The Bankwatch

Tracking the consumer evolution of financial services

Will Banks do social media?

One of the nice things about blogging is that you get to pick on friends as an example, so here goes with James. This is the comment I left on his post which rightly questions the validity of social media for banks as a marketing tactic.

I wanted to make some additional comments, and they follow, and I REALLY look forward to Ron’s views.

Why Banks won’t do social media | Bankervision

James – couldn’t disagree more – message here from the echo chamber.

This is social media.

Here is why banks (that survive) will do social media. I picked Lloyds Bank at random, and this link is a google search for this string “I love lloyds bank”

http://tinyurl.com/5sqp2h

Social media is not banner ads in FaceBook. That closed walled garden is all to often picked as the definition of social media but not so. Social media is probably the wrong word anyway – at issue is being where your customers are and having conversations with them.

How do we pick branch locations? We pick them because there are office buildings, residential density, new growth areas etc. Branch managers join the chamber of commerce, and other local associations to meet people and chat with them. This is classic banking 101 and build confidence and trust.

Social media is understanding this new location called internet that is not just essential, but fundamental to Gen X/Y as well as a few older fogies.

Back to the Google search. This simple example exemplifies the conversations about Lloyds Bank whether the employees choose to participate or not.

Relevance to Bankwatch:

I think the real point here is that peoples behaviors are shifting. That shift is not the shift from using one media to another. This is not (imho) on the same linear shift as from radio to TV to ….. Instead internet brings a new dimension and with it enormous social (small s) change and accompanying new behaviors. The addition of mobile applications beyond texting will only enhance and supplement this shift.

One outcome is a desire for greater personalisation in the sense of talking to and hearing from real people. Again web 2.0 tools supplement that. Cluetrain said in 1999 that “markets are conversations”.

– join the conversation

– join the conversation online

To me, social media means understanding consumer behaviour and adapting to that behaviour.

This implies a shift in focus for banks, away from traditional marketing, and towards conversations.

Written by Colin Henderson

November 30, 2008 at 19:25

4 Responses

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  1. Colin,

    I agree with everything you’ve said. My question, really, is whether banks will allow themselves to get to the level of an individual in the social media space: to write “out of pamphlets” at the branch level, rather than “new interest rate” at the enterprise level.

    We might get there eventually, I suppose, but don’t think we are yet.

    James Gardner

    December 1, 2008 at 06:53

  2. @James – I am with you on doubts about whether Banks will get there – but get there is a must for some Banks at least.

    Colin

    December 1, 2008 at 11:44

  3. Colin,

    I fully agree with you — with one monster caveat: compliance. It is impossible to talk about anything related to banking without considering the compliance implications. Embracing social media and remaining compliant with the fully menu of regs is, in my view, nearly impossible. Compliance demands will continue to be the greatest impediment to banks pursuing social networking — as I see such pursuit most applicable; where bankers “friend” their customers, in the full sense of the word — particularly in a regulation-focused, post-financial-crisis world.

    JJ Hornblass

    December 2, 2008 at 13:52

  4. @jj – very true regarding regulations. However imho still need to get over risk aversion in this space first, then they can consider mitigants to the risks. Bankers run risks when they speak to customers, and when they email them – and those are commonplace activities now. I think what we are talking about here can be viewed as an extension of conversations that already occur.

    Colin

    December 2, 2008 at 20:39


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