Perspectives on the Potential for Social Media to Improve Communication in Small Business–Bank Relationships

Abstract

Relationships with the small business sector have traditionally been largely neglected by banking institutions. However, as a result of recent turmoil in the world's economy and the ongoing impact of the recession, banks find themselves in a quandary about how best to support those within the small firm sector in times of tight credit. With increasing regulation, market fragmentation and increased competition, banks face real challenges to improve communication and establish profitable and long-term relationships with their small firm clients. Through conceptual modelling and empirical research, this paper explores the small business– bank relationship and examines the extent to which social media may facilitate more effective communication in that relationship. A qualitative research methodology uncovers perceptions of both senior bank executives and small firm owner-managers with respect to the perceived value social media can bring to communication within the small firm–bank relationship. The findings indicate that bankers saw little merit in any communication opportunities afforded by social media, while the owner-managers could see great value in such new media channels for improved communication. Through theoretical modelling, the differences in perception were classified at the levels of context, content and competency. It is concluded that, while social media could add value to the small firm–bank relationship, the medium would be most effective when used in a secondary capacity to personal face-to-face relationship building.