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Banking is one sector that seems to have been relatively slow to see the potential uses of social media, and there are relatively few examples of this. 

I've listed five ways that banks can benefit from the use of social media, while I've also been asking Amanda Brown from first direct about its use of social media.... 

How social media can help banks

Talk to customers / build trust

The financial sector is perhaps not that popular at the best of times, but even less so in the last couple of years. On way for banks to attempt to alter these consumer perceptions is to become more transparent, and social media can help with that. 

Just by talking to customers on their preferred social media channels can help to show a more human face to institutions and build trust.  

Customer service

The UK's banks are receiving huge numbers of complaints from customers, and and social media can provide a useful alternative to waiting in call queues. 

People with grievances about their banks are now more likely to talk about these problems on social networks, and banks can reduce the potential for brand damage by monitoring and engaging with these customers. 

Product feedback / development

Banks could use social media to test out new ideas for products and services, gather feedback from users. For example, 1st Mariner Bank used social media tools to gauge consumer needs before introducing a new type of bank account for customers. 

Media relations

Banks can also use social media tools to communicate with the media more effectively. First direct provides an alternative to dull press pages by providing a newsroom with accessible resources for journalists, including photos and videos on Flickr and YouTube, and links to Twitter feeds. 

Promoting new products and services

If you have managed to build up a decent following via Facebook or Twitter, this is a great way to introduce new products or services. If you have a great new iPhone app, then this is a great way to spread the news. 

Likewise, social media campaigns, such as first direct's 'live' campaign, which won an Innovation Award last year, are a great example. The bank asked for user feedback on its website and was then able to use this in its offline marketing, and promote the idea of transparency. 

How first direct uses social media

I've been asking Amanda Brown from first direct about the bank's use of social media. 

What is first direct's approach to social media? 

Our philosophy has always been centred around our customers. When we first set out 21 years ago, using the telephone as our primary channel, we were reacting to what we saw as an area where customers weren’t being served well. Our expansion into social media is an extension of this. It’s about allowing the customers to choose how they want to communicate and adding value to their experience.

The social media platforms that we use are each designed to fulfil a specific purpose so we use our social media newsroom, Flickr and YouTube to create a broader content offering for journalists and bloggers. We use our Twitter presence to give the media and other influencers easier ways of interacting with our press team. We use campaigns like “live” to give customers the opportunity to feed back their thoughts and we engage in further dialogue on our customer forum – Talking Point.

Which social media channels have you found to be most effective? 

It’s difficult to measure the effectiveness of channels in isolation. For us the channels are all part of a cohesive strategy, they interlink and support each other and without any one of them, the others would be less effective.

For example, we’ve increased traffic on the social media newsroom from around 10 hits per week (on the old “press” page of the .com property), to somewhere around 2,500 hits per week. This looks like a great individual success but when you look into the numbers, they are highly dependent on activity on the Twitter page, and of course, the multi-media content which gives the newsroom the added value is all hosted on other sites as well.

Audiences are in different places so to reach them, you need different tools. The social media channels we use are just tools, where we really asses the efficacy of what we’re doing isn’t at a channel specific level, it’s looking at the strategy as a whole.

How are you using social media for media relations? 

In two key ways. Firstly, we’re using the newsroom and our social media properties to create a broader content offering and to make our content much more accessible / shareable / findable. We’re also using Twitter to engage with journalists and to promote content on the newsroom.

Secondly, we’re looking at our whole approach to media relations and seeing what we can do to modernise the way we do things. This is all based on the fundamental understanding that the business model for mainstream media outlets has shifted to focus much more on online content; and a lot of what we’re now doing is designed to help media outlets build convincing content around stories.

We did a piece recently with a national newspaper where we went out and secured a lot of independent commentary around a particular issue. This included video, images and text. Once we’d put all this together, the journalist was able to use the commentary as the basis for a feature in the paper and then direct interested readers to an area on the website where the debate could continue using the multi-media content we had curated.

Of course all this really boils down to search and its affect on the media landscape. We’re working to innovate in this area too. For example we’ve started using search data to understand where people are trying, but failing to find information. We then take this insight and talk to media outlets about how we can help them create content that could answer some of these unanswered questions.  

This element of our strategy is very much in its infancy at the moment, but I’m convinced it’s the right way to go. After all, as I keep saying, it all comes down to the customer; and search behaviour can tell us more about the customer than we’ve ever known before.

Are you having direct conversations with customers? How do you manage your social media presence? Where does it sit within the organisation? 

Are we having direct conversations with the customer? Yes, through Talking Point and, to a lesser extent, through Twitter. Our Twitter presence is clearly billed as a resource for the media though inevitably people do talk to us through it and we try to ensure that they get a response.

Talking Point is our main point for social media interaction directly with customers and we have a team in our customer service department which monitors and responds to comments left there by customers.

What are the challenges of using social media around banking? Do you see other banks doing more in this area? 

The challenges are mainly around the regulation / responsiveness dichotomy. So, for example we have to be really careful not to ever give out any financial advice or to try to promote / sell a product from our social media presences.

If we did then everything we posted would have to go through compliance processes and legal checking. In turn this would slow our responsiveness down to the point where it was no longer worth engaging.

In terms of other banks doing this, I really don’t know. I understand the culture of risk aversion that runs through the whole industry at the moment. However, there’s nothing apart from that reticence which is really stopping banks from engaging in this space.  

With the right advice and the right approach, social media doesn’t need to be headache for risk management or legal departments.

Graham Charlton

Published 11 November, 2010 by Graham Charlton

Graham Charlton is the former Editor-in-Chief at Econsultancy. Follow him on Twitter or connect via Linkedin or Google+

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Comments (12)

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Pritesh Patel

I recently had a bad experience with a well known bank, took ages to open an online and vented my anger on Twitter. One bank picked up on my comments (Natwest) and retweeted all of my negative comments against my high street bank. Natwest are listening for their brand mentions and those of their competitors which is very good. Natwest could have taken it one step further by sending me link to their various accounts which could be opened online within 3 days which is what I was looking for from my bank. However, still a good start from Natwest.

almost 6 years ago

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Robert

It makes you wonder how they will cope with the number of complaints that they may end up receiving through twitter!

almost 6 years ago

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Owain Betts

It's taking a while for the banking sector to "get" social media. This isn't down to recent economic issues, but mainly, I suspect, down to the way banks operate. They are, and to a certain extent, have to obviously be very private with their clients and the information they share in an open forum. Admittedly, the same could be said for any commercial company - and look how many of them are grasping social media. However, where it's important for the banking sector to engage through social media at the moment is to re-engage and reassure their clients and the wider public that they are not faceless organisations just making money. They need to demonstrate that the recent turmoil in the banking sector is not a reason to distrust them. And where better than through digital PR and associated activity. Yes, there will be a lot of customers who use Twitter and Facebook to complain and moan about the service they are, or rather are not receiving - as with any company or organisation. But that's already happening and they need to tap into this and enter the conversation to remedy the situation and demonstrate that they are listening. Engagement will have much more of a positive PR result than ignoring it. And as Pritesh has already said, social media can also be used to the banks advantage in certain circumstances and should actively engage through it to win new clients and sales opportunities.

almost 6 years ago

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Brian

Listening is always an option for banks on social media, and launching new things. Health care businesses seem to be in the same type of boat these days as well.

almost 6 years ago

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Stephen Traynor

The issue of Banks and Compliance is an interesting field. In the UK, Manchester Police force recently ran an experiment where there tweeted every call-out, emergency and piece of police activity, over a 24 hour period. No doubt their compliance and PR people were all over that, making sure nothing too sensitive (or gruesome?) got published. You can still find the results of the 'experiment' online.

almost 6 years ago

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Mike McGrail

Nice piece, but I must say those 5 pointers can apply to all businesses when it comes to social media.

almost 6 years ago

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Jeffry Pilcher | TheFinancialBrand.com

All the examples listed are multi-billion dollar banks. For the vast majority of banks and credit unions (those with assets under $1 billion), social media is a waste of time. The opportunity cost is too high for the amount of time, energy and resources required to tackle all the challenges, detailed here:

http://thefinancialbrand.com/15465/11-reasons-social-media-is-a-waste-of-time-for-financial-institutions/

almost 6 years ago

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Jeffry Pilcher

I hear what you're saying Jeff, and I'm not "dissing" social media. It's a question of priorities, strategy and opportunity cost. Most financial institutions have 1-3 person marketing departments that are already stretched thin. They simply don't have time to do the things that do have a more direct, meaningful and measurable impact on the bottom line. For instance, could you tell a credit union that social media is more important than knowing how to write a decent CD-renewal sales letter:

http://bit.ly/cxWlOo

Also worth noting that AnchorBank has nearly $4 billion in assets, which doesn't quite meet my definition of small (<$1 billion). They probably have around 10-12 people in marketing.

almost 6 years ago

Jeff Molander

Jeff Molander, CEO at Molander & Associates Inc.

Hi, Jeffry... Ok. I'll agree to that. That's why AnchorBank, in particular, has Truebridge Financial Marketing (an agency) on its team. I like your thinking (which asks me to think!) and appreciate the response. BTW, your Web site is hanging all day today. I'm using Firefox. It's hanging on Google Analytics code for some reason. Won't finish the page-load.

almost 6 years ago

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Amanda Brown, PR Manager at first direct

@Jeffrey pilcher
 
Enjoyed reading your post. Yes we’re part of a big group and that helps when it comes to resources but “doing” social media is incremental, not absolute. A lot of the social tools we use actually save us time on our day jobs and help to keep us better informed.
 
Completely agree with your point when you say that a lot of financial institutions are too focussed on the tactical implementation side of social media, but I disagree when you say that it’s probably not worth it for smaller institutions. The changes in the media landscape have been driven by consumers not corporates so re-acting to that shouldn’t just be the role of those large enough to be nationally interesting as sources of news to the mainstream media.

almost 6 years ago

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Jeffry Pilcher

Hi Amanda,

It's easy to talk about social media in abstracts, but it gets tougher when you start talking about specifics. Are you saying smaller financial institutions need to be on Facebook and Twitter? Do they need a blog? Or do they just need to "listen" (if they are lucky enough to find anyone talking about them)? And most marketers are already working 50-60 hours a week. What activities are they engaged in today that they can stop doing?

I explore this issue in greater detail in this comment here: 

http://bit.ly/advf79

almost 6 years ago

Jeff Molander

Jeff Molander, CEO at Molander & Associates Inc.

Jeffry... THANK YOU for linking to your comment. I'm all about keeping the good conversation going here at eConsultancy -- especially as I'm a blogger here. But Jeffry's *questions* are very, very important. I encourage EC readers to give them some thought.

Example:

* How many brands do you think the average consumer is willing to engage with? Three? Five? Ten? Why should Bank X or Credit Union Y be one of them?

* Why would consumers be more interested in interacting with their bank than their brand of toothpaste or their power company? What makes banking any different than the myriad of other dull industries?

These are THE questions.  It is through asking these kinds of questions that we truly begin to position ourselves to take action on social media -- in a meaningful way that delivers outcomes.

Bravo, Jeffry.  Marketers outside of banking would do a great favor for themselves -- by thinking and acting like their fellow financial services marketers!!!

almost 6 years ago

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