Over the summer, American Banker posted a few quality articles about the status of social media usage in commercial banking.
Social Media Most Likely to Lead to Your Bank’s Next Sale
Avoiding Social Media Will Cost Banks Customers
When looking at some of the larger points from these 3 articles, I see that banks as a whole are challenged to optimize social media use. This is not a phenomenon that is unique to banks. Something that was mentioned is that banks are challenged by how to use the social media channel for content generation and management. The line between advertising and creating a communications portal that builds a sense of community is something that is difficult to straddle. The prevailing wisdom is that social media is a more conversational channel, but there can be times where a financial institution has to make sales numbers. Anyone who has ever worked in insurance and financial services, particularly in a sales and/or marketing role, would be able to identify with this particular situation. When you are in a situation where you are feeling the pressure of making numbers, there’s a tendency to want to put the word out early, often, and in whatever channels that you have control over. With social media being so easy and so rapid, there’s a temptation to want to use it to push messages out there that are self promoting and not conversational. A hard push strategy can be counterproductive, as Gary Vaynerchuk noted in his recent speech during the 2013 Social Media Conference for Financial Services.
Social media, in a lot of industries, but particularly in commercial banking, has significant usage in soft selling. A social media presence has the opportunity to serve as an information conduit, as a way to make consumer research easier. Banking often has a highly personal touch. Banks, and other types of financial institutions, hold one of life’s most prized possessions: money. People are generally invested in the relationship that they have with their bank because money is generally an important part of the equation of most people’s lives. There’s a tendency to pay attention to banking issues, especially if there’s a relevant change to a deposit account, mortgage, home equity line of credit, etc. Brand awareness of a bank once someone becomes a customer is high, but people may not be actively thinking about changing banks unless there’s some sort of life event and/or a significant issue comes with an existing bank. In their marketing, banks have to anticipate these occurrences and make themselves a part of the social conversation. Social media may not be directly causing the sale, but it is often a contributing factor.
It is also important to note that banks, like all financial services entities, face regulations on what they can and can’t do in advertising. There’s a need for disclosures, which isn’t applicable with all types of consumer products. The regulatory environment creates a greater level of complexity (as if marketing wasn’t already complicated enough!) and banks need to be well versed in addressing their regulatory environment.
There are benefits and drawbacks with social media for banks, just like anything else. The greater cost for banks is not being a part of the social media conversation and not driving brand awareness, the first step in successful marketing.