Open Access

Maximilian Lorenz Blau

• This thesis examines how financial institutions can address outcomes of the global financial crisis (GFC) such as mistrust of customers and ambitious requirements of regulations such as Basel III. Moreover, the market is facing a dramatic sociocultural change which creates the necessity to realign retail banks’ strategies. It will be outlined why social media is an important trend for the financial sector and which methods can be used to achieve a competitive advantage through customer-centricity. On the one hand the financial sector will be analysed to determine which of Porter’s five forces are shaping it. On the other hand, it will be shown how social media can be used to achieve a competitive advantage. This thesis will find out that social media is an important medium for retail banks to gain back customers’ trust in financial institutions and to focus on the customers’ needs. By engaging customers on social media platforms such as Facebook or Twitter, financial institutions can even create value beyond financial products and increase their innovative drive. Best practice examples of Banks such as CBA, ING Direct, Wells Fargo, and ICICI prove that. The implications are that social media gives customers the power to shape the bank of tomorrow and in turn banks can gain valuable insights into customers’ needs. Financial products and services will make more use of social media platforms and increase customers’ engagement through sharing, commenting and liking.