"There won't be any turning back on the growth on social media and there will be a slow gravitation toward services delivered in the channel," says Michael Versace, global research director, IDC Financial Insights. "Social media will continue to force service industries like banking to find ways to engage with customers," Versace says.
This month, Bank Technology News spoke with social media experts from the banking, technology and analyst community, who revealed five major ways banks can use and benefit from social networking.
1. Build a community and glean product ideas from it
Many banks, notably Citi and ING Direct, engage with customers via Twitter and Facebook. Sentiment analysis, content tracking and crowdsourcing can turn these interactions into actionable science.
"This can create ideas for innovation," says Harvey Sipel, who represents the social business practice at Cap Gemini. "A lot of people say social media is just Facebook and Twitter. But social is a new way for consumers, employees and even vendors to communicate, interact, and share."
Barclaycard Ring, the card company's "community-built credit card," for example, includes an internally run online community in which cardholders can pitch new ideas. Among the recent ideas is a reward for cardholders who don't repeatedly call the company for service.
Barclaycard Ring makes stats available to consumers on how they are using their cards. Card members benefit financially via rewards if the business unit that issues the cards performs well. Another carrot in the community is "badges." Similar to retweets and "likes" on Facebook, badges are earned for positive behavior, such as signing up for paperless statements. "The platform is scalable and allows us to reach out to folks to develop new products in new ways," says Jared Young, senior director of consumer markets at Barclaycard US.
Young says that by using social networking to bring people into the creative process, the institution is working to improve the way people feel about their financial institution. "U.S. consumer confidence in banks is at an all-time low...and by using the community, we're reaching out to them," Young says.
2. Monitor customers' posts to learn about product needs and preferences
Erica Barry, director of digital marketing for First Mariner Bank, says changes in traditional web search analysis are making social networking sites an increasingly important way in which the bank gathers life stage and other personalized information about its customers.
Barry says that about a year ago, when Google began encrypting its keywords and implementing "secure search" for anyone performing a search while logged into a Google product, tracking the keywords people were using to get to the bank's site became harder. "Now all we see in Google Analytics is the term "not set,"' she says. "We as businesses are left to draw assumptions and infer trends based on what we see from other sources (social media, other websites) and the keywords we see from search engines such as Bing and Yahoo," Barry says. Google did not return a request for comment.
Barry says that with Facebook, for example, the bank is able to see demographics and interests: favorite shows, movies, "wives of the Air Force," relationship status, alumni associations etc. "Basically, anything that a person adds to their profile is information that advertisers can use to target. We're able to see where our 'followers' are in their lives. Are they just graduating? Are they newly engaged and saving for a wedding?"
The bank can use that information to make its content more relevant to current and potential customers (folks who "like" the bank on Facebook but aren't customers yet). "It's a small slice of the pie, but as Google continues to tweak its algorithm, making it harder for marketers to understand their customers, relevant engaging content is going to be the main driving source of online traffic. In other words, no matter what changes on the search and social platform, good content will always be king," Barry says.
"Social media is changing the face of searching. Customers are using social networks much more now for web searches" than they used to, says Heather McCarty, director for mobile and social marketing for Barclaycard. Her company plans to study what kinds of intelligence it can obtain from social network searches.
3. Use social media to craft targeted marketing messages