developing and deploying a social media strategy for financial institutions
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Social media has made it to the big leagues though financial institutions do not yet place a high level of importance on social media compared with other points of contact with customers. Launching and maintaining a financial institution’s social media presence is daunting but it has become imperative to converse with consumers on their terms, which increasingly include social media conversations. Building a strategic plan for developing and deploying a financial institution’s social media presence can be divided into four steps: 1) planning, 2) monitoring, 3) contributing, and 4) measuring.TRANSCRIPT
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Developing and Deploying a Social Media Strategy for Financial Institutions Consumer Insights Brief October 2011
Paul McAdam, SVP of Research and Thought Leadership, FIS Mandy Putnam, Director of Research and Thought Leadership, FIS
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The Social Media Imperative Social media has made it to the big leagues. Most days and most newscasts can’t go without at least one story about Facebook, a YouTube viral video, or some new announcement a celebrity or politician made via Twitter. Only Google tops Facebook and YouTube for pure number of Internet visitors (Figure 1). Social media consumes 22 percent of all time online.1
Just like the general population, banking consumers are spending time in social media, too. Overall, 70 percent of banking consumers are using Facebook, and 27 percent are using YouTube — the two most popular sites among banking customers (Figure 2).
Sources: Alexa.com, July 2011 and Google Ad Planner, July 2011.
Figure 1: Top Social Channels in the Internet
9%
6%
19%
29%
34%
74%
13%
6%
10%
18%
23%
67%
14%
9%
12%
18%
24%
72%
14%
11%
13%
17%
26%
69%
12%
12%
17%
20%
29%
70%
Classmates.com
MySpace
YouTube
Top 10 banks
Banks 11 to 50
Credit unions
Community and small regional banks
Other FIs
Figure 2: Top Social Channels by Banking Consumers
Source: FIS Enterprise Strategy, “Consumer Mobile Banking Research,” February 2011, n=4,002.
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Despite the rapid adoption of social media across consumer segments, financial institutions do not place a high level of importance on social media channels compared with other points of contact with customers. Less than one in five executives recently interviewed by FIS™ Enterprise Strategy rated social media as important (Figure 3).
However, results from a November 2010 survey by Aite indicated that 79 percent of banks have at least begun efforts in social media. Facebook is the most popular social media site for financial institutions, followed by Twitter, YouTube, and LinkedIn.5 Most banks use a selective mix of social media sites (Figure 4).
93%
71%
70%
55%
48%
43%
18%
6%
Online banking
Branches
ATM machines
Call Center (live rep)
IVR / Automated telephone banking
Mobile banking
Social media
Self-service kiosks and/or video banking
Figure 3: Importance of Channels to Financial Institution(top 2- box score on 7-point scale)
Source: FIS Enterprise Strategy, “Voice of the Customer,” August 2011; n = 351
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Although the list includes only large financial institutions, social media can be used effectively by smaller banks and credit unions to connect with customers. In fact, reports show that smaller banks and credit unions have significantly more success getting their customers to “like” them — one “like” out of 50 customers versus one “like” out of every 710 customers for banks overall.6 If you are involved in launching or maintaining your financial institution’s social media presence, you have a big task ahead of you. The social media landscape is massive and constantly changing. Consumer preferences are evolving and their demand for meaningful interaction online is ever-growing. But, it has become imperative to converse with consumers on their terms, which increasingly include social media conversations, in order to capture value especially from younger generations.
“Deciding whether to get involved means deciding if you want to be part of the conversation…There will be a conversation with or without you…If you don’t
use social media, then your business will go elsewhere.”
– Hadley Stern, Vice President at Fidelity Labs, a division of Fidelity Investments
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Building a strategic plan for developing and deploying a financial institution’s social media presence can be divided into four steps (Figure 5). Your program will start at step one and continue on, but all four steps should be constantly reviewed and reiterated as necessary:
Planning a Social Media Strategy
Determine business objectives As with any other business initiative, a social media strategy should begin with goals. When looking at the social media playground, it’s easy to begin building goals that are tailored to the social media’s strengths, e.g. “People can ‘like’ our Facebook page. Let’s build up to 1,000 ‘like’s’!” But goals like those put the cart before the horse. The objectives of your social media program must be tied directly to your overall corporate goals, or else they have no meaning. What does your financial institution care most about: customer satisfaction ratings? Loyalty? Involvement in the local community? Your social media goals should feed directly into those goals. Aite found that the most common business objectives of the social media programs of financial institutions are engaging customers (63%), building brand awareness (58%), building brand affinity (57%), retaining customers (41%), and managing corporate reputation (40%).7
How will your social media presence help your institution reach its goals? To maximize success, look at the ways that your consumers want to interact with you online. Forrester surveyed more than 2,500 consumers and found the top ways that they would like to interact with their banks on social networking sites:8
1.Planning
2.Monitoring
3. Contributing
4.Measuring
Figure 5: Steps in Building Social Media Presence
Source: FIS Enterprise Strategy, July 2011.
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1. Alert me about upcoming products or special offers 2. Offer financial advice 3. Offer customer service (e.g. help with questions, complaints, etc.) 4. Present relevant financial service promotional offers to me FIS and the Babson Consulting Alliance Program surveyed Generation Y consumers about specific ways that they would be likely to interact with their bank and found the following (Figure 6):
A “social media audit” is a great tool for building a plan for reaching your social media goals. A social media audit covers both internal and external resources to find information such as:
Social media channels already in use by individual business units
Competitor social media strategies
Benchmarks for the social media program
The social media channels that are best suited to meet the business objectives
The role social media will play within the current marketing, sales and customer service strategies
Address compliance and security After getting a clearer picture of the social media goals and channels to be used, the next issue to be addressed before any social media communications begin is regulation compliance and security. Two regulations have specifically addressed social media:
SEC rule 17a-4 and NASD Rules 2210, 2211, and 3110 require retention of all business-related electronic communications for a minimum of three years, including social content.
FINRA (Financial Regulatory Authority) issued Regulatory Notice 10-06 to broker-dealers to emphasize the importance of extending good governance practices to social media.
Social media activity % likely to participate
Use mobile applications to access your financial information 60%Read reviews of your bank 33%Follow your bank on Twitter 19%“Like” your bank on Facebook 15%Post reviews of your bank 15%Subscribe to a savings social network 15%Watch a YouTube video from your bank or financial institution 13%Discuss your bank or financial activities on a blog or community forum
8%
“Check into” your bank on Foursquare 7%
Figure 6: Potential Ways for Gen Y Members to Interact with Banks
Source: Babson Consulting Alliance Program survey, 2011. n = 70.
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The SEC regulation can be covered with a few meetings with your IT department to make sure any social media channels you participate in are recorded and stored. The FINRA regulation, though, is both broader and more impactful. It only applies to broker-dealers who are under SEC regulation, but it is being seen as a bellwether for the direction of any other regulation that is to come. Forrester Research studied the FINRA regulation and found three particular themes from its guidance:9
Where possible, the rules you follow in other media should apply to social media.
Customer posts are not attributable to financial services firms.
Firms can engage users in real-time social conversations without compliance preapproval. Before beginning any social media initiatives, double-check on the latest regulation guidance to come out and with your own legal department to make sure your parameters for operating in the social media space are defined. Also, communicate proactively to consumers to inform them that their personal financial information is kept separate from social media communications. For example, Bank of America notes in its disclaimer on Twitter: “Bank of America will never ask you to disclose your social security number, financial account information or PIN via Twitter.”
Monitoring the Social Media Landscape
Listen to the conversation Conversations about your bank are already happening. People are already posting comments on Twitter, blogs, and review sites about your institution. American Banker reviewed social media in the fourth quarter of 2010 and found the number of times some of the biggest financial institutions were mentioned:10
Figure 7: Conversations in Social Media Networks, October − December 2010
1. American Express 81,084 mentions
2. Citibank 80,903 mentions
3. Bank of America 75,167 mentions
4. Wells Fargo 48,498 mentions
5. Capital One 12,402 mentions
6. U.S. Bank 6,931 mentions
7. JP Morgan Chase 4,368 mentions
Source: American Banker, Q:4 2010.
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The first thing your institution needs to do is hear what is being said. This will allow you to:
Know what is on the minds of your consumers, the things they care most about, the problems they are currently having
Prioritize your communication, when it begins, on the channels where your customers already have their strongest presence
Eventually, to respond to questions, complaints and comments that get posted
Use tools like Google Alerts (www.google.com/alerts) and Twitter Search (search.twitter.com/advanced) to find these conversations. In addition to your institution name, you should set up searches for product names, searches within a local radius, and other keywords that go to the heart of your bank’s offerings and goals. If your bank is a larger institution, you may want to look into social media monitoring tools such as Radian6 that will not only find the conversations, but help you analyze the sentiments they express and summarize the opinions being discussed. Once you’re listening, then you can begin to participate and to offer your own content in the social media world.
Contributing to the Social Media Conversation
Focus on engagement versus selling Participants in social media expect to interact informally and “authentically” with each other, whether those participants are people or corporate representatives. “Authentic” is a key term in social media that summarizes this expectation that people have. Hard-core, direct-sales messaging is a big turn-off. This is one of the ways that a social media audit is very useful: to get a look at the programs and messages to which your consumers respond the most favorably. Some of the more effective ways to communicate in social media channels concentrate on:
Two-way conversation
Information that is relevant to the audience
Simple, conventional language
Photos and videos that give a face/a “personal touch” to an institution
Storytelling A great way to engage customers is through simple loyalty gifts that surprise and delight customers. USBanker found that North Shore Bank in Brookfield, Wisconsin gave $5 Subway gift cards to the people who had become Foursquare “mayors” (checked in at the locations most often) at each of its branches. The unexpected gesture generated so much good will that some blogs picked up on the happy responses and wrote stories highlighting it, providing the bank with a big return on its small investment. 11
Use social media to facilitate responsiveness Social media can be used to respond more quickly and cost-effectively to customer questions, concerns, and complaints. This is the most basic way to participate in social media and is an imperative for modern companies. As one financial eBusiness coordinator told us, monitoring social media can help mitigate the impact of potentially damaging publicity.
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“Social media has more opportunity than risk. Better to be out there than not. We can listen: the good, bad or otherwise, we can address it. If we weren’t out there, then there’s no telling how big or how far something negative may be able to spread if we couldn’t participate.”
– eBusiness coordinator from financial institution
Everyone has heard the stories of customer complaints that went “viral,” creating huge headaches for the company and damaging public reputation. And on the other hand, companies that want to promote their responsiveness and service have unprecedentedly powerful tools in Twitter, their Facebook pages, and responses to review sites.
Execute targeted social media programs based on core competencies and customer expectations “Social media” encompasses a stunning array of websites and communication channels (Figure 8), most of which allow the freedom to communicate and build campaigns that are bounded only by your creativity.12 It’s not possible to have a “social media presence” everywhere. Your program must selectively choose where and how to get involved.
Figure 8: Social Media Channels
Source: www.fredcavazza.net, 2011.
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This is where you will use the assessment of your business objectives and your social media audit to build the strategy that will target your objectives and your target audience. Choose your campaign programs wisely: it is far better to excel at one or two presence points than to try to take on too many channels and not really succeed at any. Your social media audit of your competitors and social channel opportunities will help you get an idea of program possibilities. Some examples include:
Citigroup offers a social media platform called Women & Co. (www.womenandco.com) to target its female audience with blogs, events, newsletters, and discussion tools all geared toward financial education and issues.
ING offers a blog called “We the Savers” (www.wethesavers.com) with life stories, advice, and encouragement for saving money. Multiple writers contribute to the blog to provide a variety of perspectives and life situations.
Bank of America has a strong presence on Twitter, featuring multiple accounts for service, news, careers, etc. Its primary focus is on the service (www.twitter.com/BofA_Help), offering a Twitter-based customer service line that is staffed to receive and look for questions to answer.
American Express promotes “Small Business Saturday” through a Facebook page (www.facebook/com/SmallBusinessSaturday) to emphasize the importance of small business to the community.
Currency Marketing created the Young & Free campaign (www.youngfreehq.com) as a vehicle for credit unions to reach young consumers by offering them pertinent information about finances for members of their generation. Communications are conveyed in an informal, non-patronizing manner that steers clear of sales-oriented language.
Speak to corporate social responsibility (CSR) initiatives Social media is especially well-suited to working hand-in-hand with your corporate social responsibility initiatives. They’re popular to crowdsource for public involvement while providing high visibility and good exposure to your CSR efforts. Financial institutions can use social media involvement to help decide how charitable donations are allocated or to promote involvement in a charitable organization. For example:
JP Morgan Chase’s Community Giving program on Facebook (www.facebook.com/ChaseCommunityGiving) has generated more than 2.9 million “likes.” Chase continually solicits consumer voting on the winning 100 charities that will receive funding.
TD Bank’s Twitter handle @TDFEF involves its customers in discussions about the allocation of resources for TD’s Friends of the Environment Foundation (www.fef.td.com).
Measuring the Social Media Results As with any corporate initiative, measurement and assessment is an important part of the social media program. The work you did at the beginning of the program, identifying the corporate objectives your social media programs will address and the benchmarks that they will be measured against, will help you to identify the metrics you need to track and where you want them to be.
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From the most generic to the most objective-targeted, some ideas of the metrics you might use to measure your social media programs are:
Traffic: The number of Twitter followers, Facebook fans, or views on YouTube will show the raw amount of attention your programs are receiving. Increased website traffic or traffic to the company blog will show secondary results that your social media presence can bring.
Interaction: Customer participation demonstrates that the company has engaged its audience. Interaction can be measured by measurements like the number of comments the blog or Facebook page has received, Twitter replies, or participation in forums.
Brand Mentions: Word of mouth and the viral nature of social media have the ability to drastically increase brand mentions. Tracking the number and types (positive vs. negative or neutral) of mentions online will help demonstrate whether your social media efforts are raising brand or product awareness. This metric can be measured using tools such as Google Alerts, Radian6, or Trackur.
Sales: Where possible, referrals from social media to the sales channel should be tracked. Dell tracked referrals from its Twitter handle and found it had gained $3 million worth of sales in the two years that it had been on Twitter.13
Summary A social media program doesn’t end with one trip through the Planning – Monitoring – Contributing – Measuring cycle. Measurements of results, new institution business goals, and fresh audits of the social media landscape will constantly feed new adjustments and ideas for the social media program. A successful program will continuously visit all parts of the developing and deploying cycle:
Planning a Social Media Strategy – Determine business objectives
– Address compliance and security
Monitoring the Social Media Landscape – Listen to the conversation
Contributing to the Social Media Conversation – Focus on engagement versus selling
– Use social media to facilitate responsiveness
– Execute targeted social media programs based on core competencies and customer expectations
– Speak to corporate social responsibility initiatives (CSR) initiatives
Measuring the Social Media Results These are the cornerstones of a successful social media program. The social media conversation is occurring with or without your brand’s participation. It is becoming increasingly critical that financial institutions develop and deploy a social media plan that aligns with its overall corporate goals.
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Citations 1
Nielsenwire, June 2010. 2 Alexa.com, July 2011.
3 Google Ad Planner, July 2011.
4 “Consumer Mobile Banking Research,” FIS Enterprise Strategy, February 2011, n=4,002.
5 “Social Media at the Starting Blocks: A Look at Financial Institutions in Europe and the United States,” Aite Group,
November 2010. 6 “How Many Facebook Fans Can Financial Institutions Expect?” The FinancialBrand.com, March 7, 2011.
7 “Social Media at the Starting Blocks: A Look at Financial Institutions in Europe and the United States,” Aite Group,
November 2010. 8 “How US Financial Firms Should Approach Interacting with Consumers on Social Web Sites,” Forrester Research, Inc.,
October, 2010. 9 “Social Media Marketing for Financial Services,” Forrester Research, Inc., September 2010.
10 American Banker, Q:4 2010.
11 “Rethinking Rewards,” USBanker, May 2011.
12 www.fredcavazza.net, 2011
13 “Dude — Dell’s Making Money Off Twitter!,” Wired.com, June 2009.
About the Research
Developing and Deploying a Social Media Strategy for Financial Institutions is derived from a research project conducted by MBA candidates for the class of 2012 at Babson College’s F.W. Olin School of Business and managed by FIS Enterprise Strategy. The research findings herein are based on: 1) secondary research on social media, 2) executive interviews with social media experts and financial institution executives, 3) qualitative research conducted with Babson peers, 4) a 10-question survey completed by about 70 Babson students, and 5) FIS™ Enterprise Strategy research studies.
The study’s primary objective was to determine how banks can leverage social media to capture value from consumers, especially adult members of Generation Y (born between 1980 and 1990).
About FIS
FIS (NYSE: FIS) is the world’s largest global provider dedicated to banking and payments technologies. With a long history deeply rooted in the financial services sector, FIS serves more than 14,000 institutions in over 100 countries. Headquartered in Jacksonville, Fla., FIS employs more than 32,000 people worldwide and holds leadership positions in payment processing and banking solutions, providing software, services and outsourcing of the technology that drives financial institutions. FIS is ranked 426 on the Fortune 500, is a member of Standard & Poor’s 500® Index and consistently holds a leading ranking in the annual FinTech 100 list. Developing and Deploying a Social Media Strategy for Financial Institutions was authored by Paul McAdam, SVP of Research and Thought Leadership at FIS, Mandy Putnam, Director of Research and Thought Leadership at FIS and Abigail Burnham and Donald Chapman, MBA candidates for the class of 2012 at Babson College’s F.W. Olin School of Business.
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Please contact Paul McAdam or Mandy Putnam if you have questions about the research or how the results apply to your financial institution. Paul McAdam Ph: 708.449.7743 [email protected] Mandy Putnam Ph: 614.414.4207 [email protected]