Despite a late start, retail banking is beginning to dip its toe into social media. The promise of higher revenues, lower costs and better risk management are too compelling for managers to remain overly cautious. How banks connect, serve and organize around their ‘connected customers’ on sites like Facebook, Twitter and YouTube will have important strategic and organizational implications.
Social media is having a major influence on many industries and firms. And for good reason. These new models of collaboration, community and communication are transformational in terms of impact and reach. For perspective, Facebook boasts over 350 million members worldwide. And, over 21 million people use Twitter to communicate and source news.
Connected customers have different expectations around their banking experience. In general, they want their online accounts to be more user-friendly, providing increased transparency and a single point of contact for all products and information. Furthermore, these customers look for powerful recommendation engines to aid product selection as well as to provide real-time service. Finally, they want the access and flexibility to bank when and how they want to without being tethered by technological or organizational limitations.
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Despite the potential, bankers have been hesitant to fully embrace these new opportunities due to valid concerns around customer privacy, reputational risk and security. In addition, organizational barriers such as data silos, competing internal priorities and low IT flexibility continue to bedevil planning. Importantly, banks remain challenged to effectively convey key brand values like trust, appreciation and approachability within a digital environment, particularly one powered by social media.
How can managers use social media to better serve customers and improve business performance?
Deepen relationships
According to our research, up to 40 percent of connected customers go beyond the confines of their primary bank to visit external blogs, video channels and online forums. Yet, most banks continue to utilize their web sites for simple transactions and one-way information distribution. Connected customers want the physical branch experience mated to social media-delivered tools and collaboration. This deeper, trust-based relationship would include richer, one-to-one or many-to-many interactions (generating rich market insights as well), customer referral engines, product comparisons and third-party financial information.
Some banks are already leveraging social media to deepen relationships. Wells Fargo provides a variety of blogs on relevant topics such as personal finance and environmental sustainability as well as a specially designed blog for students. Wells Fargo also maintains corporate pages on Facebook and videos on YouTube, while allowing customers to contact them through Twitter.
Interestingly, the Spanish bank BBVA has built a personal finance management tool that aggregates all account information and transactions in one easily accessible place. Within the tool is a powerful analytics engine that proactively sends out customized promotional offers driven off a customer’s banking behavior and needs.
Reduce costs, risks
Through leveraging social media, marketers can significantly reduce expenses and uncertainties associated with customer acquisition, retention, customer service and new product launches. By it’s very nature and ubiquity, social media is a highly efficient marketing and service channel that can lower communication costs, improve segment targeting and deliver customized offers. For example, banks can use moderated blogs and internet forums to test market new products or inexpensively cross-sell other products. At the same time, collaboration tools in Twitter and Facebook can be used to deliver faster, more expert customer support. Currently, Deutsche Bank and BBVA use video chat to connect financial advisers and customers without the need for a physical bank infrastructure.
Even the right strategy and technology is insufficient to ensuring a winning social media plan. Banks will need to make certain their marketing programs are consistent and integrated across all channels. As well, powerful customer analytics are required to ensure effective segment targeting and program effectiveness. Finally, like any new initiative all the key elements – product design, pricing and messaging – will have to be optimized for maximum customer appeal.
This article originally appeared in the Financial Post.
Mitchell Osak – Strategist to the C-Suite
Mitchell Osak is managing director of Quanta Consulting Inc. Quanta has delivered a variety of winning strategy and organizational transformation consulting and educational solutions to global Fortune 1000 organizations. Mitchell can be reached at mosak@quantaconsulting.com