At RFI Global we spend all our time asking questions and analysing data to help our clients better understand their customers. So, in the spirit of asking questions… When searching for information about banking and financial products, do you ever use social media?
If the mere thought of using social media for this purpose seems strange to you, then you may well be in the minority! I’m not trying to be rude, I’m in the same boat. When it comes to research, I don’t even have social media on my list of options, let alone as one of my top sources. And before you say, “OK Boomer”, I am firmly and proudly Gen X…
To demonstrate its importance and influence, I thought that I might dedicate my blog this month to a comparison of social media usage in researching banking products across the US and Australian markets.
Social Media in Australian banking
The use of social media for research, hit home last week when I was presenting to one of the Australian lenders regarding opportunities in the personal lending space. We were discussing the journey that consumers go through in finding and choosing the right loan product and we delved into the sources of information.
It turns out that a huge proportion of Australians pay attention to social media when it comes to banking products. RFI’s consumer lending council surveys 1,500 borrowers each quarter. It shows that when borrowers are looking for products, depending on the product, between 68% and 46% have their opinion or understanding informed by what they see on social media. The influence is greatest for credit cards – 68% used social media – and the weakest for personal loans – 46%.
Who is influenced by social media?
It got me thinking about which groups of the population might be most influenced by social media platforms and which were the most influential. TikTok was the one that most interested me and if we isolate it and drill down by age, the data shows that it is incredibly influential among the youngest consumers.
In fact, when it comes to personal loans, almost one in three (29%) 18-24-year-olds have had their opinion influenced by content on TikTok. For 25-34-year-olds this is 20%. These are significant proportions of the population.
The US experience
The extent of the influence on Australian consumers made me wonder if this was a global or local phenomenon. For help, I turned to RFI’s MacroMonitor data – a longitudinal study of US households that’s been running for decades.
In that survey, we ask heads of household to tell us if they or anyone in their household has searched for information on specific banking products using social media. The answers align very closely with our Australian data.
That is, 35% of Gen Z’s said they had searched for information on social media, compared to 21% of Millennials. As the generations get older the proportions dipped precipitately to 13% of Generation X, 11% of Boomers and 9% of the Silent Generation.
Similarly, we saw congruency in which product searches were most influenced by social media. In the US example, as in Australia, it was credit cards for which households were likely to turn to social media for information.
Go where your customers are
These results are somewhat surprising to me. Not that it is younger consumers that are turning to social media for information on banking products. The market is confusing enough for those that are experienced, let alone those that have never borrowed. The part that I found surprising is that it is for credit cards that younger consumers are most likely to be looking for information via social media.
In Australia for example, the proportion of consumers that own credit cards is lowest in the youngest age cohorts – particularly under 25. These consumers are more likely to lean towards debit when it comes to making purchases and have not ‘learned’ to rely on credit cards for buying things online or when overseas – they have BNPL tools and Paypal to give them the perceived security or ability to delay payment.
So, the data made me wonder if banks and financial institutions were doing enough to ensure that social media accounted for a large enough share of their focus when it comes to marketing. By not focusing on the channels available – TikTok, Instagram etc. – any provider is surely missing a huge opportunity. Many years ago, one of the major Australian mortgage providers said to me that if he didn’t leverage mortgage brokers then the bank would miss out on any customers that spoke to a broker. Those same customers wouldn’t go and actively search on other channels to find the bank if the broker didn’t offer their brand of loans. The same is true of social media, banks need to be where the customers are searching. And the message is clear. Customers are on social media.
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