While it’s probably fair to say the banking industry still ranks fairly low in the public’s esteem, no one can deny its central role in the economy and it’s always interesting to see what the little weasels are thinking about. On that note, PricewaterhouseCoopers has released the 2015 edition of “Banking Banana Skins,” based on a global survey of 672 bankers conducted with the Center for the Study of Financial Innovation, asking what keeps them tossing in their silk sheets at night.
One thing that stands out in the 2015 survey, amid usual suspects like regulation and cyber crime, is the rapid rise of social media as a major threat: from 2014 to 2015, social media rose from nineteenth place (out of 25) to eleventh place, putting it ahead of more familiar concerns like capital availability in thirteenth place, interest rates in fourteenth place, and emerging market volatility in fifteenth place.
According to regional data, social media loomed even larger in the minds of North American bankers, where it took sixth place following major risk factors like cyber crime and the overall macroeconomic outlook.
Unsurprisingly the main threat posed by social media is damage to banks’ reputations (the rise of financial technology or “fintech” -- including alternative online banking schemes relying on new approaches in crowdfunding and peer-to-peer lending -- was treated as a separate area of risk, ranked in fourth place overall in the 2015 survey).
The report notes: “For many respondents, social media are forcing banks to make fundamental changes to the way they protect their brands because their ‘light speed and unprecedented reach’, their unpredictability and lack of accountability make them a very different beast to other reputational risks. Criticisms launched through social media can cause reputational damage whether or not they are well-founded.”
Setting aside the irony of bankers complaining about lack of accountability, PwC noted there’s an upside too: “By engaging directly with customers on social platforms, banks can show they are listening to and acting upon complaints.”