Q-2_2015_efl-Newsletter_08 08.04.15 06:35 Seite 3 efinancelab | quarterly 02 | 2015 03 Editorial Opportunities of Social Media in the Financial Market Philipp Sommer Philipp Sommer Account Executive Financial Services salesforce.com Germany GmbH With approximately two billion active users, 1,900 Wikifolio certificates. These Wikifolio response to a complaint the same day they Media account or by following applicants on Social Media platforms provide new opportu- transactions account for a total trading vol- send it, the average response time amounts Social Media with their permission. Con - nities and challenges for the financial mar- ume of EUR 4.6 billion in stocks, ETFs, and to ten hours while over two-thirds of ques- sidering a person’s social standing and pro- ket. Users increasingly change their per- certificates with a EUR 400 million turnover tions remain unanswered. An internal alloca- fessional connections is especially interest- spective away from a strict deference of their in October alone at the Stuttgart stock tion of customer complaints and alignment ing for people who might otherwise have private rights towards the more engage- exchange. Consequently, several large direct of company accounts would help to address trouble getting a loan due to a scant or spot- ment-oriented expectation that companies banks offer some of the Wikifolio certificates user requests more satisfactorily. ty credit history or for people in developing listen and respond to their concerns through for a savings plan. This demonstrates the countries where it is difficult to obtain finan- Social Media. For example, the inbound con- incremental interest of and economic poten- Lastly, big financial institutions hold back on cial data about the applicant. Clearly, the sumer engagement with companies grows tial for financial institutions through Social the opportunity of social credit scoring where identification and extraction of useful data over eight times faster than social networks Media platforms. credit companies use personal data from points requires profound databases and ana- themselves. social networking sites (e.g., location, social lytical techniques in the realm of Social Apart from the more striving market of social graph, e-commerce behavior, and device Media. The pervasiveness of Social Media platforms trading, financial institutions are currently data) to assess a consumer’s credit risk. This and the large amount of shared information struggling to fully exploit other potentials of approach follows the assertion of John In general, it can be seen that the pervasive- causes promising emerging markets for Social Media platforms like a successful cus- Pierpont “J.P.” Morgan that character is ness of social platform usage provides finan- financial institutions. A prominent case is the tomer relationship management or a sophis- more important in assessing one’s credit- cial institutions with promising business field of social trading networks (e.g., eToro or ticated social credit scoring. Simply estab- worthiness than money or property. opportunities which are partially already rec- Wikifolio) where traders can interact and lishing a Social Media presence does not sat- ognized (social trading). However, to exploit duplicate others’ trades. On Wikifolio, users isfy complex consumer interests spanning However, a common reciprocation is the the financial market potential of other areas can trade certificates of portfolios which rep- from feedback on banking products and reservation of banks to violate a customer's of Social Media (customer relationship man- resent the investment strategy of a particular services, over information on regulations, up privacy. Social scoring providers address this agement and social credit scoring), the use social trader. Since its launch in 2012, around to customized financial advice. While, e.g., issue by asking applicants to voluntarily pro- of more advanced engagement and analytical EUR 290 million have been invested based on over half of the online users expect a vide a limited-time access to their Social tools is required..