Survey Reveals Mix of Feelings, Approaches Towards Social Media in Banking
In an August 2011 survey of communications and public relations specialists at 35 global banks, MHP Communications found that the industry professionals are both unclear about its social media regulatory responsibilities and concerned about losing control when interacting on social platforms.
The study showed that “loss of control over the message and story” was a primary concern for more than half of all banking communications executives.
When asked about barriers banks face regarding further engagement in social media channels, 52% blamed regulatory issues, whereas 40% cited time and budget constraints as the main obstacles. 36% said social media does not naturally fit in their current organizational structure and would require additional resources to create and curate content. 12% said they do not know how to identify “real” customers within social media platforms so they cannot properly engage with them.
50% of banks said they are aware of regulatory requirements on social media in banking, but 27% said they are not sure what it looks like and how it affects them.
MHP Communications feels a major issue in such a heavily regulated industry like banking is that social media platforms are provided by external third parties. Any sensitive or confidential data will likely be stored on the social sites’ servers, something that unsettles banking compliance officers globally.
“Many banks feel that sensitive data should only be stored and transmitted on their own infrastructure to ensure full compliance,” noted the report’s author, Andrew Nicolls, Managing Director/MHP Communications.
What Is It Good For?
The most common use of social media among banking professionals is for following industry trends. 75% rely on social media as a good source for news and information in the financial sector.
For the majority of banks, social media is about building awareness with customers (63%). One in two banks use social media as part of their HR/recruiting efforts. 42% of respondents said they use social media for sales and marketing activities, while only 25% said it is used to resolve customer service issues.
15% said they do not use social media at all.
One third said social media serves as an internal communications tool, and one half use it to extend their external PR efforts.
MHP Communications points out that thousands of journalists are using Twitter and Facebook, both excellent channels where banks can engage in direct dialogue between their spokespeople and reporters. 48% of the participants in MHP’s survey said they use social media to engage with journalists and the media more easily.
Monitoring Online Conversations
When asked how they monitor online conversations, 39% of banks referenced Google Alerts, which is something MHP Communications characterized as “a surprisingly low figure.”
“Given the free and real-time nature of Google Alerts, this is one avenue that the banking sector should investigate as an easy method of monitoring online mentions,” said Nicolis.
27% use free tools such as Social Mention, RSS feed readers or Twitter’s search function. One in five banks either use paid-for tools such as Radian6 or have their own proprietary in-house technology.
23% have outsourced the monitoring of online conversations to their PR agency, whereas 15% do not currently monitor conversations in the digital space at all. Also, nearly one fifth do not know whether- or how their corporation monitors online conversations.
Nearly one third of banks say that there is little conversation about them or issues of relevance to their organization taking place on social media sites. 27% said that there are ongoing digital conversations about them, but that they are not actively involved in engaging in these conversations. 15% said that they are well discussed and referenced in ongoing social media conversations. A very active 4% said that they drive most of the social media conversations about their brand themselves.
Strategy? Or No Strategy?
44% said they have some sort of social media strategy in place. 41% said they are in the process of creating one. 16% said they either don’t have a strategy, or aren’t thinking about one.
But just because a bank has a social media strategy doesn’t mean they have established specific objectives. Nearly one in three respondents said they have not defined any goals.
One quarter of the survey’s respondents noted that the impact of social media is limited.
“Banks and financial institutions are behind the curve when it comes to using social media as a communications tool,” observed Nicolis, the study’s author. “They are catching up, but there is still a high level of uncertainty regarding how to best utilize it.”
“The banking sector is more heavily regulated than many other industries, and orchestrating a strategic approach towards social media has been pushed back for a number of years.”
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How could 68% of respondents say that their company uses social media for PR and communications, but only 43% say their company uses it for sales and marketing? PR/communications is a PART of marketing. Scary result.
A surprising number of financial institutions do not have their PR/communications teams integrated into the marketing department. There is one very large credit union with 50+ employees in marketing, plus another 20 or so in a “Corporate Communications” team who handles PR, community events and non-marketing communications with members (e.g., annual meeting notices). I’m not suggesting this is a defensible organizational structure, just pointing out that it’s more common than you might think.
In reference to the lack of adoption due to the risk: The benefits of social media in the Financial industry by far outweigh the risk, but only if you are committed to building a solid social media strategy with guidelines and policies that fit your business. What people need to remember is that those policies will never be something you can set and forget. You have to continually update those documents as the social media landscape changes.
End users will likely remain the number one security risk in this landscape, but dramatic results can be achieved with just general security awareness training.
“Nearly one third of banks say that there is little conversation about them or issues of relevance to their organization taking place on social media sites.” *picks mouth up off the floor*
I can see where a small local bank might find few specific mentions of their name online, but little conversation about issues of relevance? If it’s an issue of relevance to your customers or potential customers, it’s relevant to you. A Twitter account or Facebook page may not be appropriate for your bank, but to not even listen or worse, to not KNOW if you’re listening, means you’re operating in a vacuum. The May article linked to lists a number of tools that are free and fast to check in to at least once a day, whether it’s a marketing department or a head of customer service or a PR company or an intern. There isn’t anything – time, money, hands on deck or regulation – that should stop you from listening.
Jennifer Spencer
Community Development
PerkStreet Financial
In my experience “regulation” is just an excuse that clueless bank marketers use to cover up the fact that they are clueless when it comes to marketing.
There are a number of things they should and could be doing that have no regulatory implications but I think it’s just easier for them to have a scapegoat.
@InfoSight – For the benefit of readers, would you be willing to expand on the benefits and “dramatic results” that financial institutions can achieve with social media? I’m not sure everyone is familiar with what those are.
@Jennifer – A study conducted by The Financial Brand found that — on average — retail banks and credit unions will see approximately 1 relevant mention about their brand on social media sites per month for every $100 million in assets they have. A “relevant mention” is something interesting or actionable, e.g., “The teller at Acme Bank was so rude this morning” vs. “I just ate 3 Chalupas at the Taco Bell next to Acme Bank.”
@MarketingBanks – I agree that “regulation” is just an excuse. First, there are already plenty of financial institutions handling social media’s compliance risks just fine. Second, where’s the enforcement? And who’s doing the monitoring? Is it going to be the CFPB?
Well I’m not sure where I stated that they would receive “dramatic results”, I believe my comment addressed the issue of banks avoiding social media due to the regulatory/risk issues.
I do believe the benefits they would receive by participating in social media, would out weight the risks that they worry about. The benefits could include:
•ROR (return on relationships)
•Engaging in real-time interaction to increase the brand’s image
• Strengthen the ties between existing relationships while also creating new ones
• Offering customer service where people want it
• Listening to what people are saying about your brand
• Outputting and receive information simultaneously
Banks and credit unions have figured out how to control the message in traditional mediums like TV and print, so why should they abandon the existing marketing structures, processes and procedures when it comes to social?
I think I’m trying to make a distinction between a relevant direct mention and discussion around a relevant topic. There’s a case to be made for not just setting up a Google alert for Acme Bank, but also for Acme Bank competitor names, or topics that Acme Bank customers would find relevant like “holiday savings tips” or even local topics of interest.
If Acme is already in the social space then being able to talk about these topics is going to increase engagement, and if they’re not it’s still going to give them better insight into where they can expand or focus marketing or products to meet their base at a particular point of interest or friction.
My overuse of the word “or” above probably made that sound more complicated than it really is.
Jennifer Spencer
Community Development
PerkStreet Financial
@Jennifer – I understand now, and yes, that makes sense. However, it sounds like it could easily be a fulltime position.