‘Share this pic!’: A Picture of the Adoption of Online Social Media by Italian Banks

Abstract

Banks are increasingly using online social media to engage with their existing and potential customers; however, the use of technology can both strengthen and weaken these ‘virtual’ relationships. We analyse the adoption of online social media for 151 Italian banks and test how it affected bank profitability in 2013–2016. Although the adoption rate is lower than what is required by customers, and banks’ popularity on online social media is poor, we find that the effects of online social media vary. In particular, the presence and popularity of banks on Facebook negatively affect their profitability, whereas their presence on YouTube and in interactions on LinkedIn increases bank performance.