Tuesday, December 1, 2009

Yes, Press Releases Are Now Part of Social Media and VERY Viral

About a week ago, after issuing a press release about my company's use of social media, I saw a tweet come up from someone questioning the use of a press release to promote Web 2.0. What I got from the tweet's 140 characters was essentially doubt about the use of press releases (traditional old school technique) in promoting use of Web 2.0. The tweet said something along the lines of "Why would a company that is rolling out social media use a press release. Social media is about being viral. Press releases are not viral."

This post has been created to make you aware that, yes, press releases ARE social media and ARE definitely viral. I'm not a publicist by schooling but I have had years of experience using press releases in the pre- and post-Web 2.0 world. Something I noticed about a year ago was how the press release outlets, including the majors such as BusinessWire, started Web 2.0-enabling their releases. The following is an example of the social media functionality added to press releases to enable their VIRAL distribution.

As you can see under the "Sharing" section on the left side of the page, the press release outlet (in this case BusinessWire) added a series of common social media platforms with which this press release could very easily be shared. This is only one outlet, but I've seen most outlets incorporate this "viral accelerator" to their pages.

As a result of a recent press release, I achieved immediate and broad distribution on Twitter illustrated by the sampling below:

As you can see, just on Twitter alone there were nearly 100 retweets of the press release. Multiply that number by the number of followers that read each retweet and you can see how a traditional press release can achieve viral distribution.

Now consider how these traditional press releases are distributed to hundreds of online media outlets by the wire services, resulting in greater viral potential. Below is a snapshot of a small number of the media outlets that received the press release from the wire service and began serving up copies of the press release - again, each with a similar "sharing" feature.

Now, keep in mind that simply having a "viral accelerator" does not mean a press relaese will achieve viral results. The material has to possess certain qualities. Press releases in of themselves are not great for creating viral buzz. But press releases tied to good viral content will do the job. I recommend reading the chapter of Viral Marketing in The Community Banker's Guide to Social Network Marketing for more details.

In any case, to answer the question posed by the tweet mentioned above, the fact that press releases have Web 2.0 funtionality means that, YES, press releases ARE about viral distribution.

Saturday, November 28, 2009

Social Media-Related Regulatory Examinations On The Horizon?

Early last week I received a phone call from a consultant working for a boutique financial services consulting firm who was conducting research on a social media best practices document for a bank client. The fellow seemed bright and well informed. I was actually surprised that the firm he was working for was getting involved in the social media space. I'm surprised not so much because of their involvement in social media but more so because they tend to focus on the traditional banking/finance stuff. I'm not sure what this means for the early wave of social media consultants...but that's a story for a different day.

Anyway, one of the questions this consultant posed had to do with the regulatory risk associated with social media. My response was that I felt that regulators would likely give a social media implementation little more than lip service and so long as an appropriate risk assessment and policy was in place, the examiners would look no further. I told this consultant that given the current focus of the regulatory agencies, I would be surprised if they considered social media at all. But better safe than sorry.

I followed that up by stating to the consultant that the regulatory risk was the least of a bank's worries. While there may be some regulatory implications related to the use of social media, it is insignificant compared to the larger reputational risk posed by social media.

Earlier today I picked up the November/December issue of Western Banking Magazine. In the Consider This section of the magazine was an article that I wish I had read prior to speaking with this consultant because I think it would have laid it out very neatly for him. I've quoted this section of the magazine below.

"One out of eight respondents to the Travelers Global Technology business unit survey indicated that they post work-related information on social media websites. In fact, 30 percent feel it is acceptable to post information online about their employers as long as they believe it is true. Survey results also showed that more than 75 percent of those who post anything personal online said they were 'not at all' or 'not very concerned' about information posted online causing professional damage.

The growth of social media and the lack of awareness among employees and employers on how social media are changing the corporate landscape could increase a company's risk exposure. The Travelers survey results also indicate that two-thirds of respondents say their companies do not have a policy in place for social media usage, or they are not aware that one exists."

If you have followed this blog you know that I am a stickler for risk assessments and policies. My recommendation is to get the bank's internal auditor or product manager to prepare and present a social media risk assessment to executive management and the board of directors. This should be treated just like any other new product/service implementation.

My next recommendation is to enhance the bank's Acceptable Use Policy to include the social media policy - rather than create an entirely new policy. The bank's information security policy can also be used in lieu of the AUP.

If you have no idea where to begin with a social media policy, begin with my earlier post (Pain Free Social Media Policy). You will be able to get a customized policy up and running in no time.

As I stated above, regulatory risk is the least of your worries. What you want to do is make sure your employees know the rules of engagement - because, whether or not your bank has a social media strategy of its own, chances are your employees are out there potentially putting your good name at risk.

Sunday, October 18, 2009

Why Willie Sutton Would Not Survive Long With Web 2.0

A couple weeks ago I wrote a piece called What Bankers and Willie Sutton Have in Common. If you recall that post you'll remember who Willie Sutton was...a famous bank robber whose career spanned decades.

The point of that post was not to discuss bank robbery. The point was to make the reader aware of the obvious...people are using social media at an increasing rate and banks should consider whether it makes sense for them.

Like I said, the point of THAT post was not to talk about bank robbery. But that was then and this is now. So today, let's talk about bank robbery.

On October 18, 2009, Seth Liss of the Sun Sentinel newspaper wrote an article called "Social Media the New Crime-Fighter." This article discussed how social media is currently being used by private citizens as well as law enforcement to track down criminals. Through YouTube, Facebook and Twitter, people are creating their own version of America's Most Wanted, the popular syndicated television program.

This got me to thinking...again. If law enforcement can post photos and videos on Twitpic, YouTube, etc., shouldn't banks use the same technology in the event of a robbery? While some thought needs to be given to how it is publicized and where it is published, social media can be an effective way to speed up the discovery process in the case of a bank robbery...or any crime, for that matter.

Now, I say some thought needs to be given to the manner of disclosure because no banker would want to general public to get the impression that the bank is Robbery Central and subsequently, unsafe. However, handled properly social media can be an effective tool to closing bank robbery cases and simultaneously act as a preventive tool since no one wants their friends to spot them with women's hosiery over their head (not that there's anything wrong with that!).

I must admit that I haven't given this too much thought and I would probably want to consult a security expert (any out there?) to provide some pros and cons in terms of disclosure. But at a very basic level it seems like something that could work and become incorporated into a bank's overall social media strategy as well as its risk management strategy. Tie a decent bounty to tips leading to an arrest and in this economy you'll have some pretty good success.

Wednesday, October 14, 2009

Social Media, User Generated Content and Liability

Social media platforms and applications are dependent upon communal participation. Members of the community share everything from names, professions and scholastic and corporate affiliations to names and photos of family and friends as well as up-to-the-minute updates on current events. Little is too personal on social media, and the greater the extent of the sharing the greater the personal reward for all involved.

As in the non-Internet world, people often do and say things that are not always appropriate - whether intentional or not. Examples include a personal opinion, a piece of confidential information about oneself, one's company or an acquaintance. Through social media, such communication can take the form of a written comment, photos, videos or other form of communication. The result of these communications can result in claims of defamation, incorrect statements of fact, harassment, etc.

Unfortunately for social media operators such as banks that decides to host their own social media sites (e.g., Bank of America, American Express, etc.) and not utilize a commercially available site such as Facebook, there can be a potential legal risk. Fortunately for social media operators operating in the U.S., there exists some form of protection to the extent that certain procedures are maintained.


Section 230 of the Communications Decency Act of 1996 is a landmark piece of Internet legislation. Section 230(c)(1) of the CDA provides immunity from liability to providers and users of an "interactive computer service" that publishes information provided by others (e.g., user-generated content). Courts generally apply the following three-prong test to determine whether a defendant is subject to the protections afforded by Section 230.

1. The defendant must be a "provider or user" of an "interactive computer service;"

2. The cause of action asserted by the plaintiff must treat the defendant as a "publisher or speaker" of the harmful information at issue; and,

3. The information must be "provided by another information content provider," (i.e., the defendant must not be the information content provider of the harmful information at issue).

This section of the CDA was enacted to enhance free speech by making it unnecessary for Internet service providers and other service providers to unduly restrict customers' actions for fear of being found legally liable for customers' conduct. This law effectively protects social media operators since it covers computer services that involve user-generated content

As a result of its effective protections, Section 230 is considered quite controversial because courts have interpreted Section 230 as providing complete immunity to Internet service providers and other service providers with regard to torts committed by their users. Critics of Section 230 are primarily concerned with its effectiveness at leaving victims with no hope of relief in instances where the true tortfeasors cannot be identified or are judgment proof.

Courts have upheld Section 230 in a variety of factual contexts and on numerous legal theories, including posting of:

• Defamatory information;
• Opinions;
• Private information;
• False information;
• Pornographic information;
• Harassing commentary; and,
• Discriminatory and/or illegal advertising.

Section 230, however, is not absolute protection. For example, plaintiffs have successfully argued in a handful of cases that an "interactive computer service" was not entitled to Section 230 immunity because the person or entity in question was an "information content provider" with respect to the information at issue, thereby failing the third test noted above. Notwithstanding certain plaintiff successes, generally the social media operator is protected against liability for postings made by others so long as the operator does not contribute in whole or in part, in the creation or development of the content and provides a mechanism for detecting objectionable content.

As such, in order for social media operators to obtain the maximum protection under Section 230 of the CDA, the operator should strictly adhere to the following:

• Do not alter any contribution of user-generated content. To the extent that user-generated content is repackaged - no matter how insignificantly, the social media operator potentially voids one of the three tests and risks exposure. Competent legal counsel should opine on the risk to the social media operator to the extent that any user-generated content is repackaged or reformatted.

• Maintain the ability for users to alert the operator of questionable content. Users should at all times be provided with the ability to report user-generated content that violates the terms of use or is generally considered offensive or specifically offensive. Additionally, users should be provided with the ability to promptly delete user-generated content that is directly posted to their profiles or personal space within the social media platform.

• Maintain formal policies and procedures for addressing complaints of questionable content. The policies should include both external terms of use policies and internal policies and procedures for the timely management of complaints. Periodic audits and compliance with recommended corrective actions should be performed and well documented to serve as support in the event of legal action.

• The Terms of Use should explicitly state that the user is fully responsible and liable for any legal action attributed to their user generated content and the TOU should include indemnification language that contractually indemnifies the social media operator as a result of user-generated content. Any subsequent changes to the TOU should require the user to accept the changes prior to permitting the user access to the social media platform.

I am not an attorney and this information should not be taken as legal advice. However, it should be something to think about and explore further to the extent that your bank will host its own site.

Today it is very possible for community banks to launch their own social networks. If that decision makes sense, an appropriate risk assessment should be conducted that includes within it questions related to legal liability. Legal counsel should be well versed in these emerging risks in order to provide strong advice.

As I state over and over in this blog, these risks should not deter the use of social media. However, the risks should be considered and appropriate internal controls, policies and procedures put into place to allow everyone to sleep at night.

Sunday, October 11, 2009

Libel, Schmibel...I'll Call You What I Want

I have lived in L.A. my whole life. I attended a college that bordered Sunset Blvd and I have a wife and daughter that are "in the business," as well as countless friends who have made a sick living behind the scenes of many of your favorite TV shows. But I've never really followed "the trade." I just never thought there was much to learn from it - from a banking point of view.

Well, I was wrong.

On October 11, 2009, Amar Toor wrote a piece at Switched.com that got me thinking. Amar was describing the danger that social media poses when tweets and other social media conversations erupt into character defamation lawsuits. Amar gave several examples involving Courtney Love, Demi Moore, Perez Hilton and others. The point Amar was making was that the widespread and viral nature of the unregulated social media industry can result in a battle between free speech and defamation that could create legal headaches.

That's the part that got me thinking. As banks continue to adopt social media as a communication channel, bankers need to ensure that their employees are well versed in terms of what can, cannot and should not be said. To further complicate matters, many banks have a social media presence without knowing it in the form of employee blogs, Facebook and MySpace pages, etc. In these cases, the employees may not understand the potential risks associated with their activities and that statements made by them may be attributed as comments of the company they work for.

But even "officially" sanctioned community managers may create legal firestorms. For example, take a tweet that asks a banker at Bank Y what he thinks about Bank X. If the Bank Y employee is not factual, Bank X may take a negative comment as derogatory and detrimental to Bank X's brand. The result could be wasted dollars and energy over a simple statement.

Does this mean banks should not encourage the use of social media. Absolutely not! Even if a Bank forbid it, chances are it would still occur at some level. Instead, every bank, whether active or not in social media, should develop a social media policy.

The policy should address not only the regulatory requirements but should also address how employees can characterize their competition. For example, an employee may receive a tweet regarding Bank Y's assessment of the financial condition/capital adequacy of Bank X. The banker should refer out the question to the FDIC site for that bank's financial condition rather that provide an opinion - particularly if the opinion is not positive.

It's too easy to think of social media as merely a marketing/outreach tool and forget its regulatory/legal implications. Good policy and training are the keys to protecting a bank from legal troubles. Also, be sure to read my post on Pain Free Social Media Policy Development.

Saturday, October 10, 2009

What Bankers and Willie Sutton Have in Common in 2009

If you've been a banker for any extent of time chances are you've heard his name - or at least his quote. Willie Sutton was a career bank robber who held up over 100 banks from the 1920s to the 1950s (final arrest in 1952). As the story goes, after being arrested Willie was asked why he did it..."because that's where the money is."

So what does Willie Sutton have to do with social media?

On September 21, 2009, comScore Media Matrix released its rankings of the top 50 U.S. Web properties for August 2009. According to comScore, Facebook came in at 5th place with 92.2 million unique visitors - a five percent increase from July 2009. Twitter came in at 46th place with 20.8 million unique visitors.

So, let me ask it again...what does Willie Sutton have to do with social media? If Willie were alive today, he'd probably say, "because that's where the money is."

That's right. The money. Banks, and businesses in general, need to consider how to best utilize social media to develop their businesses - from customer service to reputation risk management to sales and marketing. And by doing all these things well, banks will find a route to new found treasure.

But, of course, social media is NOT the same as Web or email marketing. Social media is much more complicated and brings with it a whole new set of nuances that set it apart from traditional online marketing. In a nutshell, the nuances involve honest, transparent and ongoing conversations with the "community." This post does not cover those nuances in detail but is intended to get bankers thinking about the potential for the use of social media; to get bankers to think about where to find the money (without having to hold up a competitor!). I recommend the ebook Community Banker's Guide to Social Network Marketing for a detailed description of the nuances.

I recently read a post by Richard Pentin where he stated that the honeymoon over social media is over. While I respect Mr. Pentin's view, from the banking industries point of view, he could not be further from the truth. As a banker it hurts me to say that we tend to be far behind the innovation curve. So while the rest of the world has been neck deep in social media over the past two years, bankers are just now starting to get their arms around it. As such, from a banker's perspective, the honeymoon is just beginning. And with bankers' current and potential customers increasing jumping onto Facebook and Twitter and other social platforms at increasing rates, bankers need to figure out how to continue to meet the demands of the evolving consumer as well as how to use those evolving technologies to secure additional business.

What is another reason bankers consider social media? Well, to quote another controversial historical figure, former President Bill Clinton, "It's The Economy Stupid." As the economy continues to struggle, consumers have become more critical of the banking industry. With TARP, AIG, Lehman Bros., et al, bankers have taken a hit from a reputational perspective. Social media can assist in healing those wounds through the honest and transparent approach required by social media.

I could go on and on but I really think that the next step requires a thorough reading of the Community Banker's Guide to Social Network Marketing. Then we can come back and fill in the gaps.

Thursday, October 1, 2009

This Isn't Your Son's Social Media

A few weeks ago I received an email from Dave Hamel, the Managing Director at ESW Partners, a Chicago-based advertising firm. Dave expressed surprise at how little banks are engaged in social media. Dave stated how important it is for banks to consider social media. He went on and further stated that "as a 56-year old bank customer, I also use social media. So they are missing me as well."

Later in the week I shared the conversation with a friend of mine who works for a former-brokerage-firm-turned-bank. This friend of mine stated that investment if social media is not a good use of money because social media is a kid's domain and kids don't have money. Unfortunately I did not have the time or the energy that night to get into an involved conversion/debate about the inaccuracy of his statement. I have to say that this guy IS a smart fellow whose intellect is highly regarded. So how could he make such a faux pas? Or did he?

If you visit Wikipedia for a definition of faux pas you learn that a faux pas is a violation of accepted social rules. The question this brought up was "is it socially acceptable to consider social media a kid's domain despite the contradictory research?" And is the faux pas on my part for believing that this isn't your son's (or daughter's) social media?

Fortunately, answering that question is beyond the scope of this post. However, I thought I would address the issue by providing some research. Given the expanding nature of social media, many many firms are conducting research on social media usage and demographics. I will put one source here. However, I encourage you to list other useful sources of research in the comments sections. I use Quantcast data for this post.


Looking at Quantcast data for October 2, 2009, as illustrated below, only a small cut of users are kids. Total Twitter users between the ages of 3 to 17 amount to a mere 10% of users. The next age group, the 18 to 34 year olds, amount to a more significant 43% of Twitter users. However, those 35 years old and older come in at 47% of all users!


Now let's look at Facebook. While the numbers are not as strong from the "old guy" (gal) perspective, they still show that a significant percentage (33%) of 35+ year olds use Facebook. That is one-third of all users and more than the 3 to 17 year old group!


Now if you really want to skew things, let's look at LinkedIn. Anyone familiar with this social media platform knows that it obviously favors the 35+ year olds based upon its focus on professionals. No faux pas here. The 35+ year old group represents 76% of users. That is tremendous.


But no analysis would be complete without including MySpace (at least until it dies a natural death). Clearly, compared to the other sites reviewed, MySpace is most representive of the incorrectly held believe that social media is a kids space. Perhaps the reason for this is because MySpace was an early MAJOR entrant in social media. Of course, if you follow MySpace you realize that without some major changes this platform will become a small niche platform or fall off the scene altogether. However, despite its emphasis on youth (28% 3 to 17 year olds and 46% 18 to 34 year olds) the platform has a decent percentage of older users at 26% of total users.

Of course I left out many other platforms. But my point was not to provide a comprehensive survey of the space. The point was to illustrate that social media use is not dominated by the young. Older consumers with the need for checking, savings, mortgages, investments and other grown up financial products and services are very well represented on social media platforms. Therefore, if you are dismissing social media as a kid's game you are risking not only losing the game but a significant amount of business to your competitor that realizes that the faux pas is not on him but on you.

Wednesday, September 30, 2009

Social Media Enabled Core Processors

I just read an article at SiliconRepublic.com that featured Tim Barker from Salesforce.com. Here's what Tim said relative to social media:

"...Firms need to get it out of their heads that its not just about marketing to these people but responding to their questions and providing services."

I think those of us that understand social media would wholeheartedly agree. But that is not the point of this post. As a banker I have worked on many core processor installations/conversions, including Metavante, Fiserv and Jack Henry. And that got me wondering how cool it would be to have a module built in within the core processor that would automatically scan Twitter or Facebook or any other social media platform, for key words that affect my bank. These comments can then be automatically routed to a customer service rep for response - directly from the core processor console. No third party apps, no cumbersome multiple platform searches, no problems.

It sounds like Salesforce.com is working down this road. It will then only be a matter of time before core processors start incorporating similar functionality. This can be very powerful in enabling banks on social media platforms. The conversation power would be tremendous. And because it is built into the core processor banks will more easily adopt social media as a core practice versus the occasional dabble which does no one any good.

Stay tuned!

Sunday, September 27, 2009

How Social Media Improves the WOM Effect

In The Financial Services Marketing Handbook (Bloomberg Press, 2004), Evelyn Ehrlich and Duke Fanelli address How End Users Select a Financial Services Provider.

According to Ehrlich and Fanelli:

"As with most services, the most common selection factor is word-of-mouth referral. This is not surprising, since most people don't have an objective way of judging the quality of financial advice, insurance claims handling, or other types of services. when seeking the services of a stockbroker, pension adviser, private bank, or hedge fund manager, both institutional and consumer buyers seek the advice of their peers."

If Ehrlich and Fanelli are correct regarding their assessment (and I believe they are), then bank boards and CEOs should ensure that their banks have considered the need for social media within their overall marketing plan. Why? Because of the effect that social media has had on word of mouth. The Community Banker's Guide to Social Network Marketing states the following:

"Researchers have observed that social media is affecting the way people communicate, make decisions, socialize, learn, entertain themselves, interact with each other and do their shopping. Accordingly, social media has caused a significant change in the market power of consumers, taking it away from product and service providers and giving it to consumers. The vast and growing knowledge base collected and maintained by social media applications has given consumers the power to make more informed decisions, forcing product and service providers, including banks, to deal in a more honest and open manner or lose the transaction to a competitor that does. And while social media presents serious challenges to businesses, it also provides opportunities to those that embrace the change and work within the new paradigm." "

Based on the power of social media and its ability to shape consumer behavior, every bank should consider and discuss the adoption of social media. While social media may not be right for every organization, the discussion should take place rather that just assuming for or against it without a meaningful discussion.

If buying decisions relative to bank products are highly dependent on word of mouth, and if word of mouth is a significant activity taking place on social networks, banks need to ensure that they, at a minimum are monitoring the conversations taking place that involve them. For example, in my last post I noted an actual case in which AT&T proactively monitored Twitter conversations to identify and resolve potential customer service issues. At a minimum, this same approach should be used by all banks.

As noted by Erlich and Fanelli, consumer buying decisions are shaped by word-of-mouth. By monitoring and responding to conversations taking place on social media platforms (social networks, blogs, etc.), the bank has the ability to demonstrate to the community that they are interested in truly serving their customers. But more importantly, these interactions go a long way in turning negative word-of-mouth into positive word-of-mouth, resulting in improved sales.

Wednesday, September 23, 2009

AT&T Shows It Gets Twitter (a case study)

I know, I know, this blog is about BANKING and social media. So why am I talking about AT&T? Well, your honor, when I am done I will not only demonstrate that AT&T gets Twitter but I will also show how a bank was involved in the effective use of Twitter to serve customer needs.

Back in May I took a job with a bank. One of my first tasks was to determine the status of pending projects. During the process I found that the bank had entered into a VOIP project with a local telecom consultant and AT&T. There was nothing unusual with the VOIP project other than to what appeared to be a significant implementation delay. After an additional three months of delays the project was still pending. Now I am not saying it was AT&T's fault nor am I saying it was the consultant's fault. I am sure everyone, including the bank, played a part in the delay. However, so many months later, enough was enough and I needed the project wrapped up. After unsuccessfully getting the support needed from AT&T to close out the project, I chose a different approach.

Earlier this month I blogged on How to Use Twitter to Support Customer Service. In that blog entry I noted that banks can use Twitter to effectively address customer service inquiries. In April I blogged on how Banking Regulators Should Make Use of Social Media Mandatory. That blog entry stated the importance of using social media monitoring as a reputation risk tool.

So, having heard that AT&T was social media savvy but not knowing much more, I sent a random tweet into the Twittersphere. I sent the following cry for help:

Surprising, shortly afterward I received the following response:

I obviously immediately followed ATTJohnathon and DM'd him my dilemma.

About an hour later, the project team working on the VOIP project kicked into gear. Emails were flying, plans were being scheduled and people were talking (or at least emailing).

Though AT&T had a situation that could have resulted in reputational harm, it's monitoring of the Twittersphere and prompt response and action resulted in praise in the form of this blog entry.

Now, I'm not saying that this act on AT&T's part makes up for all the delays. It doesn't. It does, however, give AT&T kudos for making available an efficient and effective channel for customer service. So AT&T, kudos for that. Now let's hope ATTJohnathon saves the day and I get my VOIP system up and running soon!

Monday, September 21, 2009

Pain Free Social Media Policy Development

Okay, so your bank decides to jump into social media. Maybe it was after reading The Community Banker's Guide to Social Network Marketing (shameless plug). Or maybe it was after reading one of many mainstream news articles. Regardless, one of the most important steps will be to develop a formal written social media policy that will guide all of the bank's social media interactions. This policy will state the do's and don'ts, employee responsibilities, management's expectations, acceptable uses of social media and much more. The objective is to provide employees with formal written guidance regarding the expectations for the use of social media.

I'm a long-time banker. I'm also a former regulator (OCC) and a Big Four consultant. In my career I have had on thousands of occassions to either read or create policies. After about the third time I figured there had to be a better way to create new policies. That's when I learned the art of cut and paste.

When I was a regulator one of the first things I did when walking into a bank was to ask for the bank's policies and procedures - especially for those activities that were new to the bank. The absence of formal written policies gave me carte blanche to include a nice little notation on the report of examination.

When comparing the many banks I examined and consulted for, I have found very little is unique. Whether it is mortgage lending, commercial lending, new accounts, etc., the big picture is often the same. As such, the bulk of policies are largely identical.

Of course, as we all know, the devil is in the details. Social media policies and practices may differ from organization to organization as each organization's needs, risk tolerances and desired outcomes vary. Therefore, it is essential to ensure that every policy is customized to the bank. Without a customized policy, bank employees will be lost, defeating the purpose for the policy in the first place. Also, regulators will have a reason to criticize.

But differences in policies and practices does not mean re-inventing the wheel. Instead, the policy development process should take into consideration as much of the body of knowledge available (other social media policies) to identify best practices. One person tackling a problem may yield a good result but many tackling the same problem will provide different points of view that may produce an even better result.

So where do you find this body of knowledge. Well, HERE. The Social Media Governance Web site provides over 80 sample social media policies. I recommend you browse the various policies to identify what should and should not be included in your bank's policy. The advantage of reviewing other policies is that you are often reminded of items that may have been overlooked. In a sense, having the benefit of reviewing a set of policies allows you to identify features you need, those you don't and those you haven't yet considered.

Writing policies is often the worst part of every product/service development project. But it is also the most important. Having the benefit of other's efforts provides an invaluable benefit. So now you have no excuse for being written up for a lack of a social media policy.

Saturday, September 19, 2009

Is Social Media the Search Engine Killer?

I just read an article in Website Magazine ("Goodbye Google, Hello Social"). The article started by stating that "perhaps the biggest threat to Google - and search overall - is the meteoric rise of social media." The article suggested that the days of powerful search engines may be over. Not quite.

I've read other articles that suggest that the collaborative and communal power of social media will be enough to put the search engines out of business. I find those articles intellectually stimulating but that's about as far it goes.

This article is not about the debate of social media over search engines. This article is about the importance of considering search engines and search engine optimization as part of your bank's social media strategy.


For many years now, search engines have been the "go to" destination on the Internet. Internet users of all types - students, teachers, professionals, housewives, retirees to everyone - have visited search engines when seeking answers for everything from how to solve quadratic equations to how to heal injured quadraceps.

With the explosion of social media, platforms such as Facebook, MySpace and Twitter, as well as non-commercial sites hosted by corporations and non-profits, information is now more widely distributed than just on traditional static Web sites.

As generic sites such as Facebook and Twitter continue to dominate in terms of growth and participation, searches can provide very strong results - particularly for information with recent timestamps such as political discussions, economic discussions and of course, gossip.

Unfortunately, the use of social media for more dated information does not yield as strong of a crop of search results. This is because most discussions that take place in social media tends to relate to current happenings within an area of interest.

For example, in today's news are stories regarding the departure of Disney Chairman Dick Cook. A Twitter search reveals a tremendous amount of content and links regarding the event. However, a search for Peter Schneider, former President of Walt Disney Feature Animation, reveals no search results. As such, Twitter, the social media giant, is very effective at producing information on recent events but ineffective at dealing with historical events (e.g., that which occurred prior to Twitter's birth).

So does that make Twitter worthless. Not at all. Just as the bulk of content created by social media relates to current events, so to does the bulk of content consumed relate to current events. It just becomes important for the user of social media for "search" purposes to recognize the limitations of social media.


So what does all this mean for you, the banker? Simple answer: seach engines are far from extinction. In fact, in my opinion, search engines will only become more relevant as social media conversations grow. I am constantly searching the Internet. The Google homepage is my browser default page. As social media conversations grow and as these social media platforms become fully indexed by search engines, the value of search engines actually grows. Through search engines I can find relevant information on traditional Web sites as well as conversations on social media platforms. Search engines become more valuable - not less since I rely on a single source to identify the needed information.

Given that conversations are being indexed and showing up as search results, bankers should ensure that they give their conversations as much SEO consideration as they do to their ordinary Web content. What this means is including relevant key words when sending out tweets or posting information to a Facebook wall. Another idea is URL shorteners (e.g., tinyurl, bit.ly, etc) that allow customized URLs. Use these shorteners to include key words in the URL. I don't believe social media is the search engine killer. If anything, social media may give search engines new life. As bankers, however, we should be aware of the role that social media plays and how to best utilize social media and those conversations we participate in, to provide as much return as possible.

Tuesday, September 8, 2009

Evidence that Social Media Can Increase Banks Share of Wallet

A September 2009 U.S. Banker article entitled Thinner Wallets concluded that “lose trust, and you lose share of wallet. Gain trust, grow share of wallet. There’s a direct correlation.”

One advantage of social media, if used properly, is the gaining of trust. Social media demands honesty and transparency from users - especially commercial enterprises such as banks.

As I stated in my blog, How to Use Twitter to Support Customers, Social media allows banks to become more transparent. By being upfront and honest about making a mistake and addressing the issue promptly and head on, banks can go a long way in gaining the respect of consumers - particularly in today's banking environment. Everyone and every company makes mistakes. What everyone does not do is admit to the error and do what it takes to cure it. When consumers see a bank step up and do the right thing, it goes a long way in gaining the respect...and business of consumers.

“We were seeing this emerge as an issue in 2007 and 2008,” says Mercatus partner Teresa Epperson. “Now there is so much attention paid to business practices, and the heath [sic] of institutions. Consumers are so much more aware, and there’s a great deal more transparency.”

Therefore, using the recent research by Mercatus as evidence, banks have another tool in making the argument for social media as a way to keep and grow share of wallet.

Sunday, September 6, 2009

How to Use Twitter to Support Customers

Jordan Julien at SocialMediaToday wrote a piece entitled "How to Increase Revenue with Twitter Integration." Jordan concluded that Twitter needs to do two things to help companies generate revenue: 1) Participate in the Community and 2) Support Customers.

Jordan's conclusions are straightforward make sense. It is no secret that the major advantage of social media, in general, is the ability of companies to develop conversations with their customers and prospective customers.

But what about the supporting aspect of social media - particularly as it relates to banking?

Let's examine how banks support customers in the traditional sense. The basic support activities include:

  1. Answering questions regarding products and services.

  2. Establishing products and services.

  3. Addressing complaints regarding products and services.

  4. Informing customers of new products and services.

  5. Notifying customers of changes to products and services.

Now let's see how this could work (or not work) using Twitter.


Using Twitter, banks can definitely utilize Twitter to address product and service questions. A typical exchange can look like the following:

@BankCustomerService: Do you offer any free small business checking accounts?

@SmallBusinessGuy: Yes. With $500 min mnthly bal. Restrictions apply. See http://bit.ly/1234. FDIC-insured.

@BankCustomerService: What is your 12 month CD rate?

@CDConsumer: 12 mo CD under $100,000 has 1.00% Annual Percentage Yield. Rates subject to change. See http://bit.ly/1234. FDIC-insured.

@CDConsumer: 12 mo CD $100,000 and over has 1.15% Annual Percentage Yield. Rates subject to change. See http://bit.ly/1234. FDIC-insured.

@BankCustomerService: Do you offer 30-year mortgages and what are your rates?

@MortgageSeeker: We offer many types of home loans. Pricing is based on many factors. Call us at (888) 123-4567 to discuss options specific to you. Equal Housing Lender.

@BankCustomerService: Do you have a branch close to Main Street?

@LivingOnMainStreet: We have branches throughout the city. Use our branch locater at http://bit.ly/1234. FDIC-Insured.

As you can see, Twitter can be effectively used to address product/service questions. Some challenges appeared in the few exchanges above:
  1. Disclosures: Depending on the nature of the exchange, certain disclosures will need to be provided with each exchange. The most common disclosures involve compliance with Regulation Z (Truth in Lending), Regulation DD (Truth in Savings), Fair Housing Act and FDIC Rules and Regulations. Whoever is tasked with responding to tweets will have to have a strong understanding of consumer disclosure regulations. The best bet is to ensure that the individual has heavy compliance training and has prepared scripts for the most common questions that are blessed by either the Compliance or Legal Department. Any response outside of the scripts should then require prior approval.

  2. @ vs DM: When responding to questions, the bank should consider whether to respond openly or through a direct message. A DM provides a confidential response. While this may seem appropriate, it does not allow others to benefit from the response. Either approach is appropriate...unless there is discussion of any nonpublic personal information. WARNING: Do not discuss nonpublic personal information. That is a regulatory violation of Section 501 of the Gramm-Leach-Bliley Act waiting to happen. Keep all info free of such information. If you receive a tweet (or any electronic communication) with that information, immediately inform the customer to avoid issues.

  3. Working the Desk: Today's consumers are no longer 9 to 5. Today's consumers work up until they hit the sack. That means it would not be unusual for consumers to tweet a product or service question at 1:00 am. The worst part...they expect a response. So unless you have a 24 x 7 call center addressing tweets, you need a solution on how to handle after-hour tweets. At a minimum, the bank should set up some form of auto-response service that let's the consumer know that a response will come the next business morning. Use Google to find programs available to manage this and other administrative Twitter functions.

  4. Record Retention: Most banks maintain some form of record retention policy regarding customer communication. It would be prudent to discuss tweeting with the individual responsible for ensuring compliance. This is usually the Legal, Risk Management or Compliance Department. Based upon the results of the conversation, the bank will next need to develop procedures to capture and archive such communications. Again, it is recommended that you seek out some form of third party application that contains archival capability. In addition to complying with record retention policies, the bank's regulators may ask to see the communications as part of their advertising/marketing compliance procedures.

  5. Social Media Policy: Once answers to the four items above are determined, the bank needs to put together a Social Media Policy. Not only is this required to ensure employees do things the right way but regulators will also likely require that the bank maintain a comprehensive social media policy that addresses all the regulatory requirements noted above.


If you are familiar with social media and its nuances you have learned that social media is not the most effective platform for selling products. Users of social media generally do not want to be "sold." Users of social media want to be part of a community that they can learn from and share with. "Becoming part of the conversation" is commonly used to describe social media participants. Having said that, banks should take advantage of opportunities to sell. For example, when responding to inquiries, banks should respond with links that not only provide the answers but that also provide the opportunity to open an account. Of course, this requires that banks provide consumers with the opportunity to open accounts online - which all banks do not.


The natural tendency is to respond to complaints privately. No company necessarily wants to air its dirty laundry before the world. But hold on a minute. One of the advantages that social media provides is the ability to create a maintain conversations. Conversations can come from many sources. But conversations that begin with complaints are the best kind. Huh?

Social media allows banks to become more transparent. By being upfront and honest about making a mistake and addressing the issue promptly and head on, banks can go a long way in gaining the respect of consumers - particularly in today's banking environment. Everyone and every company makes mistakes. What everyone does not do is admit to the error and do what it takes to cure it. When consumers see a bank step up and do the right thing, it goes a long way in gaining the respect...and business of consumers.

So, going back to the question of public or private response. Rule #1: if you are questioned privately (DM), respond privately. Rule #2: if the response involves any personal information, respond privately. Rule #3: if the response relates to a violation of a law or regulation, refer to Legal for response. In this case it is important to protect the company from parties that would seek to use the bank's spirit of transparency against it through some form of legal action. Regardless, let the consumer know PRIVATELY that a response is coming. Rule #4: all other responses should be responded to publicly.

Similar to the scripts used for product/service questions, the bank should have a set of scripted responses approved by Legal and/or Compliance. Any response outside of the preapproved scripts should be sent to Legal/Compliance for review.


As noted above, social media is not the best place to make overt sales pitches. The unwritten code of social media is that interaction should have some community benefit. That does not mean, however, that new product launches should not be mentioned in tweets. It does mean that you have to find a creative way to do it. As I said, information shared is expected to be of some benefit to the community. This explains the large extent of retweeting (RT) of links and other information. It has become extremely common to retweet links to articles that might seem useful to followers. As such, if a new product/service launch can be molded into a form that provides benefit then by all means share.

For example, take a bank that in an effort to increase its visibility within the local nonprofit community, begins offering use of its conference room free-of-charge to local nonprofit organizations. This service could be shared as a tweet that references a Web page or press release that provides the details. Similarly, new products that can be shown to provide some benefit can be marketed in a similar manner. The idea is to not come off as just selling a product but instead as providing benefit to the community.


Unfortunately, due to regulatory requirements, banks cannot rely on tweets to get the word out regarding changes...exclusively. However, as noted above, consumers expect to receive beneficial information through social media. As such, Twitter could be used to: 1) survey customers about proposed changes, 2) inform customers about changes (in addition to what is required by regulation, which is usually 15 days notice in writing), and 3) provide links to updated terms and conditions associated with the affected products/services. While the information provided through Twitter cannot be relied upon to meet the regulatory change in terms requirements, it can provide useful information in a form that many prefer to receive.


From the information contained here, it looks like Twitter can definitely be used to support customers. Unfortunately, support is not as easy as banks may like it. As a highly regulated industry, bankers need to ensure that all communication is compliant. Therefore, any social media plan should include not only the use of an experienced social media professional but a regulatory/compliance professional as well. And above all, get a social media policy in place.

Friday, September 4, 2009

Blogging and Conflict of Interest in Selling Financial Services

I was reading an article tonight on the ethics of blogging. The article located at IndolentDandy.com focused on the restaurant review industry in Melbourne, Australia.

While not banking related, the post made some strong points that carry over to banking and financial services in general.

The piece focused specifically on bloggers. I probably don't have to explain much about blogging or what a blog is...you are viewing one.

The essence of the article was whether it was ethical to accept payment as part of a blog, and if it is ethical, what are the ground rules (disclosure, etc.).

As I thought about it relative to banking, I had a tough time thinking of examples where any vendor of traditional banking services would even consider paying a banker that blogs on behalf of his institution. I can't imagine a check printer doing so nor the company that makes the plastic for debit cards. It isn't really necessary for them since they usually have a monopoly at the respective banks they serve.

Once I got past the traditional bank products and services I moved on to non-traditional non-insured products and then...BINGO!

The mutual funds and annuity companies and that offer their products to banks face significant competition for customer dollars. As such, many of these companies pay banks "revenue sharing" payments. Under certain circumstances these payment create a conflict of interest in fact or perception.

To the extent that a bank maintains a blogging effort, that bank should be aware and cautious to the extent it touches on nondeposit financial products. Any recommendation, particularly if the bank receives some form of revenue sharing payment, may create a compliance nightmare - particularly related to the broker-dealer suitability requirements.

Of course, the best course of action is to steer clear of mentioning any specific fund or insurance company. However, if that is not possible, at a minimum, the blogger should run some form of disclosure past the Legal Department to ensure that the post, no matter how cursory, is fully compliant with the compliance rules.

As Lydia Dishman says, blogging is a tremendous tool for building a following. A well-managed blog invites customers to comment and become part of an intimate conversation with the company, reinforcing brand attachment. The blogging process is also very noncomplex, creating the ability for most bankers, regardless of position or experience, to create a tremendous asset (or liability) for the organization. As such, before hitting the Publish button, bank bloggers should receive the Legal or Compliance Department's blessing before putting something out that could potentially violate some law, rule or regulation.

In lieu of such review, banks can develop some general guidelines regarding the type of communication that can and cannot be posted without running it up the flag pole. Regardless, the individual should be well versed in the nuances of social media messaging as well as regulatory compliance.

It is unfortunate but it is a reality.

Saturday, August 29, 2009

Four Steps to Social Media Plan

I just finished reading Courtney Spencer's "Implement a Social Media Marketing Plan with These 4 Easy Steps."

Courtney minimizes the process to four basic steps:

  1. Decide Where Exactly You Want to Be Online
  2. Come Up With Multiple Options
  3. Implementation
  4. Search the Web

All in, I think Courtney did a good job of summarizing the basics. I would have liked to see a little more meat, particularly on the Implementation stage. But all in, not a bad summary.

If I had to focus in on one area, it would be the sections that speak to the resources needed to "maintain" the effort. Unlike other marketing channels that may be somewhat forgiving, social media is one that can truly require anywhere from weekly to daily to hourly effort once the campaign is launched. The media is so fluid and interactive that ignoring it could result in lost opportunities or reputation risk. Think Community Manager when you roll out an effort to ensure you give the appropriate attention to the plan.

Give it a look and provide Courtney your two cents.

Tuesday, August 18, 2009

How Effective are my Tweets?

By now even the most conservative bank CEO has heard of Twitter. And in some cases, these CEOs have asked the marketing department to build a Twitter following to drive traffic to the bank's Web site.

One problem most bank marketers face when tweeting messages is determining how effective the tweets are in driving traffic to a Web site. A bank may have hundreds, thousands or even tens of thousands of followers. However, simply having a large following does not mean that a bank's tweets are getting face time with followers that result in click-throughs. As such, a bank needs a process to measure tweet-effectiveness (TE). I am going to describe two similar but distinct methods of determining TE.

The first method involves using a URL shortener with built-in tracking such as bit.ly. This tool allows you to accomplish a couple things. First, bit.ly allows you to create a short URL to the Web site you are seeking to promote. For example, a URL such as widgetmaker.com/12345/widget.asp can be reduced from 33 characters to bit.ly/1234 or 11 characters long, saving 22 of the 140 characters available for use on Twitter.

Second, use of a URL shortener with built-in tracking then provides the bank with some basic analytics such as clicks, referrers, locations, etc.

The availability of the analytics allows the bank to determine the TE by examining the click-through data for the link created using the URL shortener. Another upside is that this functionality is currently free to users.

There is a downside, however, to the use of URL shorteners. The first and most obvious downside is what happens if the URL shortener goes out of business or is hacked and all links die or get redirected to another site. To the extent that the TE was good and producing favorable results, the death of the site or a hack may have a devastating effect on not only conversion but potentially creates reputation risk if a bank link is redirected to a porn site or site containing malware.

Therefore, depending on the risk appetite of the bank, a bank can replicate the URL shortener process in-house. By either using the bank's current domain or setting up a shorter domain that is controlled by the bank, the bank can create similar links to those created by bit.ly or other URL shorteners. The bank simply utilizes the "redirect" function available on the Web server. The bank would then utilize its own internal analytics software or rely on a public application such as Google Analytics to track click-throughs.

The second option, while more secure, is also more cumbersome. Increased coordination between IT and marketing must occur every time a new tweet is developed for tracking. IT must create the link and redirect code to ensure that the bank-generated shortened URL points to the proper Web address. Depending on the organization, this may or may not be the smoothest task to accomplish.

Regardless of the option selected, any process that involves the circulation of a Weblink should involve a procedure to measure the effectiveness. Here we used Twitter as the example. However, the same approach applies to the use of Facebook, MySpace or even an email blast.

Sunday, May 10, 2009

Duality of Social Media in Banking

With banks working double time to squeeze value out from every last penny, many bankers are taking a closer look at social media and the value it can bring to an organization.

For about a year and a half references have been made increasingly regarding MySpace and Facebook and how businesses can appeal to the masses that visit these sites. Then a couple weeks ago it all broke loose when Ashton Kutcher battled CNN for the first to hold one million followers on Twitter. And then it happened, the tipping point, the day everything changed. The day Twitter became a household word.

Since that day I have been approached by banker acquaintances asking me how they can use Twitter to make them heroes. And in these discussions I found the duality of social media.

The banking industry is one of a handful of industries that is overly regulated and becoming more so every day (thanks TARP!). While bankers see the benefits of using Twitter and social media, they often find it very difficult to get past the associated risks. On the other hand, bankers make their living dealing in risk. As such, it would appear to me that banking is one of only a few industries that is well suited to incorporate the use of social media, warts and all.

So to my banker friends I say, get over it and do what you do best - assess your risks. The first step in any new bank product/service launch is the risk assessment. Risks can originate from the statutory liability and regulatory penalties that are specified by law, or from reputational damage that could result from publicity of noncompliance (see Social Media and Bank Compliance Requirements). Once you get your arms around the risks and feel warm and fuzzy about dipping your ties, get to it.

Of course, as with any implementation, you must have a plan that is well thought our and clearly defined. This involves doing your homework. Speak to experienced social media practitioners by researching them on the Web or meeting them at social media conferences, see what the competition is doing, see what other industries are doing, read The Community Banker's Guide to Social Network Marketing (disclosure: I wrote this free ebook), get the green light from the right people and put your team together.

Unfortunately, today, everyone is still largely feeling their way around. The use of social media in a commercial setting has only just begun. However, there is a large global community that actively supports this effort. So, while the model has not been entirely proven, the successes to date, the support network and the masses of consumers taking to social media should make dipping your toes at least something to consider.

Anyone up for a swim?!

Saturday, May 9, 2009

Banking is Our Business, and We Think Our Business Needs to Be Wherever People are Talking About Banking

"Banking is our business, and we think our business needs to be wherever people are talking about banking."

The quote above was provided by Peter Aceto, CEO of ING Direct Canada in an interview with Bank Technology News Magazine. Mr. Aceto, an active tweeter, expresses an opinion held by many "enlightened" bankers. But banker beware: if you build it, they may not come.

Rebecca Sausner says "just because there are millions of people at a concert doesn't mean they want to see a banker take the stage." This is a great point. However, I would counter her by saying that banks should have some form of presence for the ocassion in which a client or potential clients needs to reach out. It is during those opportunities that banks will earn the points that put them over the top in the hearts and minds of consumers.

I am a tremendous fan of social media and the many benefits it brings to the banking environment. However, I recognize the many nuances that need to be considered in developing and implementing a social media plan. I agree that a bank's place within social media is not in-your-face. In fact, that is probably the last thing you want to do. Having said that, there are many ways in which banks may leverage social media while playing a role in the background and staying prepared to pounce on opportunities as they come up.

A good example is Bank of America's social network for small business operators. Bank of America has created a space on its dime that draws customers and non-customers together to share ideas and leverage from each other. As conversations take place, BofA is prepared to jump in to provide answers. Also, BofA is along the way collecting information that will assist in the development or improvement of new products and services. So, going back to Rebecca's analogy, while BofA may have built the stage, they are not on the stage but are instead backstage prepared to deal with any questions that may pop up as well as out in the stands listening to the crowds reactions.

Rebecca also made a point about the current financial viability of social media platforms such as Twitter, Facebook, et al, and whether their inability to create income is worthy of steering clear. My immediate response is "so what!" Applications like Facebook and Twitter are drawing in batches of people by the millions. Banks should do what they can to leverage their brand. However, banks should also be sure that their commitments take into consideration the fact that a specific platform or the social network/media industry as a whole may dramatically change over time. But the fact the Twitter may be here today and gone next year should not keep me away from taking advantage of the asset (e.g., people). I just need to make sure that my return in consistent with the investment made.

I think Rebeccas was spot on when she said, "the larger point is that understanding your customers is key. If your customers are addicted to Facebook, texting, tweeting, or LinkedIn groups, you should at least have first-hand knowledge of how and why. " That's pretty much it in a nutshell. Know your customers, know what makes them tick and you'll be able to appeal to them and develop products and services that they will be unable to live without.

For more information on the nuances of social media, download a free copy of The Community Banker's Guide to Social Network Marketing.

Tuesday, April 28, 2009

Social Media Lowers Stress Over Stress Tests

On May 4, 2009, the government will publicly release a portion (very little portion) of the results of the stress tests conducted by regulators at the 19 largest U.S. banks. The 19 banks have already received the results and will have the opportunity to respond to the findings of the tests on May 4th.

According to Congressional testimony by Treasury Secretary Timothy Geithner,
"one of the major components of the Administration's Financial Stability Plan (FSP) is the Capital Assistance Program (CAP). The CAP is designed to ensure that individual banks have sufficient capital even in adverse circumstances. This strategy begins with the idea that in order to ensure our largest banks have adequate capital to weather a more severe economic scenario and continue to lend, we must first accurately diagnose their problems. Federal banking agencies will soon complete a forward looking assessment or "stress test" for the 19 largest banks. The stress tests will determine the capital needs of these banks by estimating losses that they might face if economic conditions were to deteriorate more than expected over the next two years, as well as the appropriate level for loss loan reserves at the end of the period. The analysis will take into account the likely path of earnings for individual banks over the same period. By focusing on individual banks, this approach allows the analysis to take into account the unique exposures that individual banks face as well their individual prospects for generating earnings."
While many believe that all 19 banks will "pass" the tests, there is still likely to be some adversity and the government will, regardless of the outcome, likely ask some or all of the 19 banks to beef up their capital levels.

The release of information will prompt the media and consumers to elevate discussion of the capital adequacy of ALL banks. As this occurs, more and more chat will take place relative to non-stress test banks and their capital adequacy. As such, it will be critical and a perfect opportunity for all banks to monitor conversations occurring on the Internet that specifically involve them as well as general consumer concerns regarding banks. We saw this happen in mid-2008, after the crash of IndyMac Bank. This is likely to spark a second round.

On April 10th I posted Banking Regulators Should Make Use of Social Media Mandatory. In this post I focused on the importance of utilizing social media for risk management purposes - particularly reputation risk. Now is the time for bankers to create a plan that listens in on conversations specific to their bank as well as concerns overall. Bankers should assign a "community manager" to track activity. Additionally, this person should either act as the mouthpiece for the organization or run "traffic" by making sure that the right people respond to the issues in a prompt and honest manner.

In 2008, federal regulators and banking associations encouraged banks to create a crisis response program. This was part of the industry's effort to calm consumer fears regarding bank failures. While the requirements did not specify the use of social media, the use of social media as part of a crisis management/risk management program can assist in keeping adverse effects to a minimum and will allow banks to turn around a generally negative environment by being received as informed, honest and transparent. When using social media as a corporate communication channel banks must be aware of the nuances and expectations of consumers. This information can be obtained from my Community Banker's Guide to Social Network Marketing,which is a free download at http://www.tinyurl.com/cbgsnm. In addition, bankers should be aware of any other regulatory disclosure requirements to the extent that those are applicable (e.g., SEC rules, consumer disclosure rules, etc.).

Forewarned is forearmed.

Monday, April 20, 2009

Bank Lawyer's Social Media Checklist

On April 17th, I published Social Media and Bank Compliance Requirements, where I provided, thanks to the ABA Banking Journal, a list of regulatory compliance-related items that should be considered by banks that are thinking of or have already implemented some form of social media within their organization.

In this post I leverage (and paraphrase) off of the work of Richard Best as contained in NZLawyer article titled, "Social media and legal code: A checklist of issues."

Mr. Best highlighted four distinct areas that require legal consideration:

  • Upfront governance and assessment;
  • Site design and set-up;
  • Content creation, moderation, and use; and,
  • Content distribution.

Upfront Governance and Assessment

Questions that should be addressed :

  1. Does the bank have a clear objective/rationale for creating a online presence with social media capability?
  2. Has management and the board considered the business case for the development of a social media component? Is the presentation and board decision clearly documented in the board minutes?
  3. Has bank management formed a steering committee with an appropriate mix of skills been set up to oversee the development and implementation of the site’s planning, policies, and procedures? At a minimum, members of this team should have a background in the nuances related to social media and Web 2.0.
  4. Has a review and approval process been developed relative to the process? Who has the final say? Executive management? Board of Directors?
  5. Has the bank developed the appropriate policies and procedures that address issues such as site usage policy, staff contribution guidelines, employee training (e.g., who is authorized) and ongoing assessment ?
  6. Has the bank revised its record retention policy and procedures to ensure that electronic records created comply with applicable disclosure and security requirements?

Site Design and Set-Up

Questions that should be addressed :

  1. Has the bank chosen and researched the availablity of the Web site name and domain name name?
  2. Has the bank's Compliance or other Department completed a comprehensive risk assessment and have the results of the risk assessment been presented to executive management and the board of directors?
  3. Has the bank determined whether the site be designed in-house or outsourced? If outsourced, has the bank completed an appropriate vendor assessment according to the bank's vendor management policy?

Content Creation, Moderation, and Use

Questions that should be addressed:

  1. Has the bank's legal department developed a terms of use policy that complies with applicable laws, rules and regulations. Refer to Social Media, Banking and the Communications Decency Act post. Considerations should include:
  • Registration obligations;
  • Copyright and licensing disclosures;
  • Warranties on the part of site users contributing third-party copyright content that they have the right to use such material;
  • Indemnification of the bank against loss;
  • Ownership or licensing of users’ contributions;
  • Unacceptable use and the bank’s right to remove offending material;
  • Cooperation with authorities in the event that material breaching other parties’ rights, or that is otherwise unlawful, is posted to the site;
  • Moderation and banning of abusive commentators;
  • Disclaimers of liability (to the extent appropriate), and
  • Right to amend the terms of use.

Content Distribution

Questions that should be addressed:

  1. If the bank will be resyndicating content from other sites on the bank’s site (e.g., through RSS feeds available on other sites), the bank should ensure that the bank is licensed to resyndicate that content.

Mr. Best does a great job of noting key issues that must be considered. While this list is not exhaustive, consideration of each point noted here will go a very long way in protecting the bank from a legal perspective.

I recommend that bankers download a copy of my Community Banker's Guide to Social Network Marketing to educate management and the board on what it takes to develop and implement a sound social media strategy. The Guide can be downloaded at http://www.tinyurl.com/cbgsnm. Before a bank can reasonably approve such a measure, decision makers must be knowledgable. The Guide goes a long way in providing an education on social media and social networks.

Friday, April 17, 2009

Social Media and Bank Compliance Requirements

The advantages of social media include the ability to better connect with customers, build the organization's reputation as being customer-focused and responsive, and set the organization apart from the competition. Many organizations have introduced social media components to their existing marketing strategy and more will follow in the near future as social media has surpassed everyone's expectations in terms of breadth of penetration and frequency.

Unfortunately, in their rush to implement such a strategy, some organizations may overlook the obvious...COMPLIANCE.

To assist bankers in ensuring ongoing regulatory compliance, the ABA Banking Journal released the following six social media compliance tips:
  1. Conduct a social media risk assessment. Organizations should specifically identify the compliance requirements that apply to the proposed activity and evaluate the compliance risks associated with those requirements. Risks can originate from the statutory liability and regulatory penalties that are specified by law, or from reputational damage that could result from publicity of noncompliance (see the post on reputational risk as well as post on conducting social media risk assessments).
  2. Establish policies and procedures. Organizations should establish written policies and procedures for the activity that clearly outline the details of offering and ongoing servicing. Every facet of the activity, from beginning to end, should be covered (see information on social media policies here.).
  3. Establish controls to help address the risk identified in the compliance risk assessment. Controls may include a pre-publication review by compliance staff, assigning specific responsibility for specific functions associated with the activity, dual control, second review, and detailed checklists. One of the best controls is to include the compliance staff early in the planning process of the activity. The compliance staff can help build the process correctly from the beginning, rather than have to step in later to fix a compliance mess.
  4. Set up a monitoring process. Establish an ongoing monitoring process to identify and correct errors before the examiners or the customers do.
  5. Report to management. Management should be kept informed of compliance exceptions found through monitoring as well as regulatory developments affecting the activity.
  6. Vendor management. Even if there are third party vendors involved in the activity, the bank should still follow its compliance management process. Risk assessment, policies and procedures, controls, ongoing monitoring, and management reporting are still applicable and just as important, because the bank is ultimately responsible.
Following these six tips should ensure that organizations remain compliant from beginning to end. Social media communications are no different from print, radio and television. As such, compliance officers need to ensure that they are in at the very beginning when talk of a social media strategy begins to emerge. Too often the Compliance Department is brought in after all the decisions are made and the money is spent. Getting a seat at the table where new initiatives are discussed will go a long way in preventing compliance related fiascos.

Thursday, April 16, 2009

Why Twitter Makes Bank Customer Service Better

By now most everyone has heard the word Twitter. In fact, if some one walked up to me and told me they had not heard the name I would call them a liar...to their face! Knowing the name and knowing what the name means, however, is an entirely different matter.

According to the Twitter Web site, Twitter is a privately funded startup with offices in San Francisco, CA. Twitter started as a side project in March of 2006 and has grown into a real-time short messaging service that works over multiple networks and devices.

Twitter is a tool that allows users to send short messages of no more than 140 characters to people that have signed on as "followers." A user signs up for a Twitter account and then asks others to become followers. Followers also may find a user without being specifically asked to follow. Once a user has a following, that user can send out short messages to broadcast anything and everything...so long as its no longer than 140 characters long! Messages can include anything from personal thoughts to Web sites.

What Good Are 140 Character-Long Messages

Most bankers' first response to Twitter is "so what!" Why should I, as a banker, care about Twitter? What is all the fuss about?

According to Matt Dickman, VP of Digital Marketing at Fleishman-Hillard, “Twitter is the ultimate customer service tool. It’s live, instantaneous, community driven, open, two-way and multi-way, unfiltered and predictive.“

Imagine this scenario...a bank customer is traveling in a foreign country and attempts to withdraw funds from an ATM. The time back home is the middle of the night and the ATM system is down for maintenance. The ATM message states that the transaction was denied - nothing else.

Scenario 1): The bank customer becomes infuriated that he could not withdraw funds. He eventually gets money out at a later time but is steamed his entire trip. Because this customer is of the Generation Y, the first thing he does, if he hasn't already done so, is let all of his acquantances know of the horrible service. The customer reaches out to his friends on Twitter, Facebook, MySpace and blogs. The result is a permanent record of his experience on the Internet for others to see. A digital black eye on the face of the bank. Once he finishes venting, he goes online, transfers all his money to another bank (which he opened online) and sends a message to close his account.

Scenario 2): The bank customer realizes that something is wrong since he has plenty of funds in his account. He gets on his iPod and sends a Twitter message (known as a "tweet") to the bank's call center. The assigned call center operator sees the message and sends back a quick message indicating that the ATM network is down for the next 20 minutes (you may have offline limits in place but probably don't want to broadcast these). The customer walks around the corner for a cup of coffee and returns 20 minutes later. Tada! Money. The customer enjoys the rest of his vacation and returns home. When asked about his trip he states that it was great. He mentions that along the way he had an ATM problem but that the bank's customer service department told him exactly what he needed to know when he sent a tweet. His friends are shocked that banks can actually be so responsive and customer focused. The Twitter tale gets passed on from one friend to another. Eventually, when it is time to open an account, some of the customer's friends decide to open an account at the bank because of the Twitter tale.

So who would go to all the trouble? Well, banks that "get it." That's who.

A good example of a bank that gets it is Bank of America. In January 2009, BofA launched its Twitter presence using the user ID BofA_help.

According to Holly Hastings on BofA's Future Banking Blog, "with the advent of social networking sites and blogs, companies have the opportunity to listen and learn from their consumers in ways that were not possible before. Companies can gain powerful knowledge on everything from product enhancements, customer service interactions and unresolved problems–but only if they listen. Social networking sites like Twitter enable that listening in real time." Other tweeters include UMB and Wachovia.

In a Februay 2009 ABA Banking Journal article, Pete Fields, Wachovia's senior vice-president and e-business director for corporate services and Web 2.0 said, “in August we started with Twitter because we wanted to develop a corporate competency in this type of social media. Our ‘followers’ have been very supportive about our presence on the platform. I believe they see it as a validation.” In the same article, Pamela K. Blase, senior vice-president and director of corporate communications, UMB Financial Corp., Kansas City, said that her bank started using Twitter to share information about the unfolding financial crisis.

According to the ABA Banking Journal, "the broader world of corporate Twitter users has also adopted the tool to stay in sync with their customers—and ease any daily tensions that are bound to erupt." As illustrated in the example above, a customer service strategy that utilizes Twitter (or a similar technology) can prevent every day issues from escalating into reputation damaging episodes. And the beauty of it is that Twitter communications are efficient at a maximum of 140 characters per tweet.

According to Carol Forsloff, despite the benefits of social media and Twitter, in particular, some businesses are afraid of having negative information posted - even if it is just 140 characters worth of griping. Ms. Forsloff, reminds businesses that criticism provides an opportunity to defend their business and explain their position. In the example above, the tweet allowed the bank to describe the issue not as a breakdown in the system but a scheduled outage for the purpose of maintaining the network.

So who should care about Twitter? Any bank that truly is interested in improving the customer experience. By leveraging this technology and incorporating it into an existing customer service infrastructure, banks can create considerable goodwill by demonstrating that they "get it" and are committed to dealing with customers on their terms.