Social Media and Financial Services are getting to know each other pretty well.

There are some obvious opportunities to be grabbed. For decades B2C verticals such as banking and insurance brands have littered doormats and TV screens with broadcast style messaging. Yet even the most inventive direct marketing only provided one way response mechanisms as a token form of interaction.

The net result was ever diminishing returns from a generation of consumers that learnt to tune out the noise and instead preferred to seek advice and recommendation from trusted sources.

So what’s being done? Certainly the race is on to persuade C-Suiters that they need to invest in the social business model. And as ever, those at the top find themselves challenged to accept ideas that are not native to their own generation or  instinctive ways of thinking.

Risk is a relative concept.

When it comes to innovation, the insurance industry often gets a bum rap: slow to change, reactionary. One Dreamforce 2011 session, “The Next Generation of Insurance,” was even subtitled “Rethinking a Laggard Industry.”

Now, the insurance industry may be slow, but I’d never label it as lagging. Relatively speaking, the industry has been fairly aggressive in introducing new products and services to meet its customers’ needs. (Note I’m speaking here not about the health insurance industry, which is its own, unique space–especially with the Obama healthcare law now in play–but rather companies that sell life insurance, as well as non-life, general, and property or casualty insurance.)

When I accepted the invitation to keynote the Hillross Annual Conference 2012 in Canberra, Australia, focusing on practical strategies for social media, I was pretty sure that one of my main challenges would be finding examples of successful engagement via social media by financial advisers.

Part of the problem is that financial advisers operate in a highly regulated environment and have a justifiable concern that engaging with clients and the general public via social media might bring problems in terms of reputational risk or even put their whole business at risk.

My presentation is in the national capital, Canberra, this coming Friday Jan 20th and I’m very much looking forward to that. Hillross Financial Services is one of Australia’s premier wealth adviser firms, with a network of over 300 advisers and over 100 firms across Australia, who help create and protect the wealth of affluent and high net worth Australians: I feel honoured to have been asked to work with this group and I’m confident I’ll learn from them as well as sharing what I know.

Global issues

One reason for insurers to build a Facebook page is to be where the consumer is – this is the same argument used to build web sites ten year ago, invest in search engine optimization and not too dissimilar to the rationale for having a local agent in every main street in America.

But just having a Facebook page feels a little like having that first web site, it was there but did not do very much; we were just planting our flag in the ground. Now we have placed our Facebook flag what is the next.

Many companies are building what is essentially a parallel web presence inside Facebook arguing that consumers on Facebook want to stay there and not dispatched to an external website. Facebook is building its own proprietary web, much in the same way AOL tried to do.

Retailers, such as Amazon, have integrated Facebook with their website allowing consumers to buy recommended purchases for friends based on Facebook preferences. Delta lets you book an air ticket and Starbucks will let you buy a coffee card all on Facebook. With the growth of mobile use, this so-called ‘f-commerce’ is bound to grow.

As per usual, the insurance industry is dragging its feet but starting to follow suit. Geico and 21^st Century both offer auto insurance quotes inside of Facebook and Accuquote allow you to calculate life insurance needs as well as providing a range of comparison quotes. Is this a simple and logical extension to reach consumers or is there a bigger strategic issue.

#977 in the Purple Goldfish Project comes from a post by Ellie Becker at E.R. Becker Company:
In Ellie’s words:

“This morning I had breakfast with my friend and marketing colleague Stan Phelps, Chief Solutions Officer at Synergy Events. Stan and I were talking about The Purple Goldfish Project, an almost two-year book venture of his that he’s trying to wrap up for an early January publishing date.

For the book, he’s compiling 1,001 examples of marketing lagniappe, which he terms ‘Purple Goldfish’. A Purple Goldfish is when a company “gives little unexpected extras” (G.L.U.E.) as added value. It’s Purple Goldfish that become the stuff of positive word of mouth.

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#944-948 in the Project were submitted via a comment by Jordan Belcher @kjbelcher:

Let’s look at this handful of Purple Goldfish:

*All drive-thru customers with children get a lollipop. Pretty standard bank-fare. But here’s the kicker: all drive-thru customers with a dogs get puppy treats. The pups get so excited to hear the drive-thru chute. It makes banking (a routine practice) fun for the whole family. [#944]

*Tellers are empowered to provide immediate service recovery of up to $100 per incident w/o seeking management approval. This can be used to buy a customer lunch, purchase flowers, send a special treat or for anything else the rep decides to help recover from a bad service experience. [#945]

*All clients who open a new account or loan receive a hand-written thank you note from their banker. [#946]

The year 2012 may be challenging for asset managers.  In addition to the ongoing structural shift in asset flows stemming from baby-boomer retirement, continued stresses in the global economy makes it even more difficult for firms to increase assets.

This 3-part series, co-written with Steven Miyao of kasina, will examine why firms need to rebalance their focus on both acquiring net new assets and minimizing redemptions. We will discuss new data-driven techniques to anticipate and mitigate asset outflows and how wholesaler compensation needs to change to align with the firm’s objectives.

In a world with low to zero net inflows, the competition to grab share of a fixed or shrinking pie will increase.  Firms will evaluate all the levers they have in their arsenal to capture asset share.  As always, fund performance, particularly with respect to peer categories, will be a major factor.  But what else can asset managers do to win?

Bank of America may have committed the #1 business model blunder of 2011 for their $5 debit card fee.

First, let’s get some background. Spoiled U.S. banks have become so addicted to high-profit fees that they seem to have forgotten the customer. The average bank earns over forty percent of its profit from fees. These include, swipe fees, account fees, loan fees, statement fees, overdraft fees, balance fees, and more. Prior to Wall Street reform, banks averaged $0.44 per debit card swipe. Banks are now capped at $0.24 per swipe. According to The Nilson Report, banks took in $48 billion from these fees before the reform. Assuming the banks did not get tricky and add peripheral fees, this still translates to $26 billion in swipe fees.

In the old days, the banks’ business model required them to:

The financial crisis has at the end of 2011 become a global concern again and the outrage about certain corporate behavior has lead to “occupy movements” globally. A significant drop in consumer confidence in financial institutions is the result that drives citizens to the streets to voice their anger and frustrations. Even though a certain bank might not have been actively involved in the high-risk trades of recent years, the image of the industry as a whole is damaged.

From Zurich, Switzerland to Charlotte, NC: consumers lose confidence

Certainly consumer confidence is different in each market and for each brand. Looking at the situation in Switzerland it turns out that a bank like UBS has experiences several shocks (20 billion USD loss in 2008, 50 billion USD have been written down, US tax evasion scandals and rouge trading scandals that required Oswald Grübel, one of the most prolific bankers in Switzerland to resign as CEO) and customers react and move move their money to other banks. Swiss cantonal banks have seen their business mostly unaffected and instead experienced a significant inflow of new customers. Similar situations have played out in Germany, United Kingdom and the United States even though each market has its unique characteristics.

What is common in each market is that the customers perception is that a large degree of these problems are caused by banks that have focused too much on making profits instead of providing services and caring about their customers.

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