Social Media in Banking – Thematic Intelligence

Social Media in Banking Theme Analysis Report Overview

Social media companies will increasingly diversify away from their ad-funded business model in the face of increased regulatory scrutiny.

Social media in banking thematic report maps out the prospects of social media giants for a deep assault on financial services, and how incumbent banks might respond. The report shares findings from GlobalData’s 2023 Financial Services Consumer Survey, which covers consumer openness to a wide variety of different types of financial services from different provider types split by various demographic variables. The report helps identify the best attack vectors for social media giants, but also where incumbent banks should focus efforts to maximize retention.

The report further covers M&A activity, hiring activity, corporate filings, and patent applications. It also highlights early indicators of the key technology bets social media giants are placing, which can help incumbent banks benchmark capabilities and close gaps.

Social Media in Banking Trends

The main trends shaping the social media in banking theme over the next few months are shown below. The trends are classified into four categories: Technology trends, macroeconomic trends, regulatory trends, and industry trends.

Technology Trends: The key technology trends impacting the social media in banking theme are artificial intelligence (AI), the metaverse, gaming, social media monitoring, user experience expectations, and chatbots.

AI is central to every dimension of what makes social media interaction so quick, easy, and fun, as well as the UX benchmark many traditional banks seek to emulate. Social media giants will extend user experience into financial services, whether as part of their overall platforms or for specific digital banking propositions.

Macroeconomic Trends: Economic uncertainty, changing business models, splinternet, and digital authoritarianism are a few of the macroeconomic trends impacting the social media in banking theme.

Regulatory Trends: Misinformation, scams, and AI regulation are a few of the regulatory trends impacting social media in banking theme.

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Social Media in Banking Industry Analysis

Technologies are new and unfamiliar to boomers, or the older generation and they do not always feel easy to use. There is evidence of some banks using tablet devices as a gateway digital experience, as the larger form factor can be easier to use for digital first-timers. Social interfaces, which have colonized the user interface used by many industries, are likely to be considered easy to use by most older customers, which may speak to an opportunity for social media firms with that demographic.

The Social Media in Banking Industry Thematic Intelligence Report Also Covers:

1. Signals
   • M&A trends

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Social Media in the Banking Value Chain

GlobalData’s social media in the banking value chain consists of five layers: The content layer, the distribution layer, the data layer, the customer layer, and the services layer.

• The content layer consists of both user-generated and third-party content.
• The distribution layer includes the different social media players distributing content to users.
• The data layer is where data is managed to generate insights.
• The services layer consists of social media revenue sources.
• The customer layer includes consumers, brands, and influencers consuming social media products.

Social Media in Banking Value Chain

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Social Media in Banking Company Analysis

A few of the public companies associated with the social media in banking theme are:

• Alphabet
• Amazon
• Bank of America
• Chime
• JPMorgan Chase
• Kakao
• Meta

A few of the private companies associated with the social media in banking theme are:

• ByteDance
• eToro
• Reddit

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Retail Banking Sector Scorecard

At GlobalData, we use a scorecard approach to predict tomorrow’s leading companies within each sector. Our retail baking sector scorecard has three screens: A thematic screen, a valuation screen, and a risk screen.

• The thematic screen ranks companies based on overall leadership in the 10 themes that matter most to their industry, generating a leading indicator of future performance.
• The valuation screen ranks our universe of companies within a sector based on selected valuation metrics.
• The risk screen ranks companies within a particular sector based on overall investment risk.

Thematic Screen

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Scope

• The single biggest demographic shift for incumbent banks will likely be the inversion in provider preferences. In the US, for example, customers aged 18–24 are nearly half as likely to prefer traditional providers (31%) versus the general population (56%) for their primary current account relationship.
• When looking at preferred research methods for financial products, 34% of respondents in the US aged 18–24 are likely to rely on family and friends versus 26% for the general population. This speaks to declining trust in traditional providers (and traditional sources of media) and a growing reliance on family and friends, both in person and via vast social networks and online communities.
• Across all regions, consumers value privacy and security over convenience and speed, which for social media giants like Meta (with well-documented privacy issues) suggests younger customers may not be the captive demographic.

Reasons to Buy

• Understand how social media giants’ traditional business models are evolving.
• Review which disruptive technologies (such as cloud, artificial intelligence, and the metaverse) confer the most advantages for social media giants, and where they represent compete or collaborate opportunities for incumbent banks.
• Interrogate how social and macroeconomic trends (such as ESG, BRIC economies, the gig economy, the subscription economy, diversity and inclusion, and gender empowerment) create new threats and opportunities for social media players and incumbent banks.
• Understand the latest regulatory trends impacting the social media business model, and where arbitrage opportunities exist for social media giants versus incumbent banks.
• Review the latest consumer survey data to understand the best attack vectors for social media giants (by channel, product, demographic, and technology), and how incumbent banks can drive retention among the most at-risk customer segments.
• View firm-level insight on the leading social media companies and how they have invested in new capabilities and features in anticipation of a deeper encroach into FS, as well as examples of how leading banks have responded.