Social Media: Hype or a Financial Services Reality?


No topic has straddled the chasm of hype versus ROI as social media. The last few years have been a never-ending array of stories around successes using social media as well as pundits questing the validity and value of the social area. The financial services industry is increasingly playing a role in the social space, and the last two years have also provided clarity to the value of the social channel.

Like other industries, the majority of the efforts in the social space in financial services space were initially focused on the marketing area. The last two years have resulted at least four areas that show promise for social outside of pure marketing including:

  • Product development and innovation. Who better to ask about new product development or product enhancements than existing customers who own and use the product? Firms such as Chase tap social communities to drive product innovation that starts with the customer are using social very effectively
  • Community support. While financial decisions may be a personal activity, the path to these decisions is often steeped in social with segments like investors or small business looking to one another for peer comparisons and best practice sharing. American Express, TradeKing, and most recently E*Trade are using closed communities to drive service utilization and segment engagement by getting customer to interact with each other in the social space.
  • Customer service.  The bread and butter of online strategy for financial services firms have traditionally been customer service, and that aspect is seeing an opportunity in the social space. Twitter can be a hotbed of customer concerns and questions, and a litany of financial services companies are listening and proactively helping these clients. Wells Fargo and Citibank have been leaders here in development of proactive outreach customer service strategies via Twitter.
  • Online sales. Recommendations from family and friends play a key role in how consumers start the process of choosing a new provider. Social has a logical role here as social is about sharing experiences with family, friends and likeminded individuals. This role is being played at a macro level via customer ratings and reviews that are gaining traction in financial services. USAA has been a leader in this space by harnessing the good will that exists among its member to win new ones.

Please take the time to join the conversation as I will be monitoring and responding to all comments, questions and thoughts shared on the blog. 



Social Media in Banking

While you highlight some examples where social media has been leveraged by the banking industry for product development, community involvement, customer service and potential online sales, the majority of the industry does not do very well in any of these categories. As indicated recently by The Financial Brand (, there is significantly more hype than tangible evidence of effective use of social media to drive tangible results with few banks having more than a handful of followers or fans.

At the most recent BAI Retail Delivery Conference, while there were a number of sessions dealing with the subject, there was no consensus on who within the banking organization should 'own' the efforts or how these efforts should be measured. Until there are more examples of successes and a more formalized approach (like the examples you provided along with Amex and others), there will continue to be challenges.

Finally, most banks are still challenged by how to engage in dialogue in a manner expected by their target audiences. Without 24/7 engagement and programs that reward loyalty, efforts will fall short.

Jim- Agree that conversations

Agree that conversations at BAI revealed lack of consensus and clarity on metrics, but in our panel with US Bank and Zions, audience show of hands confirms our experience that social network leverage at banks is most likely to be owned by marketing. And we think that's right. The best marketing organizations should own or have significant content contributions to the areas Brad identifies as newer ground for bank social marketing: product development should be shaped by marketing's customer insights, creation of communities of interest to enable getting closer to the market, customer service as the face of the brand should be informed by marketing definition of brand guidelines, and of course, online sales where marketing should take responsibility for creating the right value proposition and customer experience to maximize the market-lead-conversion ratios.

Banks are just starting down the road, but we think they're on the right path.

Thanks for the commment

Thanks for the commment Jim.

You bring up valid and important points along with the organizatal question that I have heard before. Our goal here at Forrester has been to show through case studies including Charles Schwab, American Express, USAA and Chase how social is impacting the business outside of just interactive marketing.

To the organizaional question, I have been telling our clients that social cannot really be "owned" instead it is a tool that all areas of the bank or finanical services provider should consider as a part of the strategy. By that I mean, interactive marketing should be thinking about social for marketing, corporate marketing for branding, product development for building products, and customer service for servicing. Any place the voice of the customer can impact the business is ripe for social.

Social Media in Banking

Agree with your coverage of case studies and your thoughts around ownership, but from the banks I have visited, either the investment has far outstripped the value received (even on a generous, non-financial basis) or the investment has been so paltry that no impact could be expected.

From my perspective, there are a lot more banks saying they are doing social media than there are banks that have a corporate strategy for how to leverage and measure social media. How can a bank justify the costs (time, focus and hard costs) for dozens or hundreds of fans or followers? There are even banks that have a Twitter presence that require compliance review of responses before they are sent (if they are sent). Until tangible financial benefits can be measured and/or banks can truly 'commit' to a SM strategy, there will continue to be more hype than substance. Most banks would be better served to focus on much more urgent issues such as innovation, channel migration, revenue enhancement and customer experience (beyond SM)

Social media not for every financial institution

All the examples of social media success within the financial industry cited here come from the top 0.1% of institutions by assets — those with hundreds and hundreds of billions of dollars in assets, millions of customers and tens of thousands of employees: AmEx, ETrade, Wells Fargo, Citibank, Chase, USAA, Charles Schwab.

There is no shortage of folks offering financial institutions advice on social media. There is, however, a severe shortage of financial institutions large enough to heed this advice. Small banks and credit unions simply lack the bandwidth to apply resources in speculative areas with such a squishy, questionable ROI.

What small firms can do

I agree that the case studies represent larger companies, but that does not mean smaller companies cannot utilize social. For things like customer service via Twitter, I would agree that that would not be at the top of my list if I was a smaller company by assets, but for other things, smaller banks and credit unions might find even more benefit than larger ones. For example, customer ratings. Community banks and credit unions consistently rank high on Forrester's measure called customer advocacy so consolidating reviews from existing members would be of great benefit in marketing the firm because a credit union as an example would know they would get glowing reviews from members.

All this said, the first step on anything social is to understand the use of social related technolgies to one's own customers. From there we determine tactics to meet objectives.



Now that's the more qualified kind of advice so desperately needed — but so severely lacking — in social media circles. Seldom does advice fall into the "one size fits all" category, which is especially true in the financial industry where the scale and scope of each individual player varies radically.

Social working for smaller FIs

A growing number of smaller credit unions and banks are succeeding with social - by starting with what retailers have succeeded with for years: the humble rating and review section on their sites.

While Facebook and Twitter suck all the air out of the room in discussions of social media, Forrester Research has pointed out, "Given the array of social commerce tactics to choose from, there is one that has been proven to work and to provide value to shoppers—customer ratings and reviews." While higher-profile and larger institutions like USAA and Charles Schwab are getting more press about their successes in this area, very many FIs we work with at Bazaarvoice are smaller - credit unions and regional banks with assets from 300M to just over 1B. They are seeing the same types of measurable results Forrester has documented in their USAA and Schwab case studies.

Volume is key in driving success in the social realm, and consumers have proven to be more responsive to engaging and providing feedback on their bank or credit union's site than elsewhere in the social sphere. FIs struggle for years to pick up a thousand followers on their Facebook page, but those who invite ratings and reviews typically pick up thousands of submissions in a matter of weeks, the vast majority of which are positive.

Having gathered this input then opens the door to sharing it and amplifying it in social networks. For instance, Navy Federal Credit Union publishes reviews they've collected to their Facebook pages, where their fans submit more - and more positive - reviews. They let their members do the talking about their services for them, and can measure their social network ROI by tracking click-thrus on "apply now" links coming from FB reviews.

Actively inviting and publishing customer/member content on the FI website has other obvious advantages - being able to control, through moderation, for compliance and regulatory issues and inappropriate commentary; reaching more of your base and more potential customers than through social network sites; and asking the reviewer for information about themselves on a review submission form, which lets you segment sentiment and tie it back to your CRM system data.

It was back in 2008 that Forrester research revealed that the content/tool most desired by consumers on websites was ratings and reviews. There is strong evidence that it is also the one that is delivering the best return on their social investment for financial institutions.

Good Examples in Surprising Places

While at the BAI Retail Delivery Conference last week I was able to spend a bit of time with Howie Wu from Boeing Employee Credit Union (before I met him, a CU would not be te first place I would look). While he admits that their CU does not have good financial measurement of their social efforts, they are continuously doing customer and employee promotions and offers using different social channels and have seen customers make positive remarks about their social presence as part of ongoing surveying. There are definitely good stories out there that warrant recognition and a watchful eye. Size of organization definitely does not seem to be prerequisite. The challenge is more caused by poor planning, lack of program goals and poor integration with other organizational goals. Not unlike other banking initiatives.

In-memory analytics, real time and social media

I have recently been researching the area of real time business intelligence; this field has so much to do with updating and being informed in a matter of milliseconds, quite like the world of social media. I wonder how in-memory analytics (like that provided by ) and other real time solutions blend into the space of social media and how they would contribute to each other.

Later- but very interesting use cases of social media

Brad- Thanks for the interesting post. While many financial services firms are later to use social media than firms in other industries, it's very interesting to watch the use of social media develop across the distribution channel vs. just at the enterprise/corporate level. So many firms have used social media thus far to speak to current and future clients as a company, but social media is inherently about connections between people. There are firms, like Morgan Stanley Smith Barney and Guardian Life Insurance, rolling out social media to the advisors- meaning thousands of people within the firm using social vs. only a corporate marketing, customer service team or other. It's definitely an evolving landscape of regulation, technology, and business practice, but I think that's one of the most interesting aspects of what many other industries can learn from the financial services industry use of social media to evolve customer relationships... those person to person interactions through social.

Thank you

Thank you Christie for the insightful post. I completely agree. Social in financial services is taking much needed steps to move beyond marketing, and the moves are mostly relevant and based on the fact that financial services is a relationship business.