Three Reasons Why Banks and Credit Unions Should Offer a Social Investing Experience
Over the last 5 years, banks and credit unions have seen returns from increased investment in social media marketing and customer engagement programs. Yet, the power of social media can extend beyond these applications and can enhance financial institutions product portfolios
Investopedia defines social media as “computer-based technology that facilitates the sharing of ideas, thoughts, and information through the building of virtual networks and communities.” In this context, there are valuable applications and demand for investment products that share investment strategies across groups and build a social community. Along with the popularity of group investing and investment clubs, social investing adds an engaging and viral element.
Here are three reasons why financial institutions should integrate social interactions into their investment products:
Attractive to Millennials and Gen Z
As digital natives, social media has become the centre of many interactions for Millennials. Each day, 71% of all Millennials use social media for an average of 5.4 hours each. IDG Research Group has found that 59% of millennials use social media to find information, compared to only 29% of older generations.
Generation Z has followed on this trend and are as, or arguably more, comfortable than Millennials when interacting with friends, celebrities and brands via social media. Adding social experiences to investment products helps add this familiarity and creates a viral factor as users seek to grow their investment community. Voleo has seen an average of 13 invitations sent per investment club with a conversion rate of 70%.
Investments decisions made by a group perform better
Group investing comes with a number of benefits. Not only are investors able to share the risk and reduce the barriers to entry, group decisions can outperform individual decisions. At Voleo, we found that 80% of our investments clubs outperformed the average of their members, with an average overperformance of over 60%.
Integrating social interaction components such as ‘following’ individual investors, clubs, and stocks enables Voleo users to create their own network above and beyond that of their investment club. When investors are earning higher returns, they are more likely to try new products and refer users to your financial institution.
Contributes to improved financial literacy
Only 27% of Millennials seek professional financial advice on savings and investment and 12% on debt management. When Millennials do have specific financial issues or questions they opt to use their own personal network. And Millennials are not alone in their preference to try to answer financial and investing questions on their own.
By enabling social chat room features and discussion on trades, Voleo makes it easier for investors to learn from their network while getting hands-on experience. Voleo also provides a definitive return on investment decisions (DROID) score that helps users spot and follow along with the best performing investment clubs and individual investors on the platform. By providing a comparative benchmark, investors can track and improve their performance as their financial know-how grows over time.
Offering a more social experience within your product infrastructure centralizes interactions that boosts ease of use and supports an active user base. In our soft launch, Voleo observed high user engagement with 97% of clubs active and 77.5% of users largely attributed to the engaging nature of the social experience. We’d love to share our experience! Reach out to us at firstname.lastname@example.org.