It is time for the financial services market to take social media seriously
Exhibit One# Changing legislation
The Retail Distribution Review (Jan 2013) will forbid IFAs receiving commission
from financial services companies
IFAs will need to demand fees when the commission dries up
Less than 15% of households currently seek professional financial advice,
so charging won’t help
Consumers are turning to friends and family for free financial advice
Judgement One# A large advice gap is forming
Exhibit Two# The social consumer is maturing
68% of the Facebook audience are between 18-44, compared to
45% of the general population
13%
24%
26%
18%
11%5%3%
8%
11%
16%
17%16%
14%
17%
13-1718-2425-3435-4445-5455-6465+
Source UK: Office National StatisticsSource Facebook : Social Bakers
UK Population
Facebook Population
And social users are actively using the social conversation to
influence their purchase choices
Source: econsultancy.com
Has social influenced
your buying decision?
Bought financial services as a result of a recommendation via social networking friends43%
26% Bought clothing as a result of a recommendation via social networking friends
Bought flights/car hire/ hotels as a result of a recommendation via social networking friends25%
And which buying decisions are most influenced?
Source: Moneyfacts.co.uk “Social media used to choose financial services” March 2010
Judgement 2# Social audiences should be ready to receive credible advice
Exhibit Three# The current players are not ready
Social is where PR, marketing, product and customer service all collide, in public
but a businesscommitment to conversation with customers
Don’t treatsocial media like a marketing channel
Real or not?This un-moderated activity is damaging the NatWest brand
#FAIL
Lloyds TSB broadcast some advice well on YouTube but offer
a game on Facebook rather than
conversation #FAIL
#FAIL
Morgan Stanley invested hugely in an integrated online and social platform
But forgot their customers were time poor and really wanted a mobile application
SUCCESS IS A CONSISTENT USER EXPERIENCE WITH CHANNEL AGNOSTICSTORYTELLING
You need buy-in right from the top to bring together the experts from across the business
first direct use social transparency to prove their business model works
Judgement three# Significant business change is required to take advantage
Exhibit Four# The innovators are circling
Wonga used social to assess lending risk.They measured desire and ability to repay.
Then made it transparent and fast...
....and achieved a 5% default rate compared to
the 25% market average
Wonga.com is a very simple offering, yet to be tested measuring long term risk.But...
“Think, where else do speed, convenience
and transparency interest the consumer banking customer?
So our vision is bigger than short-term loans.“
Errol Damelin, founder Wonga.com
Aggregators are using branding to forge
strong customer relationships
3.2m Video Views50k Twitter Followers785k Facebook Likes
Source: YouGov 2011Price comparison sites earn over £650m a year in commission
Judgement Four# It is time for the traditional providers to reclaim their market
ISM in judgement• New legislation is the business case for change• Social consumers have the appetite• Significant business change will provide a return• It is time to act
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