The Role of Social Media Grows in Asian Corporate Finance

A panel of experts at the recent Asian Banker Summit in Singapore gave a resounding ‘yes’ when asked whether there’s a role for social media in corporate payments and banking. Even though social media for individual consumers has received much more attention, bank and corporate usage of social media is increasing. The panelists and other experts identified several key social media opportunities for banks and corporates.

One opportunity is information. Banks can use both internet and intranet sites to provide information to clients or prospective clients. Along with offering thought leadership pieces on their web site or in other electronic media to demonstrate their expertise, banks can also create intranet sites accessible only to clients to provide strategic information confidentially. Sending email, text or other electronic messages to key influencers about this information as well as new services is yet another favoured and effective marketing tactic. As another example, a company also used webcast training to teach staff across Asia about hedging and currency risk management strategy following a series of mergers.

While corporate treasurers would hardly be likely to go to Facebook or MySpace to look for new sources of information, business alternatives such as LinkedIn are surprisingly useful. LinkedIn groups, such as the gtnews Treasury Expert Panel offer information, networking and even jobs for treasury professionals. On an individual basis, corporate treasury or cash management staff can use services like LinkedIn to contact peers in non-competing companies for information and ideas.

Another social media is mobile, though companies obviously use mobile differently than private individuals. Corporate treasurers can get information immediately about their cash position or other data, and authorise transactions on the phone any time they want. Banks can also send an alert if economic developments or a financial position require immediate attention. As Standard Chartered Bank’s global head of client access, Neil Livingston, commented, mobile banking “effectively minimises transaction lag time, allowing clients to make the most of their working capital and manage liquidity efficiently and at their own convenience.”

Another use for mobile is salary payments. While amounts are small now, a service like ANZ Bank’s Wing in Cambodia enables corporate treasurers to pay salaries by mobile phone and keep money in their accounts to earn interest longer than in the past.

While peer-to-peer payments and lending on social media currently focus primarily on individuals, it’s easy to see a shift to small and medium-sized enterprises (SMEs), and then to corporates, over time. In Kenya, for example, Strategic Analytics already estimates that “M-PESA mobile funds transfer service handles nearly 10% of Kenya’s GDP.” If corporations far smaller than the FTSE 1,000 continue to have difficulty obtaining credit or making payments through banks, social media could spring up to enable peer-to peer payments, or even loans, for SMEs and then grow to larger sizes.

While social media clearly has demonstrable benefits, it’s also still a double-edged sword. On the one hand, it can make business more efficient by enabling corporate treasurers, cash managers, traders or other staff to obtain invaluable information or make transactions more quickly and easily. On the other hand, posting sensitive information or even something as seemingly innocuous as your travel schedule, if a merger is pending, could cause personal or professional embarrassment. Whether it’s used well or poorly, social media’s impact on banks and corporates is larger than many might expect and it’s continuing to grow rapidly.

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