The Bankwatch

Tracking the consumer evolution of financial services

The social media conversation at a bank near you

Ron raises an important and fundamental point here. As a Bank what is the approach to incorporate social media into you business strategy?

Twitter / rshevlin: @edolan FIs do NOT need a S…

@edolan FIs do NOT need a SM strategy. they need to figure out how SM fits with (or chgs) their biz strategy. Big difference.

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7 minutes ago from twhirl in reply to edolan

First off I accept that the end goal is a business strategy that includes all appropriate components. However trying to fit a social media strategy into the overall business strategy would truly be trying to fit a square peg into a round hole, and here is why.

Traditional business strategy at the Bank is probably based on a set of goals and objectives like increased share of wallet, focus on certain segments, fast follower, product leader, integrated channel management, etc, blah blah, etc. Those goals will translate into sets of tactics and initiatives.

This is where it falls down. By incorporating SM into the strategy without first understanding it and defining it assures us that it must first get a lable that can be applied from the existing strategy. The conversation with the product guy (PG), marketing guy (MG), and technology guy (TG) will be something like this. btw, this contains actual examples, but identities are hidden to protect the innocent:

  • PG; where is this SM?
  • Me; it everywhere man … its online
  • PG; oh so its in online banking?
  • ME; not exactly, it might be in Facebook
  • TG; are you a lunatic? Thats not 128 bit secure
  • Me; well, we won’t actually sell it there, we will talk to people and have conversations
  • MG; are you a lunatic? What about our brand. People won’t see our logo!
  • PG; I don’t get it. Where do you want me to sell it again?
  • Me; [trying vainly] our SM will have multiple facets, including eg, a blog, a product design wiki, a data analysis tool using the Wesabe API, we will be lending on Prosper.com, talking in the forums changeeverything.ca, seeking customer advocates in all the social media sites and ….. [cut off]
  • TG; are you a lunatic!! Those are not secure. Maybe we could do an RSS feed. [turning to the MG] I have a team working on them, and should be ready in 2010, if we can just get that darned XML to be less than 4 Megabytes
  • Me; can we go back to SM and how we fit it into the strategy
  • MG; are you a lunatic!! How can we control the message
  • PG; where do you want me to sell it? And whats an RSS feed?
  • TG; we have an internal policy on blogs. It has been reviewed by 85 people so far and getting close to completion. We will be advising the CEO that we avoid blogs. Too risky. One guy in marketing started one internally, and we had to shut down our people from commenting on it. Phew that was a close one!
  • PG; where do you want me to sell it?
  • Me; home for a Laphroaig

Written by Colin Henderson

July 17, 2008 at 11:02

16 Responses

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  1. No argument there…nonetheless, a central (arguably strategic) issue for wealth management firms (and banks) is simply acknowledging the channel. Since conducting the research that triggered this exchange, I’ve found that the mere volume of investors using social media is fascinating to many brokerages (full serve & direct alike). The goal of the research was to really get a lay of the land and provide a cross-section of what investors are doing online and the role of social media in the decision-making process. Of course, for this industry, compliance, etc. is more of an obstacle than in, say, retail or travel. Therefore, the first step is not always to engage, but rather to notice. Thoughts?

    Eric Dolan

    July 17, 2008 at 11:16

  2. @eric Certainly, to notice is important … observe, learn from others etc. My focus is Banks, and I know less about the broker side. Certainly forums SM sites are popular in discussing stocks, but not sure that without participation, real learning can occur.

    Your point regarding regulation is something I am all too aware of through my involvement with CommunityLend, but Banks and brokerages have regulation on their side, so I see that as less of an issue for them.

    Colin

    July 17, 2008 at 11:21

  3. BW writes: “trying to fit a social media strategy into the overall business strategy would truly be trying to fit a square peg into a round hole”

    My response: No real argument from me — that’s why I said that FIs “need to figure out how SM fits with (or chgs) their biz strategy. ”

    Please note the part of the statement in parentheses — “or changes”.

    Your fictional (?) conversation is spot on. But it begs the question, if the existing people in the firm aren’t able or qualified to understand what SM is and it’s potential impact — then who is?

    The problem I foresee is that whoever you come up with in response to that question, I might be able to argue that while they might understand SM, they might not understand how to profitably run a bank.

    So we’re stuck with a problem: The existing business strategists don’t get SM, and the SM-knowledgeable don’t understand business strategy. (fyi, I will vehemently argue this point with anyone. I’m tired of reading all the claims of SM-evangelists who have never had P&L responsibility for anything).

    Ron Shevlin

    July 17, 2008 at 12:30

  4. Dear god … memories of … conversations past … flooding back …

    [home for a Macallan]

    Dan Dickinson

    July 17, 2008 at 12:36

  5. Very well said Ron (esp last paragraph). I think the basic msg (from Cogent to WM world) is that “for better or for worse, it’s happening.” Does it always matter? Does it even matter most of the time? Perhaps not. The upshot though, is investors (esp soloists, and, more importantly validators) are turning to SM…it plants a seed (true or false) that ripples through many facets of their investment lives. So, to notice is to acknowledge and appreciate the fact that information, opinion, and counsel increasingly exist outside the realm of traditional sources. Of course, the RBCs & TIAA-CREFs of the world represent the (current) choir here. We’re hoping to deliver this message to those who might want to sing.

    Eric Dolan

    July 17, 2008 at 12:48

  6. Holy crap! I didn’t know we had transcripts for those meetings!

    duarte

    July 17, 2008 at 13:43

  7. @duarte … you kill me!

    Colin

    July 17, 2008 at 14:24

  8. @ron … your post begs the ultimate [for me] question, and that

    “if Banks never ‘get it’ will they survive?”

    Thats my next project 🙂

    Colin

    July 17, 2008 at 14:25

  9. It’s not a matter of “if” they will get it. Simply “when”. Some will get it faster than others. Will they survive? I don’t know, but I’ll say this: I think that whether or not they survive depends more heavily on other factors (product quality, risk management, cost control, etc.) than social media. There — I said it. Go ahead and flame me all you SM evangelists.

    Ron Shevlin

    July 17, 2008 at 15:47

  10. Ron,

    I don’t think you’ll get flamed. I consider myself a big social media proponent (I’d never use a term so wanky as “evangelist”) but I’d agree with your list of factors…those are all more important than SM.

    Dan Dickinson

    July 17, 2008 at 21:54

  11. Sigh…that was supposed to be a closed bracket. Stupid auto-smileys.

    Dan Dickinson

    July 17, 2008 at 21:55

  12. @Dan: I’m anticipating the usual chorus of “you don’t get it!”

    Ron Shevlin

    July 17, 2008 at 22:04

  13. @Ron .. you keep us all honest 🙂

    Colin

    July 17, 2008 at 23:49

  14. @Ron: depending on who it’s coming from, hearing “You don’t get it!” makes me even more sure that I’m right.

    Dan Dickinson

    July 18, 2008 at 08:13

  15. @Dan: even when that person is your wife? Yeah, I didn’t think so.

    Ron Shevlin

    July 18, 2008 at 16:46

  16. I tend to agree with a lot of the conversation here but I wanted to point out one thing. Banking is taking place on Facebook, not directly through the firms, but through 3rd-parties like FiServ’s MyMoney application. While not a particularly popular app, it does show the potential of the platform.

    In case you’re curious, check out what Wells Fargo and the now-defunct Wachovia have been doing in the social media space. One interesting potential for social media may be internal use.

    Alan

    October 6, 2008 at 14:02


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