Tuesday, August 14, 2012

Community Outreach and Retail Banking

According to a recent article written by Alan Mattei of consultancy Novantas LLC, community outreach is fundamental to retail banking.  The problem banks face is determining how to best respond to the plethora of social platforms that include blogs, Facebook, Twitter, Pinterest, etc.

Mr. Mattei argues that social networking is forcing banks to think twice about the singular importance of branch banking.  As more time is spent online, shopping habits, including those related to bank products and services, have morphed and as such, banks must find ways to meet with customers at their new destinations – social media platforms.

As evidence of this transition, Mattei provides examples of two branchless financial services players that have begun to market products and services through social platforms: Ally Bank and American Express.

Ally’s online outreach includes a blog with self-help tips and expert advice; a continuing heavy stream of articles that are broadcast and posted on its Website; posts on Facebook; tweets; and infographics. Such activities have generated millions of Website visits and have become a driver in deposit account origination, according to Forresteor Research.

American Express launched its “Sync, Tweet, Save” program, which entices customers to sync their cards with their Twitter accounts. Under this arrangement, promotions from merchants and American Express are pushed to the customer via Twitter, with discount offers concurrently activated at the merchant point of sale.

Mattei states that today’s innovators in the use of social media are going beyond traditional banking’s defensive measures (e.g., reputation management).  Regardless, Mattei makes a point for walking before running by stating that “as a reasonable first step, institutions within the top 100 should establish an individual set of surveillance routines and contingency response plans for social media. This includes participating in conversational threads as appropriate; responding to customer service requests; diffusing negative events; and generally monitoring “the voice of the customer.” Much of this preparation remains to be done, although there are a few standout examples of banks with strong antennas in the virtual space.”  Here Mr. Mattei is spot on.  Mr. Mattei’s only error is that he has limited his advice to the top 100 when in fact every institution should follow this advice.

Mr. Mattei argues that social media and banking is about proactive involvement.  He argues that banks must learn to “proactively participate in the online dialogue, not just react in trying circumstances.”  The ultimate goal accord to Mattei is strengthening brand presence and building product awareness through:
  • Community Building
  • Two-Way Conversations
  • Content Threads
Mattei states that banks must begin incorporating social media into the overall marketing plan – despite the lack of maturity in the market.  Just like the online marketing scene created chaos for bankers yet bankers adapted, so too must bankers adapt to social media despite the chaos.  Mattei states that “institutions will have to start somewhere, just as they did when the Internet took off ten to fifteen years ago.”

Mattei attacks the ROI question head on when he states that “it is a mistake to begin using strict return on investment (ROI) calculations to evaluate social media initiatives right now.”  He compares today’s social ROI debate to that of online billpay of yesterday.  He points out that what years ago was a horrible ROI example, today has been an incredibly profitable service that creates serious retention.

For a second time in the article Mattei makes reference to the “majors” by stating that “for major banks, real traction with social media will require a dedicated team.”  While the advice he gives is sound, it applies to all banks.  Regardless, depending on the success and the leverage of social media within an organization, even smaller shops may want to consider community managers to run the day-to-day social operation.  Should they be outsiders or bank employees?  That is a conversation (debate) for another day.

Mattei goes on to address the use of social media for customer service.  He advises to start small and simple and figure out what works and what doesn’t.  He suggests using analytics to find the nuggets of gold that may result in an effective social effort.

Ultimately, Mattei states that “to mobilize for this new channel, executives must embrace the notion that building ‘social equity’ has long-term value for the institution. They then need to allocate the required resources, build the right teams, and craft a long-term strategy for transformation.”

I generally agree with Mattei.  I wish his focus would not have been so heavily slanted towards larger shops.  It is, after all, community banks that are best positioned to take advantage of the social media revolution.  Understandably, community banks are not likely going to spend the bucks on social like the top 100.  Regardless, it does not help the industry when the smaller players are ignored or left out of the "conversation."

Some useful links:  Social Media Risk Assessment Template


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