Social media crucial for finance brands

25 May 2011

NEW YORK: Finance brands like Wells Fargo, BBVA and BankSimple are making the most effective use of social media to date, but most of their rivals have fallen somewhat short in this area.

In a new report, consultancy Booz & Co suggested retail banks have "largely remained on the sidelines" when it comes to leveraging digital channels.

This strategy could prove pernicious given members of "Generation C" are conducting increasingly varied activities online.

"To retain their competitive edge, retail banks need to reach out to younger, more web-savvy customers," the study said.

"[Key goals are] devising new products and services that are simpler and more transparent, and using the power of social networking and other digital platforms to improve their marketing."

Equally, divisions between retail, mass affluent and small and medium-sized business banking are breaking down, with centralised brand management models also being undermined.

"With Web 2.0 technologies, consumers are changing their behavior, and they are demanding a more user-friendly, networked banking experience," Booz & Co said.

Currently, around two-thirds of "Generation C" belong to a social network, while 12% read finance and investing blogs or participate in related internet communities.

"Despite these changes in consumer behavior, most banks still use their websites primarily to provide information and enable standard transactions, limiting real communication to branches and contact centers," the study said.

Wells Fargo is one operator that has been an early adopter in the online arena, boasting dedicated Facebook pages, a customer service hub on Twitter and uploading videos to YouTube.

It also runs blogs containing general guidance, updates about sustainability schemes and content targeted at students.

The firm recently pursued a "flash mob" exercise in Times Square, New York, and the resultant video of musicians and dancers soon secured 1m hits on YouTube. The spot was publicised on the website via a paid-for link prominently featured on search results pages.

"We didn't want to over-brand it," Ed Terpening, VP Social Media at Wells Fargo, said. "Really, the point was to capture the event for wider impact through YouTube.

"We were not counting on PR coverage so much as driving brand engagement impact on YouTube after the event with the fully produced video."

Elsewhere, Spanish bank BBVA has created a set of tools drawing together clients' financial information in a single place, and presenting tailored offers, doubling the dwell time on its website.

Moreover, BBVA Compass, the firm's US arm, climbed 11 positions, to fifth, in the latest reputation rankings from industry title American Banker.

Shelaghmichael Brown, head of retail banking at BBVA Compass, stated initiatives relating to corporate social responsibility, customer service and social media had contributed to such success.

"Everything about you has to reflect your view of who you are, in the community and to the community," Brown said.

BBVA and Deutsche Bank let netizens talk directly to bankers via web-based "video chats", combining convenience with reducing costs, a role blogs and forums can similarly play.

More broadly, Booz & Co believes embracing the net might restore trust in the sector, and help start-ups challenge the status quo.

One example is BankSimple, due to launch in the US this year, promising free ATM withdrawals, wide-ranging customer service and money transfers between social media friends.

To date, 50,000 web users have registered an interest in joining.

"It is difficult to change an industry," said Adam Erlebacher, BankSimple's vice president, product marketing. "It is critical that we get this right from the very beginning."

Data sourced from Booz & Co; additional content by Warc staff