Numerous articles have explored the usage of social media and marketing in the financial industry. Although our feeling is that no institution has really perfected their social networking strategy, most would claim that their engagement brings them closer to their customer and enables them to offer the products and services that their customers are looking for.
Often from the customer side, it seems that for all segments with the exception of today’s youth (read: teenagers), people tend to make decisions not to buy a banks products via social media and not a decision to buy. What I mean by this is that customers and potential customers are more likely to look to see if there are bad reviews of a product or service, rather than a good rev iew.
Think of it like looking at a review for a book, most people tend to look at the overall rating and then look at what the bad reviews are and why the bad reviewers didn’t like the product. So they will make a decision not to buy a product based on feedback, but wouldn’t make a decision to buy the product based on the feedback.
Social media/networking in China
In many respects, social networking in China has surpassed that of the US. Domestic companies like Weibo (twitter-like), and Renren (China’s facebook) now boast millions of users and have given the huge Chinese population a way to connect that distances and costs have prevented in the past.
Further, Chinese companies have largely imitated the US social media models and improved on them for the domestic market.
The gap that we currently see is really on the ‘professional’ networking side. As compared to Renren or Weibo, which both have a significant user-base of domestic Chinese users, the nearest Chinese equivalent to Linkedin is generally thought to be a services call Ushi which claims 12,000 CEOs, 5,000 CTOs and 75% of VCs active in China among its 300,000 members, with forecasts of 10 million users by 2013.
Linkedin is of course working hard to penetrate the market, but ultimately, as numerous other examples of foreign social networking and/or internet companies failing in the market, they may struggle.
Now of course some services like twitter and facebook are blocked in China, but limited success from other internet companies who have tried to penetrate the Chinese market, such as ebay or google, would seem to indicate that even without the block, foreign companies would face similar challenges.
Challenges for social media in China’s Financial Industry
So what we have found, especially in the Chinese financial technology space is that people rely on more traditional ‘BBS’ or online forums for exchanging information, and typically the level of participants in the forums doesn’t seem to be very senior. As well, they, similarly to the general reference I made above, make decisions to not buy a product based on online information, but not to buy a product.
So all of this begs the question of what the solution would be? How can social networks more effectively reach and engage senior financial industry professionals?
A lot can be learned from the Linkedin example. I first signed up for a Linkedin account about 7 years ago as a way to stay in touch with my MBA classmates.
At that point, in 2004, Linkedin was seen as a useful service, but was far from being widely used or accepted. It has been very interesting to see this change over the years until today when it is widely used and senior executives, including the likes of Vikram Pandit, CEO of Citi, who are embracing the platform and seeing the positive benefits.
Getting to that critical mass, is one of the primary challenges – there needs to be enough of a base of users to change the question from ‘why are you on this site?’ to ‘how can you not be on this site?’ For serious professionals, Linkedin in nearly at this point now.
A further challenge, and somewhat specific to China, is internet ‘fatigue’. “Group buying” portals similar to services provided by the international online portal Groupon.com (not to be confused the complete Chinese knock-off site groupon.cn) were very popular towards the end of 2010 and into early 2011.
At one point there were over 1000 group buying start-ups in Beijing alone – more than in the entire United States. Over the past few months however, ‘group buying fatigue’ has set in as there have been more and more offers inundating the market and now many smaller players are looking to sell, merge or even just close shop.
Groupon.com itself has scaled back expansion plans and in many cities is cutting staff. With such a focus on the internet in China, it can be incredibly difficult to get mind share and to get it quickly enough before this fatigue sets in.
Professional online social networking in China’s financial industry will certainly grow in the future and will be an increasingly important channel and way for institutions to connect with each other and potential customers.
However, the future ‘Linkedin of China’ (perhaps even Linkedin itself?) will have to provide a perfect combination of usability, value and convenience specifically designed and tailored for the Chinese financial industry executive. By no means an easy task, but certainly one that can reap huge rewards for whomever gets it right.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Asian Banking & Finance. The author was not remunerated for this article.
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