By: Joe Gillen
Social media is playing an increasingly larger role in most financial institutions' marketing and customer service strategies. Banks and credit unions use Facebook and Twitter to introduce new products, garner feedback on services, post information about new innovations and measure customer satisfaction. However, bank consultants are discouraging institutions from leaning too heavily on social media for certain tools, particularly sign-on services.
A recent American Banker article noted that many European banks were allowing users to sign in to their bank accounts via Facebook and Twitter, a move that may appear to boost convenience for customers but could actually expose them to harm. The news source noted that providing access to millions of customers or members via a single log-in - and without unique username and password requirements - could expose customers to fraud, identity theft and other security vulnerabilities in the future. Identity theft is already a pronounced problem that affects millions of Americans each year. By allowing millions of customers to access their bank accounts through one platform, the scope of damage could reach unprecedented levels in the event of a data breach or hacking event.
Will sign-in services eventually spread to the U.S.?
The article noted that currently, many European banks are beginning to offer sign-in services via single-platform social networking sites, but analysts are hesitant to make determinations about whether this trend will spread to the U.S. Nicole Sturgill, a research director in the cards and retail banking practice at CEB Towergroup, told American Banker that social media should solely be used for marketing and customer service purposes, rather than actual banking.
"However, banks outside the U.S. are starting to allow direct access to [online banking] through Facebook and that's where there should be a concern about Facebook hacking," Sturgill said. "For those banks, Facebook should be used as a gateway to [online banking] but there should be an extra layer of security. No one should be able to log in to [online banking] with nothing but their Facebook ID and password."
Many financial institutions have been trying to find a balance between social media and security, and it's likely that this trend will continue as social media plays a stronger role in most Americans' daily lives. For example, more banks are relying on Twitter and Facebook to address customer service needs. However, adhering to privacy standards when corresponding with customers over public forums can present challenges to banks.