That’s the recommendation of Celent, which indicated, in a report released yesterday called “Best Practices in Social Media and Mobile,” that financial institutions should strive to integrate social media functionality into the digital experience. “Social media is about brand awareness and customer engagement, and Celent applauds those who are actively committed to the integration with digital channels,” the report says.
The report also offers the following 10 recommendations for social media use by lenders.
- Integrate Twitter and Facebook into mobile apps. There are many apps that leverage Twitter to engage in customer service requests. Celent thinks this is something all financial apps should eventually have. Facebook is more specialized, and riskier, but useful in limited iterations. Celent specifically salutes RBS for its integration of Facebook and payments. Users can access their Facebook friends list and send money to them from within the RBS app. “This is a natural extension of payment functionality that few banks offer,” the report notes.
- Build consumer confidence in the company’s social media strategy. Consumers show little confidence in interacting with financial institutions over social media, so lenders need to work harder at encouraging engagement over social channels. First National Bank in South Africa is a good example of this, with 15,000 Facebook conversations with customers per month.
- Drive the discussion via social media. Customers talk about companies on social media more than they talk to them. Nothing you do will prevent this, so lenders should set up forums for customers to air complaints and questions to help contain and control issues as they arise. Deutsche Bank and another German bank, DSGV, both set up forums for customer complaints on Facebook and found success corralling complaints and responding to them more quickly and effectively with this strategy.
- Engage customers, and they will use more services. Awareness is critical. Social media should be engaging, and lenders need to give customers something to engage with, rather than simply broadcasting messages. HSBC set up an “HSBC Students” page that hosts an annual competition where users create content and vote on others’ submission. The winner receives a scholarship. ANZ Bank has a Facebook page for people moving to Australia that helps them set up accounts and filling out biller profiles and the like.
- Understand where social media can be used as a tool, and where it cannot. Social media strategies that may work for restaurants, for example, will not necessarily work for lenders. Consumers want social media personalized, rather than filled with promotions. A successful campaign highlighted in the study, and mentioned at the recent Auto Finance Summit, was TD Bank’s #TDThanksYou, which utilized Twitter, Facebook and YouTube.
- Don’t jump into Facebook too quickly. Using Facebook will not work for all lenders. Social media use by businesses is still highly experimental and should be treated with caution. Just as not every product is right for every lender, only those companies with resources to spend and a willingness to accept failure should take the plunge into engaging customers through social media.
- Use analytics to gauge effectiveness. Every social media campaign must be carefully measured and evaluated, and additional software is crucial for this. USAA is considered a leader in this space, with 647,000 Likes for its Facebook page, and 6,000 customers actively engaging with the page. Yet, with 10 million customers, the Likes represent just 6% of USAA’s userbase. This payoff might not be worth the expenditure for other companies.
- Lenders need to craft a social media model. JPMorgan Chase and Wells Fargo have made internal decisions to put resources into developing a social media strategy. Not everyone can claim the same budget, of course. If your company is not willing to put in a strong effort to develop internal guidelines and directives, the social media effort will falter.
- Use big data to maximize value. Some aspects of social media for use in analytics, such as giving a more complete view of customer preferences, are obvious. Others may not be, such as using social media signals for risk. Infosys has software that will evaluate risk by measuring many different aspects of Facebook statistics, even the credit scores of Facebook friends.
- Complex social media strategies require regulatory considerations. Compliance may be the major barrier to social media use by lenders, and is the reason most social media innovation in financial services takes place outside the U.S. The FFIEC recently released social media guidance that financial institutions need to follow, but the overall compliance burden may make the effort not worthwhile for many companies.