Wednesday, September 30, 2009

Social Media Enabled Core Processors

I just read an article at that featured Tim Barker from 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 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,, 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 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 FDIC-insured.

@CDConsumer: 12 mo CD $100,000 and over has 1.15% Annual Percentage Yield. Rates subject to change. See 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 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 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 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.