Introduction of Social Media Networks Utilization in Tanzania Commercial Banks

A Proposal Submitted By Baraka Charles Rupia (TP017356) In Partial Fulfilment of the Requirements for: The Bachelor of Science (Honours) International business management University College of Technology & Innovation (UCTI) (7th September, 2011)
Student Name: Baraka Charles Rupia Student No: TP017356

Email Address: charlesbaraka@gmail.com

Supervised by: Mr. Zainalabidin Sebli Bin Hambali

ACKNOWELDGEMENT Firstly, I would like to give thanks to God for giving me strength and courage to conduct this research to reach this mid-point. My friends, family and college colleagues for giving me with support and encouragement I needed in caring out this research. Secondly, I would like to thank my supervisor Mr. Zainalabidin Sebli Bin Hambali for providing me with professional guidelines in various stages and important aspects of conducting this final year project.

Table of Contents
CHAPTER 1 ................................................................................................................................................. 6 INTRODUCTION .................................................................................................................................... 6 Social Media Network Definition ......................................................................................................... 7 Background of Research ....................................................................................................................... 8 Review of Past Research Work ........................................................................................................... 12 Problem Statement .............................................................................................................................. 13 Aims and Objectives ........................................................................................................................... 14 Scope and Limitation .......................................................................................................................... 14 Justification of the Research ............................................................................................................... 15 Methodology ....................................................................................................................................... 16 Conclusion .......................................................................................................................................... 16 CHAPTER 2 ............................................................................................................................................... 17 Literature Review.................................................................................................................................... 17 Introduction ......................................................................................................................................... 17 Domain Research ................................................................................................................................ 17 Why should Banks Engage in SMN. .................................................................................................. 17 Ways Bank can use SMN.................................................................................................................... 20 Importance of SMN to Banks. ............................................................................................................ 20 Advantageous of SMN over Traditional ways of advertising ............................................................. 22 Challenges and Limitation of Social Medias ...................................................................................... 22 Why do customers engage in social media relationship with other business but not banks. .............. 23 Risk of Social Media Networks .......................................................................................................... 23 Social Media strategy .......................................................................................................................... 24 Social Media Landscape ..................................................................................................................... 25 Best practices and Approaches ........................................................................................................... 26 Return on investment .......................................................................................................................... 28 Privacy and Legal Concerns ............................................................................................................... 28 Factors influencing SMN usage in Tanzania ...................................................................................... 29 Conclusion .......................................................................................................................................... 30 CHAPTER 3 ............................................................................................................................................... 31 RESEARCH METHODOLOGY ............................................................................................................ 31

Introduction ......................................................................................................................................... 31 Research Approach ............................................................................................................................. 31 Primary Research ................................................................................................................................ 31 Secondary Research ............................................................................................................................ 31 Sampling ............................................................................................................................................. 32 Area of Study ...................................................................................................................................... 32 Questionnaire Instruments .................................................................................................................. 32 Questionnaire layout ........................................................................................................................... 32 Data Analysis Methods ....................................................................................................................... 33 Ethical Considerations ........................................................................................................................ 33 Conclusion .......................................................................................................................................... 33 REFERENCES ........................................................................................................................................... 34 Books ...................................................................................................................................................... 34 Websites .................................................................................................................................................. 34 Journals & Articles ................................................................................................................................. 35 APPENDIX ................................................................................................................................................. 38

LIST OF ACRONYMS SMN- Social Media Networks CRM- Customer Relationship Management ATM- Automated Teller Machine SPSS- Statistical Package for Social Sciences ICT- Information and Communication Technologies

CHAPTER 1 INTRODUCTION Tanzania is an East African country, which is a combination of the mainland and the islands of Zanzibar (Pemba and Unguja) and Mafia. Tanzania has a tropical climate consisting of Africas highest mountain, Mountain Kilimanjaro, the world's second deepest fresh water lake, lake Victoria and the world second largest lake, lake Tanganyika. Tanzania has a total area of 947,300 sq km and population of 42,746,620 (July 2011 est.) and population growth rate of 2.002%. (C.I.A World Fact Book, 2011) Tanzanias banking industries can be categorized into four groups namely; commercial banks, regional unit banks, financial institutions and regional unit financial institution. There are twenty nine registered commercial banks, seven regional unit banks, five registered financial institutions and two regional unit financial institutions.i

The purpose of this research is to introduce the use of social media networks specifically Facebook, YouTube and Twitter in registered licensed commercial banks in Tanzania. Also, suggesting the effective strategies, useful approaches that banks can implement and follow in engaging in this highly growing business model to achieve sustainable competences over competitors and ensured survival in present and future business environment. The research will provide knowledge on how banks can capitalize from opportunities and benefits of positioning themselves in social Medias, leveraging from listening to customers/clients conversations and other influencers related to banking industry such as fellow banking companies worldwide. Moreover best practices in responding to customers enquiries and concerns raised both negative and positive ones in a manner that avoids damaging the bank reputation but delivering customers value to retain them and turning the customers to marketers to attract more customers and new market segments to respective bank. The research further seeks to provide knowledge to Tanzania customers and clients of commercial banks on the importance of engaging in social media relationship with their banks.

Social Media Network Definition Social Media is media that enhances communication and the formation of social ties among people. (Donathan J, 2004) Social Network sites are web-based services that allow individuals to construct a public profile, articulate list of other individuals whom they share connection with and allowing them to view and transverse their list of connections and those made by other users. Nature of these connections varies from one social site to another (Boyd, D. & Ellison, N. 2007) Social Media Networks have developed from being means by which a person interacts socially with family, friends and colleges through activities such as photos and videos sharing to a strong marketing tool in todays business world of strong competition for both emerging and successful large firms. Social sites have more than a million users worldwide and the rate is growing per day. Basically, social media networking such as Facebook, YouTube, Twitter, LinkedIn and

blogs have become part of consumers lives, making them an important market place which business owners must invest in and capitalize from. (Nilsenwire, 2010) Joining these Social Media Networks is free, thus business firms can utilize them with a low cost compared to the traditional advertising methods. Companies can easily calculate the return on investment due to advancements of technology in tracking customers dialogue on specific topics or a specified account/profile owner in Twitter and Facebook while in YouTube its through number of views, comments and feedbacks on a particular video posted by the business firm. (Chaney P, 2009) Background of Research Tanzania Commercial banks have not started using social media networks as a business strategy yet but twenty four hours banking service such as online banking and mobile banking have being introduced in recent years and most commercial banks are providing these services to Tanzania banking customers. In additional to that, ATM service is being provided by banks for a couple of years now. The continuous growth of Social media networks usage in Tanzania is highly influenced by the growth of information communication technologies (ICT), specifically the growth of internet and growth of mobile phones usage and technology. According to internet world stats statistics, the mobile market in the country was expected to break 50% penetration barrier during 2010, while the introduction of fibre optic international submarine cables in 2009 and 2010 has revolution the internet market which depended on expensive satellite connections (world stats). Fibre optic has reduced tariffs on internet services (TCRA, 2009) Tanzania mobile services are provided by Tigo, Vodacom, Zanzibar Telecom (ZANTEL), Tanzanian Telecommunication Company Limited (TTCL), (TCRA, 2009). The use of mobile phones has enhanced people to have better understanding of institutions, organizations, policies and legislation. (Sife, Kiondo & Lymo-macha. 2010) The Table 1 below shows the continuous growth of internet usage in the country with the corresponding penetration rate;

Table 1: YEAR 2000 2002 2005 2009 USERS 50,000 500,000 820,000 520,000 POPULATION 14712000 13874610 12247589 41048532 PENETRATION % 0.3% 3.6% 6.7% 1.3%

Source: http://www.internetworldstats.com/af/tz.htm Recent statistics released by Internet world stats showed that by June 30th 2011 Tanzania had 319,440 Facebook users with 0.7% penetration. According to statistics released by social media bakers, there is significant continuous growth of Facebook users over the last six months, while Facebook usage distribution in the country, Generation Y and Generation X are the most users of facebook in Tanzania, out of 344460 facebook users, 40% of users are in age group of 18-34, 34% are in the age group 25-34, while baby boomers generation as well as older generation have also start using this platform at a slower percentage rate. As shown in the figure 1 and 2 below;

Figure 1 Tanzania Facebook users growth over the last six month

Source: http://www.socialbakers.com/facebook-statistics/tanzania

Figure 2

Source: http://www.socialbakers.com/facebook-statistics/tanzania There are no reliable statistics on the number of Tanzanians using twitter or subscribing and viewing YouTube videos. However, Tanzanians have started using twitter to talk about their daily activities, others talking about the services they receive from their brands particularly banks. As shown in appendix.

Review of Past Research Work Many marketers are still focused on the old model of advertising; from the business firm to customers. We are in a business world that the old monologue way is being replaced by the dialogue that takes among customers as brands are being influenced by customers response and feedbacks shared across online connected communities through social media platforms. (Chaney, P. 2009) There is a need for business owners to not only leverage its customers to talk about their brand in the web but also by turning them to marketers, reaching the targeted and right consumers, delivering the right message with no boundaries on the spread of the message in terms of a more international look. (Ernst & Young, 2011) Customer talks about their experiences on services and products delivered by companies in social sites whether the companies are available or not. Business owners are taking leverage on the opportunities and benefits that these social platforms has to offer, sustaining their markets, achieving competences and gaining new customers. (Social CRM, 2011) Banks and Financial institutions have a unique opportunity to utilize and benefit from investing in social Medias, engaging and interacting in customers conversations but unfortunately only few financial institutions have invested in this sector worldwide. (Financial Institution & social Media, 2010) The reasons behind most banks not investing in social media platforms are the fear of losing control of information management, the way information are transmitted and shared online, lack of knowledge on how to use these platforms to generate revenue, expansion of markets, lack of the knowledge of how to track and propagate the customers conversations about the banking firms while others just remain stagnant in fear of change itself where most financial institution falls. (Oracle Financial Service, 2009) Moreover other financial institutes along with banking clients and customers have risen the concern of privacy and security, whereby customers may not feel comfortable in sharing their financial information and details online. Therefore, banks opt to be selective and careful in the way they capitalize from social sites, which includes providing training to its employees as well

as having specific employees who are assigned in the banks Social networks utilization department.(Financial institution & Social Media, 2010) Information and updates transferred through social media networks travels fast both to the specific targeted markets as well as attracting new markets, also building a interrelationship between banks globally. This is accomplished through access of internet online via personal computers (PCs), laptops, mobile phones or other devices that through devices that support Internet usage and social networks application such as Ipads. (Social CRM, 2011) Problem Statement Commercial Banks in Tanzania serves large number of customers throughout the countries in three segments of the country; urban areas, semi-urban areas and rural areas. Due to increase in daily activities and unexpected emergencies of the population as years go by, not every customer/client can afford or get time to visit his/her bank branch or queuing in line during normal bank operating hours while making calls to the customer service centre may result into either the call to be on hold or absence of the customer service representative in the particular time the respective customer needs assistance. The continuous advancement of technology and services such as online/mobile banking has increased the need for customer assistance from banks 24-hours a day. Customers expect bank assistance when they need it regardless what day, time or where they are, since banking services are very essential requirements for every citizen. Research Questions Should Tanzania Commercial Banks engage in Social Media relationship with customers? Do Tanzania customers/clients need Social Media Relationship with their Banks? What services and information that Tanzanian Banks can offer via Social Medias? What strategies Should Tanzanian Banks implement to capitalize from Social Medias? What are the best practices, responses and approaches in Social Media Networks? What are opportunities and benefits that Social Media Platform provides to both Banks and Customers?

Aims and Objectives The main aim and objective of this research is to address the significance of Social Media networks strategies in Tanzania Banking industry; Enabling commercial Banks to identify its market niches and targets markets, using low cost advantage in delivering relevant information to specific market segment and at the same time to bigger audiences scattered throughout the country even to potential customers/clients, investors or bank influencers who are not only located inside the country but in other places of the world. Commercial banks that provide online banking, mobile banking and visa cards would be able to understand the way they can provide customer service and support to its clients with no regional or countries boundaries for twenty four hours a day and seven days a week. Increasing benchmarking and partnership networks with other international banks, getting more understanding in problem solving techniques on similar situations. Motivating employees within the organization also being able to retain customers and increasing customer loyalty. Influencing market place through social media platforms is another objective whereas banks can create a bond with customers in relational level to influence them to talk about their brand attracting other customers as well as participating in banks communities and events to increase brand awareness. Moreover the way that banks can tract and propagate talks about them in social sites and calculating the return on investment which is not only on monetary basis. Scope and Limitation The scope of the research is mainly on the areas within the country that commercial banks has position themselves and people within the particular region/society have access to internet facilities either through internet cafs, mobile phones, workplaces, home computers or via other portable devices that support internet services facilities which will be most active in urban regions, semi-urban regions and at a very low margin rural areas.

The limitation of the research would be in finding the previous researches, surveys, data and information on this particular area of study based in Tanzania. As it is still a new business trend to most of the developing countries. Most of banking firms have a tendency of not sharing companys information to outsiders especially if particular information involves future strategies and plans, thus there will be limitation in acquiring adequate and reliable information. There would be no enough time to go all the Tanzanian regions (25 regions) or conduct interviews to all twenty nine licensed commercial banks; hence the information collected would be used to represent the large number size which might not be suitable enough. Communication barriers between the researcher and people that help the researcher in the data collections process, the source of information and data is another limitation of the research. Lack of enough funds and time constraints to conduct the research at a wider scope throughout the whole country will be another limitation to the research. Justification of the Research This research will enable Commercial banks to start planning effective means and strategies to deliver customer value for future references through Facebook, Twitter and YouTube social media platforms. Increasing brand awareness not only on national perspective but in a global perspective as well leveraging from the time that consumers/individuals spent online in social sites, grabbing every opportunities that can be obtained through this customer/public-Bank Social relationship. The significance of the research is not only concerned with benefits and opportunities that banks gets from social media networks, it also provides awareness to the public/customers on importance they can get from engaging in relationship with their banking firms and financial institutions.

Methodology The research would involve getting information on awareness, understandings and perspectives towards the use of social media networks for banking services in Tanzania from both commercial banks and from the public which represent these banks customers. The research would include collecting information and data through primary research and secondary research; Primary Research Primary research would be conducted through provision of online questionnaires to individuals (customers) and other questionnaire would be provided to the selected commercial banks together with interviews. Secondary Research A secondary research would be conducted through gathering information, data and statistics from journals, articles and books. Further online resources such as websites, e-journals, e-articles and article from newspapers related to the research being conducted. The data collected through both primary and secondary researches will be analyzed by the researcher to provide final conclusion and results obtained from the data, to provide effective reliable recommendations. Conclusion This Research would discover the Knowledge and perception that Tanzania Commercial Banks and Tanzanians Banks customers have on Social Media Networks for business purpose, provision of services and in establishing the bond between them in relational level through Social Media Platforms and Limitations in effective utilization of these platforms in Tanzania.

CHAPTER 2 Literature Review Introduction This Chapter talks about findings by other researchers, the contribution to the body of knowledge relevant to the research, identification of the key development areas and the gaps and limitations in researches conducted by previous researchers. Domain Research Web 2.0 technology has changes the way people live, connect and engage online, changing the customer behavior model. Consumers are looking for a user friendly and networked bank experience to build their trust together with high level of transparency and interactivity. Banks that have successful incorporated these technologies into distribution models have gained customer trust especially after the financial crisis which resulted into most customers to lose confidence with their banks even considering switching to other financial institutions. (Bussman, Hyde & Sandrock. 2011) Social platforms such as Facebook, YouTube and Twitter have attracted millions of users, three out of four global consumers who go online visit social networks or blogs, spending 66% more time in these platforms than one year ago. Social Networks have become part of consumers everyday lives, making them a channel that banking firms cant ignore. (Wire N, 2010) Social Media networks are no longer channels through which individuals simply chat, post videos or share photos but a strong vital marketing channel through which businesses/brands build communities and connect with their consumers in a relational level. (Smith, Wollan & Zhou. 2011) Why should Banks Engage in SMN. Social media networks have provided banks with a new Customer relationship Management tool (CRM), which is effectively being used by only few banks. The continuous increase in competition within the banking industry has raised the need for customer advocacy. Banking Services such as ATMs, Internet Banking and Mobile Banking has made a bank to be available to its customers 24/7 (twenty four hours a day, seven days a week), as a result customers expect

solutions about their banking needs anywhere, anytime through various channels, not just old model of local branches and calling customer services which can only be used during normal working days and hours. (Social CRM, 2011) Customers who are more interested in engaging in social media relationship with their banks are the ones who have already engaged with the bank in transactional level in services such as internet banking and online bill payment. Banks should target these customers to further the digital relationship build between the bank and these customers. (Financial Institution & Social Media, 2010) Only few banks have positioned themselves in social media networks, Platforms like twitter which is a micro blogging site that provide opportunity to the bank to listen to what customers, clients and other people such as competitors and industries analyzers are saying about them and a chance to instantly respond to different enquiries and concerns raised. Further banks which have position themselves in Facebook with a page/profile, group or created Facebook communities are strengthening marketing and promotion through posting various events that a bank host or advice its customers and clients to attend. (Microsoft Financial Service, 2010) Banks that have started developing strategies to leverage from the use of social network platforms differ on their main goals and objectives depending on their size. Large Banks that have incorporated huge funds in building their brands through traditional media of advertising which includes Television, banners, radio and newspapers are using Social Media networks to build a personal relationship with their customer base, narrowing market segmentation and understanding more the community they serve rather than just assuming their needs and requirements on banking matters concerns. On the other hand smaller banks are using social medias to appear larger and attracting more customers and clients, extending their business reach as well as empowering their communities. This in turn enables them to differentiate themselves from large banking institute with these distinctive capabilities which on one way or the other large institutes may remain bias about it, failing to realize its impacts to the banking industry in present time and most importantly in future. Smaller banks have more chance in expanding quickly and gain competences via the use of these platforms. (Hitachi Consulting on Financial Services, 2010)

Facebook is a general social community which enables a bank to use conversation to build relationship, increase website traffic and provide banks news and updates such as network opportunities, promote events, community projects and charities that a bank may sponsor as well as avoiding negative reputation. Twitter limits a Bank post to 140 characters but does not limit the potential benefits that it may enjoy through its effective utilization which includes showing appreciation to bank twitter profile followers that re-tweet or re-publish not only that but also personally and publically handling negative feedbacks about the brand. (Social Media Solution, 2011) YouTube is a vlogging site (Video blogging). An average YouTube viewer spends three hours online everyday while an average television viewer only spends two hours watching Traditional television per day. Business owners should be creative in creating contents that are educative, informative and interactive to take leverage on the time that individuals spends on YouTube to maximize company benefits. YouTube is replacing traditional television viewing habits for the recent and the coming generations. (Miller, M. 2009) According to the financial marketing analysis and insight the video posted by financial brands, inclusive banks and credit union commercials on YouTube have been viewed 450,486 times with a lot of customer response. This means the information and knowledge these particular brands are sharing to individuals are spreading enormous fast through social platforms. Information is spread to other customers or other individuals who are not customers yet through word of mouth within these individuals. As indicated by Christophe Langlois (Social Media Evangelist and Founder, VisibleBanking.com) during an interview with e-marketer digital intelligence, Facebook YouTube and Twitter are essential requirements for any company engaging in social media. He further said there would be many unofficial pages, groups and profile about the company; hence there is no choice for a company but to engage for the purpose of taking control of its brand. Social media is an excellent tool in snatching customers from other banks also for partnership with other business organization which could be the bank clients, these clients are less offensive due to the reason that they are also looking for markets through these platforms. (E-marketer Inc, 2009) Citi Group is a good example of a large banking institute that uses Facebook to build communities with its customers, it has develop a "Make a differerence, one Friend at a Time"

program whereas the bank promise to donate 50 US$ for every friend in customers facebook friend base who is approved for Citi credit card application. Refer to appendix. Well Fargo is one of the pioneers of the banking institute that engage in social media with two twitter accounts, three YouTube channels and five facebook initives and four blogs. The bank had 4,096 facebook likes which accounts for 0.009% of its customers and 13415 twitter followers which accounts for 0.028% of its customers while its YouTube videos has been viewed 450,486 times. (Cohen, L. 2009) Ways Bank can use SMN. The figure below shows the five ways that Banks can use social Media networks; Figure 3

Community Building

Customer Service

Banks SMN Usage

Market & promotion

Product Research

Transparency

Source: http://mashable.com/2009/09/11/banks-social-media/ Importance of SMN to Banks. Through effective utilization of social media platforms a bank does not only respond to angry customers but also discovers what competitors are doing and saying about their brand, competitors or individual who are bias towards the brand may post a negative comments to make the bank look bad in public, competitors could also raise aspects and concerns in areas in which

they think they think they provide better services or products than the brand. Hence the bank discovers its weakness and aspect that needs improvements, as well making competitive strategic plans to ensure future survival in the industry. (Smith, N. Wollan, R & Zhou, C. 2011) Social media platforms are; Easy to use and accessible to everyone with no boundaries. Highly scalable. Real time events, shows the exactly time a certain post from either customer or bank has been posted. Free to engage, hence cheap investment required. Motivating and encouraging employees. (Social CRM, 2011) Narrowing market segmentation, increasing ability to gain more specific information about the market. (Hitachi Consulting on Financial Service, 2010) Social media networks enable the customers to share their experiences of products and services provided by their brands whether good or bad, shifting the dynamic from one way communication (brand to consumer) to a two way communication (brand to consumer, consumer to brand) whereby brands have to respond to its customers. Customer-Bank interaction can be conducted without a customer to have to go to the banks or making calls to the customer service which may have no response or being on hold, bank interact with different people on multiple issues, thus time spent with customer/client is spent wisely and efficiently. (Financial Institution & Social Media, 2010) Case Study 1: For instance one Wachovia (Wells Fargo) customer was angry about an overdraft fee charged and expressed her opinion through twitter, the bank was quick to respond, directing the customer to a specific person who can provide the required assistance. On another scenario a customer tweeted about the positive experience with customer service representative, with no expectation from him, the bank replied asking the customer who is the specific customer service representative so that he/she can be thanked for providing good service. Thus through social media not only that Wachovia followers see other customers complaints and concerns but also see how the bank has reacted to them. (Social Media Solutions, 2011)

Advantageous of SMN over Traditional ways of advertising Being Measurable, spreadable and less costs are advantages that social medias have over traditional ways of advertising. It is difficult to know the exactly number of people who has seen and read an article that a company has posted in a newspaper, watched an advertisement on Television or listened through the radio or even pay attention to Banners outside, it is easy to know how many people have visit your site, BlogSpot or view an online video. (Chaney, P. 2009) According to Chaney we are in age of conversation and grassroots bottoms up marketing, old top-down methods are already doomed but their practitioners just havent noticed yet. People are too busy and occupied with their life that they have developed a tendency of paying less attention to newspapers, even getting time to watch television advertising, Most of the time they listened to the radio is during traffic jams whereas most would prefer listening to music rather than listening to news. People are not really ignoring the information around them but tend to filter them and pay attention to the ones that matters, with the growth of social media tools such as twitter which allows individuals to filter the flow of information and updates they receives. YouTube allows the subscription to specific channels of choice and lastly Facebook allowing people to join groups of their choices or like a certain pages. This phenomenon is referred as information on finger tips. Financial institute has a unique opportunity to benefit through this as every person has a banking account and few who havent are planning to have one, others even switching to other banks or adding more banking accounts. A bank which deliverers customer values and fulfilling customer expectations is the one that gains competences and gets more customer and clients. (channey, P. 2009 / Attensity Banking Industry Report, 2011) Challenges and Limitation of Social Medias No regulations hence content published by customers or competitors may not be true. Its impact cannot be stopped or undone even in the court, as its content travels globally everywhere. Some situation may need a fast decisions and a quick response regardless the amount of precise information available.

It can only be accessible in places with internet facilities either through laptops, computers, mobile phones or other devices that support internet usage. (Smith, N. Wollan, R & Zhou, C. 2011)

Why do customers engage in social media relationship with other business but not banks. Lack of awareness and knowledge, many customers and clients wants to connect with their bank or credit union via social media's but they are not aware on if they can, as banks has not promote their social network sites both to its customers and the whole society/public through all its marketing messages to increase awareness. Consumers lack understanding of the value of connecting with their financial institutes, banks should educate its customers on the benefits of interacting through these channels such as open customer dialogue, special offers and being able to read reviews from others customers. consumers have privacy concerns about the disclosure of their financial data, balances and other personal information, banks should ensure such information will be dispel and the interaction would be in a relational level. (Financial Institution & Social Media, 2010) Risk of Social Media Networks Banks fear the distraction of their brand image which they have spent millions of cash to create will be destroyed in social Medias since they have no full control of information transfer, affecting the attraction of new customer as well as loss of potential loyal customers and clients which they have worked hard to maintain the relationship. However the risk is higher if banks dont engage in social medias at all because customers talk about the services and products they get from their banks whether banks are available or not. Brands that are listening to what customers are saying about them at the same time improving customers experience are more likely to get customers to support them and survive in the future business environment. (Oracle Financial Services, 2009) Social Media networks are characterized with two significant risks; Business firms that remain stagnant and ignore its growth and influence in todays and future business environment will be left behind and miss out on this next wave of customer relationship.

Companies that do not understand what it takes to fully utilize, embracing, creating the right strategies and practices would experience a failure or not fully benefiting from Social Medias.

(Smith, N. Wollan, R & Zhou, C. 2011) Information transferred through word of mouth spread fast even more faster in a much bigger audience, positive interaction are essential in building customer relationship and brand loyalty. This can be achieved through a bank being a reliable source of accurate information so that customers and clients can trust the content provided by the firm through Facebook, YouTube and Twitter. Engagement in these social platforms is more valuable when a bank develops an interest in helping its customers/clients in solving their financial disputes and requirements instead of focusing on constant firms promotion. (Social media Solutions, 2011) Social Media strategy A simple way for financial institutions to get started in social media is to monitor the online conversations about their brand with free tools like Google Alerts or Social Mention. Listening to conversations and monitoring sentiment will prepare financial institutions for the types of comments they can expect when they create a social media presence. (Financial Institution & Social Media, 2010) Banks should identify the different segments of people talking on the selected channels in these case Facebook, YouTube and twitter in terms of their age group (generations), gender and where are they located and what are they talking about. Thereafter a bank can start building its own social community on these platforms, developing effective social media policy within the organization thats understood by all employees in different departments. Bank should provide the support via these platforms while measuring the success through looking on the number of followers, subscribers and cut down of customer centre calls. These should go simultaneously with listening to customers needs and innovating new products. Traffics should be driven to the banks social sites through traditional advertising and links in the firms official website. (Social CRM, 2011) Accounts with Verified Badge (Verified accounts) are no longer be offered by twitter, hence a firm can link there twitter page from their official website by using the free tweet buttons. (Twitter help Centre, 2011)

Source: Social CRM (2011) Social Media Landscape Its essential to define target audience when developing social media approach, younger generations are the future markets and its easy to win their heart now making them loyal but older generation are also important users. When gender is concerned women are more active in social media platforms than men, banks should recognize these and capitalize from it. (Microsoft Financial Service, 2010) Gen Y (18-30years old) contribute to a sizeable banks base, there income is estimated to surpass that of baby boomers and close rapidly on that of generation X. Gen Y are more web savvy, well-connected and spent significant time online in social medias on daily basis, practically motivated and most likely to support their brands thought informing others, looking for information and updates as well as posting their thought and opinions. To retain a competitive edge banks need to reach out this generation.(Oracle Financial Services, 2010/ Bussmnan, Hyde & Sandrock. 2011)

A good example is from one of the most successful bank in implementing social media strategy. Well Fargo, the bank believed the Gen Y members visiting there social media platforms engaging and interacting in conversations with the bank has influenced others who represent a critical demographic segment to become customers. (Hitachi Consulting Financial Service, 2010) Gen X and Gen Y (31-35) are the most users of social medias, however there is a high proportion of boomers (46-64) and seniors (65 & above) are also using these platforms. Facebook being the most utilized platform across all generations while YouTube and twitter is mostly used by Gen X and Gen Y. Social sites are powerful new ways for financial institution to connect with consumers of all generations. (Financial Institution & Social Media, 2010) Best practices and Approaches Banks that would engage in social media networks for the purpose of making sells or turning these platforms directly as a source of just promotion for their products and services would result into failure of their social media strategies. Customers that are in social medias are more interested in building relationship with their service and products providers, thus Banks should focus in building a trust-based relationship with its customers through transparent and genuine participation in social media networks, being committed and valuable resource for provision of information. Marketers that fail to respect consumer sensibilities by making social network relationship transactional base and not making as a long term relationship base but transitional are mostly likely to permanently destroy their image and brand. (Oracle Financial Service, 2009) Brands should engage in casual conversation with its customers by creating fun context that deliver the intended message; they should create a friendly tone between the bank and its customers. Moreover they should not push hard sales message to its audience, it may post few links related to their official website for more informations and directories but not too many links as it may be interpreted by consumer's as a sales pitch. The focus should be in engaging and educating first, business profits and sales will come in time. (Smith, N. Wollan, R & Zhou, C. 2011) Training should be provided to banks and financial institutes employees on the social media policies, also bank should assign specific employees to deal with bank social media sites in responding to comments, questions and various concern raised to avoid any legal pitfalls (Social Media Solution, 2011)

Source: social media Solution (2011) Common mistakes that marketers make with social media is the attempt to go commercial before delivering value to consumers and before trust is earned which usually result into a merger fall as frowned on, portrayed as liars, parasites or worse, content provided in social media should be of genuine value to others in a community.(Wallington, A. Social Media Handbook page 65) Case Studies 2: Bank of America (BOA) launched its twitter account (@Bofa_help) in 2010 with assigning a single employee to tweet which attracted 3000 followers who further influenced three million followers of their own. Today Bank of America has expand the number of employees who deals with their blogging site to a team of five members, they main goals and objectives is reaching out directly to customers, listening, engaging and responding to various problems also extending the banks reach and becoming part of various communities. This team is the one thats scan the banks mentions and topic related to the bank. (Hitachi Consulting on Financial Services, 2010) Bank of America has a unique customizable background feature of uploading a picture of their tweet responders this makes a customer to feel connected to the bank, in one of their tweets the bank invites the customer to direct message the time that they can be reached on the phone after they havent answered or responded to voicemails. (Social Media Solution, 2011)

The Missouri Bank also known as Mobank have position themselves in Facebook and they are not using it to sell anything but utilizing it as the way to build community minded philosophy. The bank has created a cool young image on its page for its customers to interact with each other and with the bank in a manner that its almost similar to the way these customers interact with their branches. The banks tracks all the talk about them within the Facebook platform, if someone talks about them negatively or raise a particular concern in public settings they would find a way to communicate with the specific person as well as the whole public to avoid negative reputation but if its occurred within their Facebook page, Mobank responds to concerns instantly on the spot. (Social Media Solution, 2011) Return on investment Social Media Networks return on investment requires a patient and commitments in building a long term relationship its not suitable for companies that look for fast quick return on investment. There are various methods through which ROI can be calibrated such as number of followers, subscribers, page likes, as well as tracking on the frequency by which customers talk about the bank in social media and the rate by which positive messages are transferred by these customers to other individuals who are not bank customers/followers or subscribers. The awareness on various bank activities, product and services moreover brand growth and increased traffics to the bank official website are the way to calculate the ROI in social Medias. (Oracle Financial Services, 2009 /Chaney, P) The Servus credit union in Canada targeted young customers under 25 years old with their Young & Free initiative, which in return attracted around 2000 new checking account and generated 179,000 US$ within a year. (Oracle Financial Service, 2009) Privacy and Legal Concerns In utilization of Social media platforms, Bank should be careful in ways which they share banking information with customers and the way financial aids is provided to its customers, by disclosing the way they collect and transfer financial information. Banking privacy policies in personal details such as banking statements and other customer private details like credit card numbers should be maintained to compile with the usual Bank-Customer-Clients ethics. (Financial Institution & Social Media, 2010)

Social Media sites specific facebook and twitter are characterized with frequently developments and have new changes and exciting features on continuous basis. Banks should be flexible and adjusting to these changes being updated to avoid any misunderstanding or undesirable legal situations to arise because customers would not hold the service providers responsible but the Bank. (Oracle Financial Services, 2009) Coordination and communication between different business units of a company is important. If one particular business unit develops its own policies or activities without consulting other units or departments there is a huge possibility of negative impacts to the whole company social media look, resulting into confusing the public. Company social media strategies and policies should be uniform and standardized. (Khalil, E. 2010) Factors influencing SMN usage in Tanzania The growth of ICT has impacted the way business is conducted, facilitating learning and knowledge sharing, generating the flow of information, empowering citizens and communities resulting in a global information society. (MCT, 2003) Telecommunication services are being modernized to provide better services and capacity, mobile services aided by multiple providers is increasingly rapidly in the country, trunk service provided by open-wire, microwave radio relay, tropospheric scatter, and fiber-optic cable. (C.I.A World Fact Book, 2011) Reduction of tariffs has influenced more people to use mobile phones service and becoming addicted to it; Tanzania's tariffs are lesser than Kenya which is the leader in internet and telecommunication services in East Africa. (Elieneza A, 2011) In developing countries there is a gap between those people with access to internet mostly are from urban areas and those who do not have internet access known as the digital divide (Rao, 2005). However internet usage is growing fast not only in urban areas in Tanzania but also in semi-urban areas and rural area facilitated by internet cafes. There are more people accessing internet through internet cafe in the rural regions of Songea, Mbeya, Iringa and the semi-urban region of Morogoro compared to urban Dar-es-salaam. (Furuholt, B. & Kristiansen,S. 2007) A venue that provides sustainable relevant services to its community has the effect of transforming them from no ICT to a state of significant access to this resource. (Postnote, 2006)

Case Study 3: A good scenario where social media platforms was used in the country and received a good response by Tanzanians was during the general election in 2010. The official website of the current president and the ruling CCM party candidate, Hon Jakaya Mrisho Kikwete, had a link to a facebook page with more than 4,500 followers, with another facebook page dedicated to Mr Kikwete with more than 13,500 fans as well as a twitter page. 74% of them aged between 18-34 years. (Tungaraza, J. 2010) Conclusion This chapter has identify the key developments areas in effective implementation of social media strategy in banking industry, descriptive findings and recommendations of previous researchers related to the research, further the research has identify the factors that influences the use of social media networks by banks in Tanzania.

CHAPTER 3 RESEARCH METHODOLOGY Introduction This chapter discusses about the methods through which the researcher will use to collect data, information and statistics. The designing of the research and the overall approach in conducting the research from data collections to data analysis and evaluations of the findings to produce reliable recommendations and conclusions which includes focus group study, interviews, survey, questionnaire layouts and instruments and data analysis tools. Research Approach This research will be consisting of primary research and secondary research basing on finding information from both banks and their respective customers. The research will take a qualitative methodologies concept. Primary Research Primary research will be conducted through observations, interviews and questionnaires relevant to the research study to enable the researcher to meet the research objectives. The primary research will be categorized in two segments; the Bank perspective and the

Customer/client/public perspective. Secondary Research The research will obtain more information on the Social media networks relation to banks and Tanzania statistics, as well as current situations together with successful implemented social media strategies by banks through articles, journals, newspaper, magazines and online resources.

Sampling A stratified sampling will be used for all individuals who are using social media tools and internet facilities in the country as well as banking services from the age of eighteen years old and above. These individuals will represent the public/customers of the bank. Sample Size A selected random sample size of Tanzania commercial banks will be selected to represent the huge population of all twenty nine commercial banks in the country. Questionnaires will be distributed to the sample size and interviews will be conducted. Area of Study The banks that will be in the selected sample size will be located in the urban region of Dar-essalaam and the Semi-urban region of Morogoro. Dar-es-Salaam will represent places in the country that usage of internet and social media tools is high and developing at a very fast rate and the majority of the populations are adapting to the various trends of technologies and globalization. Morogoro will represent places in the country where adaptation to various trends of technology are being adapted at a slower rate by the population. Questionnaire Instruments Online questionnaires will be provided to individuals (bank customers/clients) to reach as many target audiences as possible in different geographical locations who are using the banking services provided by commercial banks in the country and other questionnaires will provided to select few commercial banks to represent the overall population of commercial banks in Tanzania. Questionnaire layout These questionnaires structure will be open ended, closed ended and checklist, while the questionnaire types will be multiple choices, multiple answers questions. A distinctive segmentation questions will be included such as to get the respondent age and gender moreover for making the findings more reliable interviews will be conducted to selected few banks via online interview, phone calls and further through helped interviews from colleges in Tanzania.

The aim of these questionnaires will emphasize on getting the understanding and knowledge that customers and bankers have on social media networks in relation to banking services and their perspective on the introductory of social media platforms usage by Tanzania banks. Data Analysis Methods The data analysis method will be qualitative analysis, the data collected from sample size banks and response from the public will be used to represent the overall population of Tanzania commercial banks and Tanzanians. The data collected will be analyzed through various methods such as SPSS and Microsoft excel Ethical Considerations Though the main objective of the research will be to collect as much information as possible from the public/consumers and from the Banks which are relevant to the research study to enable the research to reach research objectives and desirable results, ethics issue will be considered to make sure no one is harmed or offended while the research is being conducted. From primary research level, respondent would not to be forced to provide information against their will and questionnaires will be prepared to adhere to ethical issues, also ethical consideration will be on secondary research as well. Conclusion This chapter has portrayed the various methods the researcher will be using in information gathering and its analysis, the area of study and the sample size that the researcher will be using to represent the overall population and the consideration of ethical issues.

REFERENCES Books Chaney, P. (2009). Seven proven strategies to grow your business using social media. John Willey & Sons: Hoboken, NJ. Smith, N. Wollan, R. & Zhou, C. (2011) The Social Media Management Handbook: Everything you need to know to get social media working in your business. John Willey & Sons Inc: Hoboken , NJ. Miller, M. (2009). Youtube for Business: Online Video Marketing for any Business. Que Publishing: IndianaPolis: In. Websites Nilsenwire (2010) [Online]http://blog.nielsen.com/nielsenwire/global/social-media-accounts-for22-percent-of-time-online/ [Date Visited:2/6/2011] Social media statistics (2011) [online] http://www.socialbakers.com/facebook-statistics/tanzania [Date Accessed: 3/9/2011] Africa internet statistics (2011) [online] http://www.internetworldstats.com/africa.htm [Date Accessed: 26/8/2011] Tanzania Statistics (2011) [online] http://www.internetworldstats.com/af/tz.htm [Date Accessed: 26/8/2011] Cohen, L. five ways that bank can use social media (2009) [online] http://mashable.com/2009/09/11/banks-social-media/ [Date Accessed: 31/8/2011] Tungaraza, J. Tanzania social media (2010) [online] http://globalvoicesonline.org/2010/10/04/tanzania-the-use-of-social-[online] media-in-tanzaniageneral-election-2010/ [Date Accessed: 30/8/2011] Elieneza A [online] http://www.jamiiforums.com/business-and-economic-forum/105207-istanzania-having-only-672-000-internet-users.html [Date Accessed: 30/8/2011]

C.I.A World Fact Book [Online]https://www.cia.gov/library/publications/the-worldfactbook/geos/tz.html [Date Visited: 30/8/2011] Banking Supervision [Online]http://www.bottz.org/BankingSupervision/BankingSupervision.asp [Date Visited: 30/8/2011] Twitter Help Centre (2011) [Online]http://support.twitter.com/groups/31-twitterbasics/topics/111-features/articles/119135-about-verified-accounts [Date Visited: 30/8/2011] Journals & Articles Donathan, J. (2004) Sociable media: Prepared for the Encylopedia of Human-computer interaction, forthcoming. [Online]. Available at http://smg.media.mit.edu/papers/Donath/SociableMedia.encyclopedia.pdf [Date Visited: 30/8/2011] Financial Institution and social media (2010) A new way to connect with your customers [Online]. Available at http://www.fiserv.com/WP_financial-institutions-social-media-whitepaper_nov2010.pdf [Date Accessed: 2/6/2011] Boyd, D. & E, N. (2007) Social Network Sites: Definition, History, and Scholarship [Online] Available at http://mimosa.pntic.mec.es/mvera1/textos/redessociales.pdf [Date Visited: 30/8/2011] Social media solutions (2011) Banking on Social Media Guide [Online] Available at http://socialmediasolutionsllc.com/wp-content/uploads/2011/03/Banking-Guide.pdf [Date visited: 2/6/2011] Attensity Banking Industry Report (2011). Why do customers churn [Online] Available at http://www.attensity.com/wp-content/uploads/2011/05/RetailBankingIndustryReport.pdf [Date Visited: 2/6/2011] Oracle Financial Services (2009). Building a Banks Brand equity through Social media [Online] Available at 4/6/2011] http://www.oracle.com/us/industries/financial-services/045588.pdf [Date visited:

Oracle Financial Service (2010). Are Banks ready for Next generation Customers? [Online] Available at http://www.oracle.com/us/industries/financial-services/gen-y-survey-report165297.pdf [Date visited: 4/6/2011] Hitachi Consulting on financial Services (2010) Sizing up Banks and social media Market place [Online} Available at http://www.hitachiconsulting.com/files/pdfRepository/AR_SizeandSocialMedia_vFINAL.pdf [Date Visited: 4/6/2011] Social CRM white paper, (2011). How social media is transforming Business world. [Online] Available at http://www.bearingpointconsulting.com/SID-6464842A-61F180B2/dede/download/0615_WP_EN_Social_CRM_final_web.pdf [Date visited: 4/6/2011] Khalil, E. (2010) Data protection law & policy US: All atwitter about banks and social media: Managing Risk [online] Vol.7 Issue 12 Available at http://www.ecomlaw.com/dplp/details.asp?ID=799 [Date Visited: 10/8/2011] e-marketer inc (2009) Social media 101 for banks: An interview with Christophe Langlois Social media evangelist [Online] Available at http://clanglois.blogs.com/Interviews/CLanglois%20interview%20-%20eMarketer.pdf [Date Visited: 10/8/2011] Bussman, J. Hyde, P. & Sandrock, J. (2011) Banking on Social Media [Online] Issue 63 Available at http://www.strategy-business.com/media/file/sb63_11202.pdf [Date Visited: 4/6/2011] Ernst & Young (2011) Global Consumer Banking survey 2011: A new era of customer expectation [Online] Available at http://www.ey.com/Publication/vwLUAssets/A_new_era_of_customer_expectation:_global_con sumer_banking_survey/$FILE/A%20new%20era%20of%20customer%20expectation_global%2 0consumer%20banking%20survey.pdf [Date Visited: 2/8/2011] A Microsoft Banking and capital Markets (2010) Tweets, Blogs and Instant relationship: Social Networking and the bank of the future. White paper.

Postnote (2006) ICT in Developing countries [Online] Number 261 Available at www.parliament.uk/parliamentary_offices/post/pubs2006.cfm [Date Visited: 24/8/2011]

Furuholt, B. & Kristiansen,S. (2007) A Rural-Urban Digital Divide? Regional Aspects of Internet use in Tanzania. [Online] Available at [Date visited: 24/8/2011] Rao, S. (2005). Bridging digital divide: Efforts in India, Telematics and Informatics, Volume 22(4), PP 361-375.

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APPENDIX Citi Bank Campaign.

http://mashable.com/2009/09/11/banks-social-media/

Examples of Tanzanians Talking about Commercial banks on twitter.

Source: Twitter.

Source: http://www.socialbakers.com/facebook-statistics/tanzania

http://www.tcra.go.tz/publications/InternetDataSurveyScd.pdf

Facebook, twitter & youtube icons.

Source: Google images.

http://www.bot-tz.org/BankingSupervision/BankingSupervision.asp