Chris Skinner, Chairman – Financial Services Club UK, and myself have been working on this survey over the past few weeks. The results, while predictable, show a requirement for RAPID adoption of social networking into the bank DNA. Bank’s are largely unsure of how to respond to Twitter, Facebook, LinkedIn and the like, due to the lack of ‘control’ the bank has over the medium. But customers aren’t confused or unsure – they are flocking to it.
According to data released today by Pingdom, aggregation of traffic and demographic data shows that social networks are dominated by the 35-44 age bracket. That flies in the face of conventional wisdom which asserts that Web 2.0 is a Y-Gen dominated arena. The fact is, if you want to acquire or retain your most profitable customers as a bank, either Retail or Corporate, you need to have a social media strategy.
For the survey we conducted almost 450 folks responded, the largest representative group being from financial institutions obviously. Here are a few fast facts from the survey:
- the majority of the participants would participate in social media before making a decision on a financial service provider
- 93% of participants consider social networking will be worthwhile or critical for banks in the next five years
- 78% said social media is worthwhile or critical for corporate banking relationships today
- the majority of customers would go first to independent community discussions before coming to the brand itself
- Facebook and Twitter scored as the highest value social media channels for retail banking engagements
- LinkedIn, Blogs and Privately Managed Online Communities scored as the highest value social media channels for business interactions
- 74% said their use of social media organizationally will increase over the next two years, whilst only 1% said it would decrease
93 per cent of the 443 respondents to the Financial Services Club survey indicated that a focus on social media would be essential to the future of financial institutions over the next five years. Only 1 per cent of the survey group said that they feel their institution would be likely to decrease their use of social media in the next two years…only 1 per cent! All indications are that this is a hot topic for pretty much every service organization out there which is surprising as so few firms are doing anything about it!
Adoption rate of social media is scary. Two years ago Twitter was unheard of. Although Twitter started beta testing their concept in 2006, it is largely agreed that it didn’t formally launch till April 2007. Since then Twitter has taken off by storm – globally, in the USA and in Australia, Twitter ranks as the 12th most popular website by traffic, in the UK it ranks in the top 10, and in most of the EU it ranks in the top 30 or 50 websites. It took Facebook 4 years to achieve the same impact; so social media adoption is definitely speeding up, not slowing down.
Given the rate at which Facebook, Twitter and other such social networking sites have impacted popular culture, it should come as no surprise that financial service providers are starting to think about integrating social media into their business. However, the path to integration of these new media tools into the institution is a tough challenge. Firstly, organizations understand that this is an issue requiring total commitment across the organization, but achieving such is difficult because finding someone who can garner that support is a challenge. Secondly, brands in general are starting to understand that social media is a medium they can’t ‘spin’ – that is customers are largely in control – and that is worrying, particularly in the current environment where FIs are facing significant perception challenges at large.
The real conclusions of our research show that individually we know that it is inevitable that social media will be integrated into our business, but our organizations are looking for direction. The difficulty is that there is no one size fits all solution. Each of the popular social networking sites works in different ways, so we need strategies that reflect this. The survey showed, for example, that LinkedIn is a far better tool for business-to-business discussions and for promotion of services to professional individuals, such as priority banking and wealth management. For general brand marketing, Facebook is an effective tool, but our respondents wouldn’t use Facebook for banking contacts or LinkedIn for private and personal socializing. So banks must target effectively if they are to get the socialization of finance right. The strategy needs to be localized and involves pay-per-click embedded advertising as well as sponsored groups and consumer support.
Twitter as a tool is an excellent research tool. We would say that this medium in its current form would probably yearn more data than your best of breed focus groups and customer satisfaction surveys if it can be harnessed correctly. When it comes to Twitter it is all about listening. Our survey showed that consumers would use social media first to ask other customers about their experience with your brand, rather than engaging with your brand directly.
The survey shows the biggest missed opportunities for banks and financial service providers are more in respect to their own properties. Banks need to be using blogs to give more of their own voice to the social discussions, along with privately owned social networks embedded into the customer website experience. If you are not sure what privately owned social networks mean, think say Amazon’s product recommendations and rating system, PayPal’s Blog, and Wells Fargo’s Stagecoach Island?
Our survey essentially shows that most banks are missing a key development in customer engagement – both at the consumer and, more importantly, at the corporate level – by not deploying and utilizing this media effectively. For example, respondents are familiar with some of the key bank provided B2B networks, such as those from Bank of America and HSBC, but these examples are few and far between. This is the case even though most consumers and corporations feel this is critical to the future!
There needs to be an immediate and concerted effort to integrate social media into your organization today. More than that, this needs to be a cross-discipline, multi-department effort and it’s going to be difficult, but not necessarily expensive. If used properly, the bank will improve delivery, revenue and customer engagement significantly.