Social media transforming our lives

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WE are in the midst of a revolution. It's called social media and it comes in different forms and under different brands. There are microblogs like Twitter, video blogs, like YouTube, wikis, like Wikipedia, social networks like Facebook and podcasts like iTunes.

The explosion of social media in the past decade is attributed to Web 2.0, the technology that allows individuals to interact with each other, share information and self-generate content in a virtual community. With the launch of smart phones like the iPhone, the revolution has moved to a notch up. Now everyone who has a phone possesses unlimited access and instantaneous communication through the Internet.

The Internet world in China has come a long way since Professor Qian Baitian of the Beijing Computer Applied Research Laboratory sent out the mainland's first email in 1987. Internet has created business opportunities for a new type of entrepreneurs, providers and consumers.

Today you can read news on Sina, send and receive emails using 163 mailbox, meet friends at RenRen, microblog at Weibo, search for information through Baidu, shop at Taobao, play games on Kaixin, chat via QQ, invest in PaiPai and settle bills through Alipay - all in the comfort of your own home. All these tools started around the turn of the millennium.

According to the China National Network & Information Center, the mainland's Internet population in January 2012 exceeded 513 billion, including cell phone users, social networkers and microblog users. For the financial industry alone, estimated Internet banking users this year will top 100 million.

Before considering using social media for your business, the first question to ask is: "What do I need it for?" For most corporations, the first reply that comes to mind is increased sales.

China Galaxy Securities has ordered its sales department to microblog clients and prospective clients to facilitate engagement and reduce labor costs. China Merchant Bank's microblog has over 220,000 "fans," which is the highest in the banking industry. It provides daily updates on news and financial matters, investment advice and greetings to customers.

Dispensing coupons

Standard Chartered Bank launched its mobile game Breeze to dispense discount merchant coupons. The strategy has attracted thousands of customers. The peer-to-peer online lending site PaiPai provides and discloses a "bad customers list" as a warning to investors and delinquent clients. Many microcredit companies make use of search engines, the most basic social tool, to advertise their loan products.

Social media is simply a tool that co-creates value that is relevant, up-to-date and problem-solving. The key is to keep the social circle engaged and the decision-making process interesting, which ultimately creates a tangible or intangible value to a firm.

Social media has gradually become a "must have" strategy across industries, including banks. Owing to the credit crunch crisis a few years back, general public sentiment towards banks has changed. According to the Edelman 2010 Trust Barometer Survey, public trust has fallen in the past year. As such, social media becomes a validation process in trusted circles. Customers would rather listen to friends than bankers.

In China, people have tended to trust banks for the simple reason that they are backed by the government. Nevertheless, social media does influence consumer behavior amid a perception that the virtual community is unbiased and more reliable. Having said that, it is still a challenge to measure social media's contribution to the bottom line. Years ago, a university conducted research into the correlation between ATMs and bank profitability. The result was negative. However, just imagine the response today to a retail bank that had no ATMs. Bank executives also don't care about the return on investment of ATMs.

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