Social media and financial institutions in the Indian context

Abstract

This paper aims to identify the extent to which social media is used by Indian financial institutions (FIs) for various purposes including generating financial awareness. We consider a total 32 FIs which are listed with Bombay stock exchange (BSE)/national stock exchange (NSE), India; 22 of them being banks and ten non-banking financial companies (NBFCs). Managers of all the FIs were interviewed using self-administered questionnaire. The result shows that Facebook, Twitter and LinkedIn are the most widely used social media platforms for exploring new markets, developing new ideas, selling financial products, connecting with the customers and customer relationship management (CRM). Further, banks and NBFCs are found to adopt these media pages to post important financial announcements, which increases customer's interest in investment options. The study provides a view on social media usage in terms of cost reduction and customer satisfaction. However, there are some risks associated with social media such as reputational risks, operational risks, data and information risks etc. Furthermore, managerial discussions highlighted their contribution to the use of social media to increase financial literacy.