Terms such as “Add as friend“ and “Confirm friend” are now commonplace in online forums and emails. For many people, social media has become part and parcel of everyday life. With online social interaction becoming increasingly important, media monologue (one-way, “one to many”) is thus transforming into social media dialogue (two-way, “many to many”).

For the world of banking, social media has a lot to offer. The most apparent, but by no means principal advantage of social networking sites for banks is their potential to act as a channel for sales and promotions. However the real value of social networking sites lies in their potency as a marketing tool in a broader sense – to understand customers better and respond to their needs and concerns. Social media is an ideal way to segment markets and integrate banking services into a broader communication channel which, with the advent of smartphones and other online mobile devices, will soon supersede ‘established’ services such as SMS.

As banks are traditionally perceived as cold and impersonal, any friendly approach towards the customer will be well received, at least initially. A new online community must embody the spirit of customer service and act as a platform for mutually beneficial two-way communication. For instance, let’s say a bank creates a Facebook profile to launch a credit card for young people. Users could use this opportunity to ask all kinds of questions, sometimes as mundane as whether the card will have a commission charge. So employees in charge of online communications must be able to redirect these questions to the appropriate banking staff and answer them – as if the Facebook page were a virtual branch.

There are three key pillars to bear in mind when launching a bank on social networking sites. Community, which helps create the brand image, customer service, which acts as a catalyst for user participation, and business communication, for sales, promotions and events. There is also a fourth pillar, R&D, which although less evident to the user, can be very useful to the bank: social media is an excellent testing ground for new financial products and services.

The best approach is to set up a profile that offers a transparent and innovative service. Nothing satisfies the customer more than feeling special. Strategies such as sending deposit notices by SMS heralded the dawn of a new type of communication – one that banks can expand to previously inconceivable realms using social networking sites. Transparency and innovative services help bolster customer relationships – and as word of mouth does the rest, the arrival of new customers who also want to feel ‘special’ is merely a matter of time. In the long term, and if crises are managed correctly, profiles on social networking sites can only improve a bank’s public image.