Social media - should the mortgage market be bovvered?

Recent research has found that UK mortgage lenders are bucking the trend when it comes to social media use. At a time when social media is transforming financial services providers’ relationships with their customers, lenders’ use of social media has actually fallen in the past two years. So why is this, and does it matter?

Social media use in the UK in 2016

Let’s put this in perspective by looking at the social media trends in the UK. According to the Office of National Statistics(1) the internet was used daily or almost daily by 82% of adults (41.8 million) in Great Britain in 2016 and social networking on the internet has continued to grow and has become part of many adults’ everyday lives, rising to 63% in 2016. This was an increase from 61% in 2015 and 45% in 2011.

Interestingly we often perceive of social media as being the domain of the young, generation X and Y, whereas according to the ONS, social networking is widespread in all age groups, up to and including those aged 55 to 64, where 51% of adults reported use.  Compared to our original TV leisure time, the average daily use of social media is one hour 29 minutes which is just over half of the average time spent watching TV at two hours 46 minutes. (2)  So in the context of that background, what is happening with social media in consumer finance?

Consumer finance and social media

In the UK, banks and lenders have started to engage with consumers on social media platforms, initially in the area of customer service, dealing with complaints, helping with enquiries and product promotion. Lenders such as Nationwide and First Direct have teams of staff managing their on-line presence and engaging 24x7 with clients and prospects.

The FCA has started to look at social media, especially in respect of advertising and customer communication, the same rules being put in place as with any other engagement with consumers.

Recently there has been a realisation that the wealth of data available from our digital lives and the ability to identify and understand digital behaviours could be used to determine credit risk in a more accurate way, and reflective of an individual’s personal circumstances. This is part of the drive to emulate personalisation within consumer finance, following the success in both e-retailers and high street clicks and bricks stores.

Social media and the mortgage market uncovered

In contrast to other areas of financial services, lenders’ use of social media has fallen in the last two years, according to 2016 research. 

• 52% of lenders are currently either active on or considering using Twitter, compared to 90% in 2014.
• 55% of lenders are active on or considering using Facebook, compared to 80% in 2014.
• 36% of lenders are active on or considering using LinkedIn, compared to 50% in 2014.

Of the lenders surveyed, 52% are currently either active on or considering using Twitter, compared to 90% in 2014. Similarly, 55% are active on or considering using Facebook, compared to 80% two years ago. LinkedIn follows the same pattern, with 36% considering or active, compared to 50% in 2014.

At a time when social media usage is booming, it is surprising that many lenders are actually stepping back from Twitter, Facebook and LinkedIn as tools for engaging with intermediaries and customers. In other areas of financial services, for instance banking, social media is transforming customer relationships with the likes of American Express using social media to personalise its message and tailor its service to individual customers. Developments are also moving beyond customer service and marketing to new services such as Turkey’s Denizbank Facebook banking; reducing operational costs and creating new business models. 

While I do not envisage customers applying for mortgages via social media in the near future, tools such as Twitter and Facebook can provide useful additional channels for customer service and information pre and post completion, particularly in reaching the under 45 age group. 

So should lenders and brokers be bovvered with social media? The answer is a resounding ‘yes’. With several digital lenders set to launch in the coming months, I believe lenders across the market will need to better understand social media and develop plans on how to use it effectively and make it part of a digital engagement strategy otherwise they risk falling behind socially-savvy lenders who will better understand customers and how they want to interact. 

(1) http://www.smartinsights.com/social-media-marketing/social-media-strategy/new-global-social-media-research/  - Global social media research summary 2016  

(2) Internet Access  - households and individuals 2016 https://www.ons.gov.uk/peoplepopulationandcommunity/householdcharacteristics/homeinternetandsocialmediausage/bulletins/internetaccesshouseholdsandindividuals/2016