Social media and banking

Tomorrow morning, I’m speaking to over 100 bankers on social media and business.

I’m curious about how receptive bankers are to the notion of disruptive technologies and empowered clients. In the past two years, banking has had more than its fair share of bad press – mention ‘banking’ and you get mutterings of greed, fat cat bonuses, corruption and government bailouts. Ask anyone in academia in the UK about why they are having to work with decimated budgets and raise student fees, and they point the finger at the financial sector.

In my country, the impact of the financial meltdown has been somewhat cushioned – to the extent that some local bankers are surprised by the barricade mentality of their counterparts across the water. And yet, the bubble that burst has still impacted the local way of doing business, as all major banks have been forced to increase checks and balances and tighten up internal control procedures to make sure there is no repeat of the 2010 crash.

In this new ‘cautious’ brave new world, you can understand why some banks have been reluctant to explore using social media channels. Yes, there are blogs aplenty on financial issues, Deutsche Bank and American Express are doing some interesting things, but most of the ‘social’ in banking happens at an individual basis – or in the way some banks continue to engage with their customers – developing personal relationships, going the extra mile for clients who are known and trusted.

The corollary is that banks have had an online presence for many years – and yet, clients’ only interface with the bank’s website is to complete a basic transaction within as short a timeframe as possible: checking a balance, making a payment, viewing an electronic bank statement. I have serious doubts on how many people use the more ‘social’ functions of these sites – such as requesting a meeting, asking for information about a new set of financial instruments, engaging in the type of interaction that has to happen on a ‘face to face’ basis.

When I tweeted that I was running a workshop for bankers a couple of days ago, the instant reaction from the Twitterati went from ‘They seriously need to be receptive, Alex’ to ‘Yeah.. about time they got disrupted.’ A day or two later, a lovely lady from my local (village) branch called me on my mobile to ‘remind’ me that I had promised to meet her and a colleague to review a new set of financial instruments.

Somewhere, there is an opportunity to migrate the personal touch of the village bank online. Whether there is an interest in doing this, in the age of austerity and procedure will unravel.

In the meantime, Jeremiah Owyang et al continue to evangelise on the need to turn the corporate website social. Banks could do worse than start from this: how can they use their functional, utilitarian websites to help them operate more as village banks, and less as ‘suits’ hiding behind procedure?

Secrets of Engagement: Leverage Social to Unlock User Value on Your Site from Janrain on Vimeo.

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7 Responses to Social media and banking

  1. Joakim Nilsson says:

    Banks are banks. I still have a hard time understanding why I pay close to €100 yearly for an account and a basic debit card. Put on top of that the 2-3% transaction fees for merchants. If anything, paying cash should be expensive.

    I’d like to see the non-profit bank, is that such far fetched idea?

    In terms of banks adopting social tools… My local bank BNP Paribas has a facebook page with some 100k fans, not sure if that makes me think they are a better bank though… But when I got phoned back after having left a tweet I must admit I was impressed.

  2. Good luck tomorrow. I absolutely agree that banks and building societies need to start using this new way to listen and talk with their customers. I work in financial services for a UK building society called Saffron Building Society. We’re using Twitter, Facebook, Youtube, online communities and blogs to listen and talk with our members. We’ve found the experience to be rewarding, improving brand perception and reach, assisting new product development and increasing our web visits.

  3. Joakim, I guess it is not entirely surprising that banking has been cautious about using web 2.0 to engage with customers, prospects and other stakeholders. Despite the early heady days of the Internet and before that (telephone banking, First-Direct style in the UK in the 1980s, for instance) it’s remained a ‘closed’, fiduciary type of business: yes, personal relationships count (a lot) for the very small majority of customers with large banks – or for larger numbers if the focus is to position the bank as a ‘local bank’, as was the case with the bankers I was presenting to, this morning. It’s all about reaching some sort of tipping point – when customers start to expect a bank to operate in a more human manner online, using whatever tools are available at the time. Have we reached a tipping point now? I guess it depends on the local context. I happen to think that smaller banks could really get an edge and create their own ‘blue ocean’ if they moved quickly to set up some social media CRM touch points and manage those in a human manner. In your case, your bank won some ‘brownie points’ with you once someone responded to your tweet. Small step, I know. As for non-profit banks – I’m not an authority in this, but if people have set up banks targeting high-risk individuals who need to borrow small amounts of money to subsist (in India, Pakistan et al) and turned that into a successful business model, it is probably only a matter of time for the non-profit bank.

    Michelle, I’ll monitor what Saffron is doing with interest. The first challenge is to secure a team of internal champions prepared to embrace the notion that the end customer is more empowered; doesn’t want (need) to show up at a bank / building society; and is likely to engage in an online (public) conversation which may not necessarily be ‘PR-friendly’, or even ‘correct.’ I guess this is one of your roles in your building society. For me, it’s a no-brainer that banks who have invested significantly in their online presence should, as a bare minimum, gain a deep understanding of the socio-economic implications of the various media we all use in our daily lives; and try and find ways of engaging online in a more human manner. It is what we demand from them in our offline lives, regardless.

  4. So how did the presentation go?

    Banks should incorporate live online chat in their websites before screwing around with social media:
    http://thefinancialbrand.com/16249/live-online-chat-for-banks-and-credit-unions/

    You might also be interested in The Financial Brand’s collection of articles on social media:
    http://thefinancialbrand.com/category/online/social-media-online/

    And Joakim, I believe you are looking for a credit union. They are not-for-profit in the U.S.

    • Joakim Nilsson says:

      Didn’t know abow credit unions, I guess Europe is lagging behind here…

      As for what tools & technologies to use (I read Alex’s reply as well) it must be down to the strategy that banks chose to embark on. Coming from the online gaming industry where people rely on us for their monyes safety, I can see the prim need of a closed live chat environment… This would support a strategy wanting customer to get quick answers at any time, and doesnt that fit into ‘the world’s local bank’?

      I’d hate to see a bank embarking on twitter before they had cleaned up and organised themselves with propper tools aimed prim to their customer base. (in US it may be diff as 50% of all twitter users are from there, only 0,5% here in France).

      Leaving tools a side and refering back to Alex’s first post where he mentioned the bank lady calling reminding him about a meeting, no tools can replace actions. Here in France the world’s local bank will treat you as a criminal and charge you as a bilkionaire. As a previous customer of thier bank in Malta I thought it would be easy to get an account setup in France… Let’s just end with that they never even let me inside the bank, despite me waving my hsbc (ops i said it) card in front of the security cams,,, a voice from the mic was repeatedly asking if i was a French hsbc customer and caredittle about it’s local friends.

      Sorry, didnt mean this to by a cry story but… Banks have a ling way to get their business on the right track before any tools or technologies can help them.

  5. Jeffry, The objective of the presentation was to provide some context on where social media is, and where it’s going, to around 150 bankers. I think it went reasonably well – enough for various discussions at different levels (strategy, IT et al) to have started. But, of course, it’s early days – the acid test is whether social media can be aligned to the core business strategy of a bank that is very strong at a ‘local’ level – branches in every town on a small island.

    As for live chat – totally agree, always preferable to, say, Twitter. Conversely, banks may go for Twitter if they want to operate in asynchronous mode or are not prepared to go for the investment.

    And great site, by the way.

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