Scary Story: Social Media Spooks Financial Services

In honor of Halloween, I’ve written about something really scary – social media.  It may not scare you, but it frightens the risk-adverse traditionalists who manage financial services companies!  They know that (whether they personally tweet or not), the majority of Americans are using social media for everything from keeping in touch with friends to requesting service from the companies they shop with.  But it feels so wide-open and dangerous that most financial services companies have shied away from the social part of social media, confining participation to “brochureware” postings.

Alain Sherter does a nice job describing this financial services dissonance in his recent BNET blog, “Banking on Twitter and Facebook”.  He writes, “Social networks are for sharing; by contrast, many people are understandably reluctant to disclose anything about their financial situation on a public forum.”  The same is true on the institutional side, where sharing and disclosing have not been generally viewed as advantageous.  Despite the mutual trepidation, some companies and their customers are trying to crack the code.  Sherter cites Wells Fargo’s Twitter feed focusing on customer service and financial tips, and Fiserv’s Facebook-based application that lets users monitor and access their bank accounts.

But NOT using social media to communicate with customers can be even scarier for financial institutions.  According to the research I directed last year, 41% of customers recalled a bad experience with a bank, up from 29% in 2008, and 44% of credit card customers recalled a bad experience with a provider.  65% of these customers tried to report their problems to the company.  To see how well that worked, see my previous blogs, Customer Experience in Financial Services Parts 1 &2.   The end result was that 81% of banking customers and 83% of credit card customer went viral with their problems.  All told people they knew, and ~17% reported posting their frustrations on social media.  That number has undoubtedly climbed in the last year, as has the number of people seeing each post (~45 in 2010).  Joshua Kalkbrenner, co-founder of SpotBanks.com,  commented on Sherter’s blog, ” I have seen a sharp increase in the number of people who publicly express Bank related frustrations on Twitter… But of a 100 Tweet samples, I found 75% were one-sided (Bank did not engage customer) and 25% involved back-and-forth correspondence between the identified Bank and frustrated customer.”  Sounds about right.  I mean wrong.

In her blog, Reasons Financial Services Can’t Ignore Social Media, Rebecca Neufeld of Edelman Digital summarized several compelling reasons why financial services must overcome fear of social media:

  • Customers are already banking online.  A survey conducted by the American Bankers Association in August 2010 found that 36% of customers preferred to do their banking over the internet.  That number is growing fast, and it make sense that the demand for more levels of online service must be growing as well.
  • Smartphones and Tablets are on the rise. In a recent survey by Good Technology to determine what industries are adopting the tablet, financial services soared ahead of the pack dominating over a third of the market (36.8%).
  • Reputation management is going social, and financial services are in dire need of attractive ways to manage that.
  • Competitors are already digging in.  If you aren’t online and social,
    you’re already losing share of voice to companies that are ahead of the game.

The social media channel is open and customers are receiving.  Now more financial services providers need to determine how to communicate effectively. It’s spooky – maybe even risky – but it has to be done before something really scary happens – like losing market share.

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About Lorena Harris

Lorena Harris has more than 20 years of marketing leadership experience with large business service companies. Her expertise is in designing research-based content marketing programs for brand building and demand generation. Since earning her MBA from Duke, Lorena has built revenue-generating marketing programs for $B+ B2B service companies such as Fiserv, First Data and Vantiv (financial services), ADP (employee benefit services), Convergys (contact center services) and Donnelly (publishing services). More information available on linkedin.com/in/lorenaharris.
This entry was posted in Channel Preference, Customer Service, Financial Services, Social Media CRM and tagged , , , . Bookmark the permalink.

One Response to Scary Story: Social Media Spooks Financial Services

  1. Chip Bell says:

    Very thought provoking. Should be a wakeup call for financial services companies reluctant to embrace social media.

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