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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