Social Media: Opportunities and Challenges for Banking

Ishwar K Sethi

Oakland University, and Integrated Knowledge Solutions

isethi@oakland.edu, iksinc@yahoo.com

Outline

• Introduction

• How Can Social Media Help Banks?

• Social Media Analytics

• Social Media Adoption Challenges

• Summary

2

INTRODUCTION

3

What is Social Media?

“media for social interaction, using highly accessible and scalable communication techniques. Social media is the use of web-based and mobile technologies to turn communication into interactive dialogue.” Wikipedia

4

5

Social Media is About Conversations

6

What Makes Social Media Attractive?

Traditional media is one to many while social media is many to many

Instant low cost communication

7

What Makes Social Media Attractive?

• No distinction between media producers & consumers

• User generated content • Free borrowing and sharing of content • Rich user interaction

8

Social Media Characteristics

• Great variation in quality • Immediate consumption • Long tail characteristic

9

10

11

12

13

Why Social Media?

14

Why Social Media?

15

Why Social Media?

16

SOCIAL MEDIA & BANKS

17

How Can Social Media Help Banks?

• Monitor their brand identity

• Test new products and get feedback

• Develop conversations and build trust

• Find good quality employees

18

19

Social Media Usage Examples: Virtual Branch on Facebook

Auckland Savings Bank offers a virtual branch on facebook. With just one click you can start chatting with one of the bank’s agent.

20

Young & Free credit union of Alberta created a community of its target audience and gave them a platform to connect and discuss not only finances but other issues of interest as well. Result: Over 2000 new customers and over US$ 4M new deposits

Social Media Usage Examples: Community Building

21

Social Media Usage Examples: Marketing via Blogging

blog.wellsfargo.com/ StudentLoanDown

Wells Fargo has six other blogs or microblogs. These are working well to build their customer base and brand loyalty.

22

Social Media Usage Examples: Customer Service via Twitter

23

Social Media Usage Examples

• Product Research: 1st Mariner Bank (in Maryland) created a new type of checking account using customer feedback through social networking

• New social services:

– Peer to Peer Lending

– Personal Finance Management

24

Social Media Use at Indian Banks

25

Social Media Use at Indian Banks

26

SOCIAL MEDIA ANALYTICS

27

Social Media Analytics

• The goal of social media analytics is to provide meaningful insights to an enterprise from social media conversations. It involves for example, measuring and tracking customer sentiments, identifying “influential authors” etc. to gauge ROI.

28

Analytics Example

29

Analyzing Tweets

30

Analyzing Tweets

31

Sentiment Analysis

32

Sentiment Analysis

33

Sentiment Analysis: Another Example

Week 1

Estimated Approval Gallup Approval Estimated Disapproval Gallup Disapproval

43.10% 43% 43.50% 48%

Week 2

Estimated Approval Gallup Approval Estimated Disapproval Gallup Disapproval

45.3 43% 43.2 49%

Results of a class project on using Twitter to estimate President Obama’s approval 34

http://monitor.wildfireapp.com/

Tracking Likes on Facebook

35

36

http://tweet.grader.com/

Locating Influencers

37

A Framework for Social Media Measurements

38

Aligning Social Media Measurements with Business Goal

39

SOCIAL MEDIA ADOPTION CHALLENGES

40

Social Media Adoption Challenges

• Factors inhibiting effective social media adoption

– Strategic

• Many banks view social media as another channel for corporate communication and not as a collaborative medium. Thus limiting social media’s effectiveness

– Financial

• Not enough funds

• Not convinced about ROI

41

Social Media Adoption Challenges

• Factors inhibiting effective social media adoption

– Regulatory

• Many of the regulatory, compliance and legal issues are new, causing banks to move slow

– Organizational

• Effective social media use transcends traditional organizational boundaries calling for organizational changes that are difficult to implement

42

Social Media Adoption Challenges

43

Social Media Adoption Challenges

44

Approach to Social Media Adoption

• Must be customer centric – Understanding how customers use social media and their preferences is crucial

• Clear goals and metrics – Social media initiatives’ objectives must align with the bank’s business objectives

• Strategy – Must be guided by an enterprise vision and must encompass objectives, market analysis,

governance, performance metrics etc.

• Technology – Social media platforms must be integrated with bank’s analytics, CRM, marketing, and

security applications

45

SUMMARY

46

Take Home Message

• Social media growth is unstoppable; the platforms might change

• Banks can ignore social media only at their own peril

• Employing social media with well defined business objectives has shown to yield success

• Although social media deployment can be outsourced, initial implementation should be in-house to better understand social media’s usage and organizational issues that might crop up

47

48