Social Media For Financial Services
I recently attended a great training course on social media for financial services as many of the clients we work with are in this sector and understanding how to get around the compliance issues and still create an engaging social campaign can be a challenge. However, we feel the pros outweigh the cons in terms on considering whether social is a viable platform.
Investment in social media marketing by financial services companies has surprisingly declined sharply since the end of 2011 despite significant growth in all other industries and growth prior to that. Social media is hugely important for financial services as although it may not seem like a convincing channel for selling insurance or current accounts now, Gen Y who will have grown up using social media as the norm are future customers and if companies are not accessible via these platforms then they may lose out on a huge segment of their audience. In the US, Gen Y now accounts for $2.4trillion worth of personal income and by 2025 this will account for 46% of personal income so this is big business in terms of the potential value that can be gained from effectively communicating with and gaining advocacy from this audience.th are in this sector and understanding how to get around the compliance issues and still create an engaging social campaign can be a challenge. However, we feel the pros outweigh the cons in terms on considering whether social is a viable platform.
For financial services brands, the risks are much higher than other business areas due to stringent compliance rules and the negative opinion of most high street banks these days. The backlash is going to be unavoidable and for this reason many companies are very hesitant about a foray into the world of social media. Ultimately, social media acts as a mirror to and an amplifier to editorial coverage. One report claims that only 30% of financial institutions had any social media presence at all despite the fact that 80% of them were being actively discussed in social media channels.
So what are the benefits of social media for financial services?
- Offers an additional channel to reach your audience and tell them about your services.
- Increase brand awareness
- Promotes customer loyalty
- Enables companies to communicate with hundreds of thousands of people at once
- Crisis and reputation management
- Allows companies to interact on a more personal level with customers
How should they be using it?
- Brand monitoring
- A recent study by Anthony Cooper, MD of business intelligence company Pearlfinders, found that by running six of the major high-street banks through social media monitoring software (Lloyds TSB, Barclays, RBS, HSBC, Co-operative and NatWest) there were over 170,000 mentions on Twitter alone in 30 days. However, negative posts were twice as common as positive ones.” This highlights the importance of monitoring to understand where and why you are being talked about. In this environment, understanding what customers feel, think and say about your company – in real time – is ever more critical.
- Reputation management
- From bonuses and system outages to accusations of laundering money, banks have been heavily criticised for staying mute on social channels when these crises occur. By having social platforms at least organisations are in a position to defend themselves and get the facts across whatever the subsequent negative response. In the US and the UK, trust in banks dropped 39% and 20% respectively between 2007 and 2010. A recent survey of social media usage by bank customers demonstrated how customers use social media.
- Customer Service
- Many companies are now using Twitter as a main customer services platform with dedicated teams monitoring and responding to customer issues and complaints. Without this service your customers are going to be frustrated and could end up publically venting. Citibank are one bank who have seen the value of adopting a strategy that allows them to deal with customer service issues with Twitter.
- Establish relationships with future customer base
- First Direct are a brilliant example of a financial services brand who have successfully utilised social media in a way that has allowed them to establish relationships and conversations away from their services.
- Create a brand personality
- Co-op Insurance are another example of a brand who have used social media to inject some personality into their brand and remove themselves from the stereo typical corporate bank persona. Its Facebook campaign to target young drivers not only managed to build a highly engaged fan base of future customers but also positioned them as an approachable and engaging company.
Who is doing it well?
A recent study from Sticky Eyes revealed price comparison sites are proving to be better at engaging customers via social media than high street banks. CompareTheMarket is top performing financial brand on social media thanks to high engagement as a result of its meerkat character.
They attributed social scores out of 100 based on criteria such as the number of fans and followers, sentiment analysis, retweets and Facebook’s ‘talking about this’ metric.
It revealed that among the retail banks social media strategies remain a relatively underdeveloped channel, although First Direct is one of the most progressive operators.
When it comes to spending on social media, marketing budget-holders in this sector are left deciding whether the benefits outweigh the risks and many are simply putting spending on hold until they have developed a clearer picture of how social media can be harnessed to improve their brands. What is undeniable however is that at some point these corporations are going to have to act if they