In honor of Halloween, I’ve written about something really scary – social media. It may not scare you, but it frightens the risk-adverse traditionalists who manage financial services companies! They know that (whether they personally tweet or not), the majority of Americans are using social media for everything from keeping in touch with friends to requesting service from the companies they shop with. But it feels so wide-open and dangerous that most financial services companies have shied away from the social part of social media, confining participation to “brochureware” postings.
Alain Sherter does a nice job describing this financial services dissonance in his recent BNET blog, “Banking on Twitter and Facebook”. He writes, “Social networks are for sharing; by contrast, many people are understandably reluctant to disclose anything about their financial situation on a public forum.” The same is true on the institutional side, where sharing and disclosing have not been generally viewed as advantageous. Despite the mutual trepidation, some companies and their customers are trying to crack the code. Sherter cites Wells Fargo’s Twitter feed focusing on customer service and financial tips, and Fiserv’s Facebook-based application that lets users monitor and access their bank accounts.
But NOT using social media to communicate with customers can be even scarier for financial institutions. According to the research I directed last year, 41% of customers recalled a bad experience with a bank, up from 29% in 2008, and 44% of credit card customers recalled a bad experience with a provider. 65% of these customers tried to report their problems to the company. To see how well that worked, see my previous blogs, Customer Experience in Financial Services Parts 1 &2. The end result was that 81% of banking customers and 83% of credit card customer went viral with their problems. All told people they knew, and ~17% reported posting their frustrations on social media. That number has undoubtedly climbed in the last year, as has the number of people seeing each post (~45 in 2010). Joshua Kalkbrenner, co-founder of SpotBanks.com, commented on Sherter’s blog, ” I have seen a sharp increase in the number of people who publicly express Bank related frustrations on Twitter… But of a 100 Tweet samples, I found 75% were one-sided (Bank did not engage customer) and 25% involved back-and-forth correspondence between the identified Bank and frustrated customer.” Sounds about right. I mean wrong.
In her blog, Reasons Financial Services Can’t Ignore Social Media, Rebecca Neufeld of Edelman Digital summarized several compelling reasons why financial services must overcome fear of social media:
- Customers are already banking online. A survey conducted by the American Bankers Association in August 2010 found that 36% of customers preferred to do their banking over the internet. That number is growing fast, and it make sense that the demand for more levels of online service must be growing as well.
- Smartphones and Tablets are on the rise. In a recent survey by Good Technology to determine what industries are adopting the tablet, financial services soared ahead of the pack dominating over a third of the market (36.8%).
- Reputation management is going social, and financial services are in dire need of attractive ways to manage that.
- Competitors are already digging in. If you aren’t online and social,
you’re already losing share of voice to companies that are ahead of the game.
The social media channel is open and customers are receiving. Now more financial services providers need to determine how to communicate effectively. It’s spooky – maybe even risky – but it has to be done before something really scary happens – like losing market share.
Next to used cars, financial services should be spooked. Their level of service and respect for the “average” customer has been greatly lacking.
Social media is like a mirror; you get a picture of what you look like. Attention has to be paid to EVERY situation, no matter how minor. Social media also now forces firms to live up to their Mission Statements and corporate attributes. They can no longer be internal marketing statements developed to make people feel good about where they work. They have to be acted upon in the marketplace.
We work with a number of financial services firms on social media, and have found it to be highly rewarding. They’ve embraced the role of the customer and have delivered on their brand promise. It has proven to be a tool that has delivered with measurable performance.
They better be scared! Because of social media and the internet people have a lot more choices and they can shop around for the best deal