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Enthusiasm For Social Media Dampening In Financial Industry

Barely half of all marketers in retail banking are confident that their social media campaigns are effective. A third say they aren’t effective. Budgets will be adjusted accordingly.

A new study reveals retail banks will continue to focus on social media marketing in 2013, but a lack confidence in its effectiveness and uncertainty over its business value is slowing investment in the area.

Retail banks and credit unions will continue to focus on social media marketing in the coming year, even as they wrestle with the importance of social media as a marketing channel. Plagued by questions about its effectiveness, business value and ROI, the financial sector will take a more cautious approach to social media in 2013 than other industries.

“Well-intentioned marketers in retail banks could inadvertently turn customers off by irritating them with their social media behaviors.”
— Kieran Kilmartin,
Pitney Bowes Software

The independent study, commissioned by Pitney Bowes Software and conducted by Vanson Bourne, examines the effectiveness of social media marketing and compares social media marketing trends among marketing directors with consumer attitudes to social media marketing across Australia, France, Germany, the UK and the US. The study encompassed seven business sectors: fast-moving consumer goods, insurance, the public sector, retail, retail banking, telecoms and utilities.

Marketing decision-makers in retail banking are split 50/50 in their confidence — or lack thereof — of being able to link social media spend with their organization’s profitability.

Barely half of marketers in retail banking (53%) are confident that their social media campaigns are effective, while less than a third rated them as not effective (31%). Only the insurance sector came out lower in terms of rating their campaigns as effective (49%).

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A More Cautious Approach to Social Media in 2013

The survey showed that more than seven in ten (74%) marketing directors in retail banking had seen a greater emphasis being placed on social media in their external communications. This was a significantly higher number than average (69%), and second only to the telecommunications sector (81%).

Reality Check: Retail banking has consistently ranked among the earliest and most aggressive industries to adopt social channels, despite rampant — an unfounded — accusations to the contrary.

However, this growing importance is not reflected in banks’ marketing spend. The research shows social media spend in retail banking, as a share of marketing budgets, will only increase incrementally over the next few years. From 16% in 2011, when banks were among the biggest spenders on social media, it is expected to climb to 22% in 2013. By contrast, other sectors like telecommunications will be committing over a third of their marketing budgets (36%) to social channels.

This increasingly timid attitude towards social media is also reflected in the study’s other findings. More than half of marketing decision-makers in retail banking (53%) say that social media will grow in importance as it becomes more rooted in customers’ lives. However, more than a third (34%) are of the opinion that it will only apply to certain areas of their organization’s markets or business units, a view shared with respondents from the utilities and insurance sectors (34% and 41% respectively).

Risks and Challenges

Social media usage is not without its risks. 65% of consumers surveyed say that they would stop using a brand that upset or irritated them as a result of their social media behavior.

“It is not surprising that retail banks have been keen to jump on the social media bandwagon early on, but are now taking a step back to evaluate this new channel more thoroughly,” says Kieran Kilmartin, Marketing Director EMEA, Pitney Bowes Software. “The continued use of old-school broadcast marketing models in social channels is likely to turn people off, and at worst, trigger them ultimately to become ‘brand blockers’.”

The greatest challenge for retail banks, says Pitney Bowes, will be capturing and making sense of all the data being generated as the number of customer touch points increases (50%). Two in five struggle with ROI, as they grapple connecting online engagement with new customers. An equal number said that managing the amount of time and money spent on social networks (42% each) was a major concern.

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Financial Marketers + Consumers = Social Media Disconnects

Caution among retail financial institutions is not surprising, given that marketers’ enthusiasm has not been matched by consumers’ response.

“Our research shows that there is still a disconnect between marketers’ high expectations of social media, and the lack of desire among consumers to engage,” explains Kilmartin.

Only a quarter of consumers use social media to follow and keep up-to-date with certain companies or brands (26%) — and you can be certain that “banks” and “credit unions” don’t rank high on their priority list. Most consumers are predominantly on social media to keep in touch with friends and family (78%).

Subscribe TodayAmong consumers who do choose to follow brands, nearly half of social media users (48%) are positive towards receiving their marketing messages. The reverse is true of communications from companies people don’t follow, which 40% say they would find annoying. Consumers regard unsolicited marketing (‘spam’) and pop-up advertisements as the lowest form of social media marketing.

Identifying which social media channels to invest in was a challenge for all marketers surveyed. While they were aligned with consumers in their emphasis on Facebook as the most popular and trusted social media site, they disagreed about the importance of other social media outlets. Beyond Facebook, marketers devote most of their remaining spend on Twitter (57%) and Google+ (51%). By contrast, consumers prefer YouTube — rated only fifth by all marketers — over Twitter and Google+.

When it comes to interacting with brands, the research shows consumers are most interested in discount or money-saving vouchers, new products and services, and upcoming sales and events. Yet these are bottom of the list for marketers, mentioned by fewer than one in ten of those surveyed. Instead, marketing decision-makers highly rate the effectiveness of newsletters, information about their organization’s social responsibility and customer satisfaction surveys, all of which were least interesting to consumers.

All content © 2017 by The Financial Brand and may not be reproduced by any means without permission.

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  1. Mark Arnold says:

    Is social media dead for banks and credit unions? Not necessarily. But two things are evident: they must develop better ROI for their social media campaigns and they must do a better job of actually providing info consumers really want. One of the best ways to accomplish this is with a defined target audience and community (and hint: it’s not ALL of your customers or members). Consumers are using social media; the question is can retails financial institutions effectively reach them there.

  2. Social media and banking is not dead at all. What is dead is the typical boiler plate strategies that banks use and have used for decades. Which will all have to change as consumer communication habits have changed with it.

  3. John – No one said social media is “dead.” But it is harder than hell for financial institutions to figure it out. Banks and credit unions are starting to realize they can’t skate through social media with a laissez-faire approach and willy-nilly strategies. It takes a lot of work — more so than most FIs feel like mustering, especially since there’s no guarantee of success even when they do all the hard work.

    It’s more complicated and difficult than FIs expected (and were led to believe by consultants/analysts). So many of them are just throwing up their hands, if not throwing in the towel completely. If the ROI was there, things would be different.

  4. It is very hard. One major reason is that social media forces banks to go far beyond just the marketing department to have any opportunity of success. Many bank marketers continue looking for those out-of-the-box programs and measurements that no longer work in this new social economy. Banks don’t have a social media problem, they have marketing “strategy” problems. Here are a few steps that may help.

    Step 1 if for banks to stop primarily thinking tactically, and start thinking strategy.

    Step 2 is to understand that this new social economy is about people (social) and not predominately technology (media).

    Step 3 is to build strategies with every senior manager at the bank, helping build their strategies around connecting with “people” while growing at the same time.

    Step 4 is to get everyone on board including but not limited to (branch managers).

    Step 5 is to implement with people in mind. Meaning, talk to people, not focus groups, have personal emails/phone calls/meetings with people, not survey’s. Do the “right things” offline to make online (social media work).

    Finally, banks need to find other things to talk about (other than banking) that can touch peoples hearts and keep them engaged, yet make those people relevant as customers at the same time. Very difficult. But very, very lucrative when done correctly. Make sense?

  5. I wonder if the survey had asked the “what are you most interested in” question to the business banking audience, what the answer would have been.

    We’ve had tremendous success with using social media to promote the latest Content, posted specifically for the small business (banking) audience.

  6. Hi Karen,

    Thanks for your comment. The Financial Brand has frequently noted that social media enjoys a much higher rate of success in the B2B space than with retail consumers.

  7. My opinion is that the reason for this timidness is that they aren’t using social media the right way. Its all about customer service which is a viable reason to use it but there is so much more to it that they are missing out on!

    Most banks are using it for awareness building and customer service and ignoring the best way social media can impact the bank: Relationships. With the shrinking impact of branches and the lack of opportunities to touch their customers social media presents the opportunity to build stronger relationships. We have been enlightening quite a few bankers at Deluxe Expo 13 this week and the response has been very strong. Follow #DeluxeExpo on Twitter to keep up on the action!

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