Recurring revenue from existing customers is essential for continued success in any industry, but it’s especially important for relationship-based services like banking. Since the housing crisis in 2008, banks have revamped their community reinvestment and outreach programs to rebuild their image and relationships with their customers.
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While the CFPB has traditionally provided an outlet for customers to file complaints, social media has become a powerful marketing tool for brands, and banks and financial institutions are no exception.
Consumers increasingly turn to social media to both leave reviews of companies they love and lodge complaints against policies they don’t like. As a result, public feedback on social media channels are gaining influence over consumer protection in the financial industry.
Changing Tides of Influence
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Given new leadership and recent turmoil at the CFPB, banks and consumers are asking what will happen next for the regulatory body. While it’s unclear exactly how the CFPB will operate moving forward, the question may not be what will happen, but what is already happening?
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Since social media amplifies both positive and negative feedback, consumers’ dependence on online reviews can greatly impact revenue and customer acquisition strategies. With 91% of consumers regularly or occasionally reading online reviews, reviews have a significant impact on a business’s reputation.
Social media may feel overwhelming at the onset, but when done right, it has the power to position brands as leaders in consumer protection, customer service, and grow a loyal consumer base.
Faster Response
The educated consumer uses the publicity of its reviews as a bargaining tool: banks can either respond quickly or risk their reputation.
Perhaps the most well-known example of this in the banking industry is Bank of America’s attempt to institute a $5 monthly fee for debit card use in 2011. According to reporting from the Washington Post, within a few days 300,000 people had signed a petition against the change that circulated widely on Facebook and Twitter. Another 21,000 people took to social media pledging to close their Bank of America accounts if the changes took effect. Shortly thereafter, Bank of America removed the proposed fee.
It’s easy to see this need for immediate response times as a burden on banks. However, it’s also an opportunity for banks to differentiate themselves from the crowd with public examples of responsive customer service.
Consumer Protection in the Social Media Era
Banks and other financial institutions should redouble their efforts and attention on the power of social media in consumer protection and customer service. In this age of constant connectivity, consumers hold the power to influence many industries, including financial services. Incorporating customers’ use of social media into a financial institution’s best practices demonstrates reliability and accountability, and in return gains their customers’ trust and loyalty – a win-win for all.