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

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?!

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.