Are customers unfriending banks in the Middle East? 08 October 2014
Fahim uz Zaman explains how banks in the Middle East are getting left behind. To win young customers’ hearts they need to better leverage social media
Although some of the leading banks across the globe have been able to tap into the potential of social media, retail financial institutions in the Middle East are getting left far behind. Indeed, banks in the Middle East seldom use social media to effectively reach out to their customers, engage with them and get to know them better. Likewise, they rarely use social networks as a channel to serve their young customers. An evolving region
The Middle East is fundamentally changing in terms of customer profile and behaviour. The region’s population is predominantly young and increasingly connected to the internet - therefore it frequently uses social media. Over 50% of the population in the Middle East and North Africa is below 24 years of age and around 40% use the internet. There has been an explosive growth in the adoption of social media in the Middle East. Around 88% of internet users in the region access social networking sites at least once a day. Some 45% use mobile devices to connect to internet. At the end of the third quarter of 2013 there were 56 million active monthly users of Facebook in the Middle East and North Africa region and out of them 28 million were using a social media site daily. Similarly, there are 6.5 million Twitter accounts in the Middle East, 37% of which are using their Twitter accounts actively. The use of social media in some of the large countries in the Middle East is more pronounced. For instance, UAE has the highest penetration for Facebook, with 44 percent of the population using the social media site regularly. Similarly, Saudi Arabia has one of the largest social media user bases in the region with more than 13 million individuals using social media sites. Out of the total Saudi social media users, 51% are active on Twitter and 42% are active on Facebook. In Jordan, 88% of adults use social networking sites. Despite such a heavy use of social networks by population, banks in the region lag far behind in leveraging social media to reach out to customers and serve them better. Despite intense competition in the banking industry in UAE, none of the banks are counted amongst the top 50 brands in terms of Facebook likes and only five financial institutions are amongst the top 100 companies in terms of Facebook following. Similarly in Egypt, which has around 14 million Facebook users and around half a million active Twitter users, none of the banks are amongst the top 100 brands in terms of Facebook followers and only one bank is amongst the top 100 brands in terms of Twitter following. In Saudi Arabia, which has the largest number of Twitter users in the region, four financial institutions are amongst the top 20 brands in terms of Twitter following. However, altogether, six financial institutions are amongst the top 100 brands in the Kingdom. Customer experience lags It is therefore not a surprise that banks in the region are rated negatively in terms of customer experience. According to the survey published in Capgemini’s World Retail Banking Report 2014, UAE and Saudi Arabia were ranked amongst the bottom ten countries in terms of positive customer experience. The two countries were ranked as 27 and 24 respectively according to the survey which measured customer satisfaction in 32 countries. This compares with UAE and Saudi Arabia being ranked as 18 and 15 in the survey conducted during the previous year . Speaking about the current and present danger, Farhad Irani, head of retail banking at UAE’s Mashreq Bank wrote in a local newspaper: ’The revolution is there and recent surveys conducted suggest that the digital-savvy consumer… is increasingly dissatisfied with the digital and mobile service delivered by banks.’ Suresh Bajpai, head of retail banking at Qatar based Doha Bank believes that banks have to become relevant by understanding more fully the new buying patterns of the young and increasingly more mobile customer base. ’Most young customers are extremely interconnected and depend on peer-to-peer advice, rather than turning to the bank,’ Bajpai was quoted as saying. He believes that lenders need to become more relevant by understanding the lifestyle of the customers faster than their competitors. Breaking free of tradition Yet some of the banks in the region are breaking away from rest of the lot and aggressively using social media to reach out to the customers to engage them, understand them and serve them better. UAE’s Emirates NBD, which went past the milestone of over 200,000 fans on its official Facebook page in June 2014, leverages its social media strategy to fast track the resolution of customer issues within a couple of hours. The bank is encouraging its customers to approach it through social media sites to reach out to the bank. Emirates NBD employs a multipronged strategy to engage customers and understand them better. For instance, after learning that its customers are interested in a variety of offers made by Emirates NBD, the bank uses its Twitter account just for deals. It also uses LinkedIn to reach out and engage entrepreneurs and business banking customers. Another UAE based bank, RAK Bank, uses Facebook and Twitter to reach out to customers, informing them about the exclusive promotions, managing their complaints and addressing criticism within a short period of time. RAK Bank, which has over 100,000 fans on its Facebook account, is using customer comments to understand the response to its services and offerings. Although the journey has just begun, banks are fast learning about the benefits of deploying effective social media strategies. They have to race against time as other industries, more significantly telecommunication companies and retailers, are leading the pack in terms of winning and retaining customers as banks get disintermediated out of the frontiers in retail banking such as cross border payments and e-commerce.