertising in the USA will grow to USD 20 billion by 2019, with a forecasted annual growth rate of 12.3%.2
This growth in spend shows that companies are eager to explore digital channels as part of their business development strategy. One of those fintech leaders mentioned above, Alibaba Group, took the digital lead back in 1999 by introducing a business-to-business (B2B) e-trading platform, alibaba.com, that connects manufacturers across different countries.3
To survive fierce competition in the banking industry, B2B social networking could be a smart move for banks, an approach that we’ve called B-Connect.
Unlike big firms, which already have well-established business networks, small and medium-sized enterprises (SMEs) may need additional tools to help manage their business relationships, as well as resources planning. In this context, B-Connect might prove to be their most cost effective and efficient solution.
B-Connect is a trusted platform. Only bank customers who have passed through a stringent client onboarding process are eligible to register as users. With the consent of customers, banks will analyze transaction data and user behavior patterns on B-Connect. This analysis will include how users browse and search on the platform.
Using these insights, B-Connect aims to provide the following one-stop-shop services to banks’ corporate customers:
Predict and recommend potential suppliers and buyers by evaluating against predefined criteria, such as current business partners’ demographics, target customer segments and business size.
A platform for users to advertise, write blogs and form groups to share the latest market trends and insights.
Provide a business partners rating system, through which users with desirable ratings will be recommended to their potential business partners. This function can also help users to gather valuable feedback for relationship building and business development.
Integrate with e-banking systems, so that users can manage payment settlements and even keep track of trading logistics in one environment.
Prepare on-demand management information reports that offer insights into different industry segments, such as the latest R&D activity, regulations, trends, and key competitors. Equipped with this information, companies can carry out better strategic and operational planning.
Banks could launch B-Connect as an annual-fee-based platform while charging a premium for advanced features, such as blog posts and subscriptions to industrial reports.
In the face of surging digital requirements and social media penetration, if banks fail to challenge the status quo, the castles they have built in the banking industry will soon be overrun by hungry fintech giants, new to the battlefield. New and innovative initiatives, such as B-Connect, have real potential to provide a strong line of defense.
Anna Li is a compliance specialist within the Regulatory Compliance practice at Capco Hong Kong, with experience in compliance, operational risk and process re-engineering in banking. Anna specializes in KYC/CDD, transaction monitoring investigation and AML/CTF controls and processes. She is also a Certified Anti-Money Laundering Specialist.
Steve Wan is a compliance specialist within the Regulatory Compliance practice at Capco Hong Kong, currently focusing on AML transaction monitoring. He has worked on process re-engineering and digital projects within retail banking, particularly on credit card applications and collateral safekeeping areas.
The content and opinions posted on this blog and any corresponding comments are the personal opinions of the original authors, not those of Capco.