Why Social Media Is a Waste of Time for Most Banks & Credit Unions

The Financial Brand spends at least two hours every day combing the web for interesting financial marketing case studies, and how many truly effective social media marketing examples have we seen? Maybe a couple dozen…in three years.

Let’s roll the clock back to 2005 for a minute. Back then, it was called “Web 2.0,” not “social media.” Analysts agreed change was afoot with respect to the way people used the internet, but no one really knew what to call it. Skip ahead… Podcasts are forgotten. Wikis are never discussed. And all the conference speakers who once extolled financial institutions to launch MySpace pages seem to have disappeared, much like MySpace itself.

Go to any bank or credit union Facebook page and what will you likely see? Not more than a few hundred “fans” (or “likes”). Check out their Twitter account and you’ll find maybe a hundred “followers” who, ostensibly, are “listening” to the occasional tweet about extended Saturday hours or the latest shred day event. Take a look at their blog and you’ll be lucky to see more than one post per month and no comments.

Here are 11 reasons why social media for most financial institutions — at least as a marketing tool — is basically a waste of time.

1. Your institution is boring

As the Stolichnaya vodka campaign asked, “Would you have a drink with you?” Honestly? Probably not. Let’s face it: Most financial institutions have dull, colorless personalities. Consumers view banking like a utility. It’s about as sexy as many of life’s other necessities, like toilet paper or the cable company.

Generally speaking, the less people interact with their financial institution, the happier they are. Just because people love money as much as they fret over it doesn’t mean they want to spend time a whole lot of time talking about it, especially with you. Even if people did feel like “engaging around financial matters,” they’d prefer to talk with their friends and family — even total strangers.

Reality Check: Spewing streams of mundane facts, marketing information and links to articles via social media channels does not make banking any more interesting to Joe Consumer.

Key Question: At its center, social media is about engagement, so why try to strike up conversations with people who don’t like you and don’t care to listen even if they did?

2. Banking is boring

Given the choice, if the typical consumer finds themselves with 10 minutes to spend online, what do you think they’ll choose?

  • Menu A – Going to ESPN.com, getting the latest info on “Dancing with the Stars,” or reading Perez Hilton.
  • Menu B – Visiting a financial institution’s website, checking a credit union’s Facebook page, or listening to a podcast on investing.

Banks and credit unions in the social media space are competing with very powerful entertainment brands, each with its own Twitter and Facebook presence, e.g., MTV, CNN, New York Times, Jon Stewart and The Onion. Your CEO blogging is simply not entertaining.

3. People don’t have time for you

The most precious commodity on earth isn’t gold, oil or diamonds. It’s time. People’s time and attention have become so severely strained that companies like Google and Amazon measure the world in milliseconds. People don’t even have the time to do the things they really want to do, the things they enjoy doing — like spending time with their kids. People are stretched so thin, they actually feel guilty about not being able to watch all the shows they’ve loaded onto their DVRs.

And yet financial institutions — naively, selfishly and/or arrogantly — presume that consumers will spend 10 minutes reading their blog or engaging via Facebook. Why stop there? Why not assume consumers have the time (and interest) to interact with all the commodity brands in their lives. Is it reasonable to expect people to get all excited because their brand of toothpaste just launched a Twitter account? “Oooh, and now look! My power company has a Facebook page!” To consumers, the cacophony of brands competing for their attention blurs into a deafening chorus of white noise.

Reality Check: You should be finding ways to help people spend less time interacting with your organization, not more. Freeing up people’s time is a benefit to them. Consuming more of their time is something that really only benefits you.

4. Internet users are over-subscribed

If people in general are stressed out, then it’s doubly true for the internet-savvy crowd social media marketers label as “early adopters.” These folks spend their day exchanging tweets, emails and Facebook updates, often from multiple accounts. They follow dozens of blogs, subscribe to RSS feeds and have automated Google Alerts. They may even have a social media community of their own they need to maintain. Plus they are bombarded 24/7 by friends, fans and followers who share way more compelling content than one could ever possibly hope to have time for. Quite simply, the bandwidth of internet users has been stretched to the breaking point.

If the internet-savvy consumer has 10 minutes to give you, they are probably headed directly to your online banking site. Ironically, many financial institutions on Twitter and Facebook have limited online banking systems, ugly websites and don’t offer mobile banking or remote deposits. These banks and credit unions hope to be lauded for embracing innovative channels, but, from the internet consumers’ perspective, can often end up looking foolish and misguided.

Reality Check: Generally speaking, the only people who have the time and genuine interest in following financial institutions and their social media escapades are consultants (often the ones espousing the gospel of social media) and other financial institutions (those desperately searching for a peer who has struck social media gold). Every bank and credit on Twitter should have at least 100 followers because there are at least that many industry peers and insiders who will follow just about everyone in banking.

5. Flawed motives

Most social media projects start with the solution, then look for the strategy. “We want to be on Facebook.” Why? “We want to launch a blog.” Why? “We want to create a viral video?” Why?

The majority of financial institutions embarking on social media initiatives aren’t really sure why. Maybe they heard some social media guru talk about how important it is at the last tradeshow. Maybe they’re giving into peer pressure from the fear of being left behind. Maybe they’re bored and they just want to do something cool.

Reality Check: Yes, young consumers are online. Yes, social media is growing because people love it. Yes, free social media tools are available. Yes, other financial institutions have social media projects. But no, none of those are sound, strategic reasons to launch a social media project.

6. Meaningless measurements

When you have no strategy and no clear motive, you are inevitably going to wind up measuring the wrong stuff. Few financial institutions have figured out how to translate “pageviews,” “video views” and “comment counts” into anything meaningful. Your YouTube video was viewed over 100,000 times? So what? How many of those folks are actually within your service area? How many opened a new account?

An unbelievable number of banks and credit unions launch a Facebook page, Twitter account or blog without ever connecting the dots back to the bottom line. When asked what they hope to accomplish, they echo things they’ve read and heard in the social media scene: “We want to foster positive conversations that engage advocacy and drive word-of-mouth buzz.” Huh?? Is it any wonder CEOs and CFOs sit around scratching their heads when marketing teams pitch social media? What about the stuff that really matters? Things like new relationships, loan volume, return-to-member/shareholder, funds-under-management, products-per-household, etc.?

This largely explains why there is still virtually no hard evidence demonstrating a clear, measurable and direct ROI even though the financial industry has been experimenting with social media for at least five years now.

7. Risk aversion

Wedged between regulators and compliance issues, banking’s core business model is ultimately about mitigating risks (e.g., a checking account is less risky than putting money under the mattress, a borrower with a 720 FICO is less risky than one with a score of 620). Banking inherently resists innovation because being innovative doesn’t involve a high rate of success. That’s why the financial industry is full of lemmings. No one ever does anything unless someone else has done it first. Hopefully, that “someone else” did their due diligence. Wrong. They are just like everyone else who came back from a conference all jazzed about the latest buzztheme du jour.

If you are willing to concede that most Web 2.0 experiments are duds, then it’s easy to understand why so few financial institutions find social media success. They follow their predecessors’ recipes using the same ingredients — for better or for worse — even if they wind up making the same crap.

Reality Check: The replay rate for social media experiments is very low. You don’t see many banks and credit unions repeating their social media promotions. What does this tell you?

Social media requires a culture that embraces failure because you aren’t likely to hit a home run on your first attempt. In some organizations, one failure is all it takes and you can forget about it from then on. “Yeah, we tried that in 2006 and it didn’t work.” End of discussion.

8. Control freaking

Perhaps the scariest part of social media for financial institutions is the fact that they can’t control the conversation. Brrrrrr, that sends a shiver down the spine of most bank and credit union execs. Perhaps it is this low tolerance for negativity that explains why some banks and credit unions try to game the system, “salting the mine” as it were with more positive, more favorable “user-generated content.” What triggers this behavior? Do marketing teams feel such tremendous pressure to justify their social media investments that they feel compelled to cheat by using shills. You could go further and accuse some individuals in the financial industry of perpetuating the social media myth simply to advance their own careers. I want a successful social media case study so badly that I will show results on my social media promotion even if I have to make numbers up. It’s how I’m going to land my next big gig.”

9. Failure to communicate (internally)

If you need any reminder about how scary social media can be for financial institutions, think about how many banks and credit unions block their employees from accessing sites like YouTube and Facebook.

Key Question: How can an organization simultaneously reject- and embrace an idea? Isn’t that hypocrisy akin to saying you oppose nuclear war while you stockpile an arsenal of warheads?

It is amidst this bizarre love/hate psychology that marketing teams must try and persuade their organizations to launch social media projects. Just like any other marketing project, they should outline a strategy integrating products and services, while talking about business objectives and tangible results. What do they do instead? They introduce the tool first — “We need to be on Twitter!” — and then talk about how important it is to “engage Gen-Y” while reminding everyone how free and easy social media is. “See, it’s going to be an online photo contest! Someone wins a prize!” The CFO rolls her eyes…

Then when the time comes to launch, what are employees told? Nothing. The Twitter account goes live, but no memo goes out. Not that it matters much, since employees aren’t going to rush home and take time out of their personal lives to check it out (remember, these are the same employees who are Twitter-blocked at work).

10. It ain’t easy

Social media pundits have misled the world into believing that it’s easy. After all, the barriers to entry are virtually non-existent. Anyone can have a Twitter, Facebook, YouTube or Flickr account up and running in under five minutes. And it costs nothing. But creating a social media presence is the easiest part. After that, the real work begins.

Finding social media success is extremely hard. It takes care and feeding. It takes a ton of time and energy. And no matter what you want to do on the social web, it takes a ton of writing. We’re talking about both quantity and quality, and most people are pretty sucky writers.

Reality Check: There is no such thing as a panacea or silver bullet. Social media is no different than any other endeavor; you get out of it what you put into it.

Some they think, “Oh, we’ll just dabble with it in our spare time. If it works, then we’ll take it more seriously.” But what happens? They usually end up pulling the plug on the project after their half-ass investment yields lousy results.

Your marketing department is already stretched thin, and they might not have the social media chops to pull it off. To find any success with social media, most financial institutions will need to create at least one new, fulltime position. For instance, just to run a simple blog, it will take someone — who is that? is it you? — at least 10 hours a week. Expect to spend more time if you want a truly vibrant and growing blog. Add more time for Facebook. Add more for Twitter.

Reality Check: If your social media projects don’t take a lot of time, you’re doing it wrong (e.g., auto-scheduling tweets that you then repeat as Facebook updates).

11. It ain’t free

Many financial institutions seem to think that social media is immune to the fundamentals of marketing — that somehow the basic tenets of promotion do not apply. “As long as it’s awesome, people will find it, right?”

No they won’t.

“If you build it, they will come…”

No they won’t.

Reality Check: It isn’t likely that you’ll create a self-propelling, viral hit. Basically, no matter how cool it is, people aren’t going to know about it if you don’t tell them. And you usually can’t pull it off purely online.

Banks and credit unions have to beg and bribe consumers to engage with their social media initiatives. That takes good, old fashioned marketing muscle, and yes, even traditional media channels. Between sweepstakes, prizes, advertising, emails, giveaways and all the other things that take money, you can wind up spending more on a social media promotion than you ever spent on any campaign before. And then don’t forget to add in the cost of human capital. All for what? One auto loan?

Bottom Line

If your financial institution has less than $250 million in assets, you probably lack the resources — both staff and budget — to sustain any kind of serious, long-term investment in social media. Everyone else should feel free to dabble, as long as they acknowledge the opportunity costs. In all likelihood, there are probably more important things you could be doing than social media — things with more immediate relevance to your organization’s brand and/or bottom line.

Jeffry PilcherDon't miss THE FINANCIAL BRAND FORUM — April 15-17, 2019 in Las Vegas. Join 2,000+ of the best and brightest in banking at the world’s most elite conference on marketing, CX, data analytics and digital transformation for the financial industry. Banks and credit unions that register now SAVE $870+ and get a free upgrade to a GOLD PASS, and PAY NOTHING until next year! REGISTER NOW!

This article was originally published on November 3, 2010. All content © 2018 by The Financial Brand and may not be reproduced by any means without permission.


  1. Andy Janning says:

    Best article I’ve ever read on social media and financial institutions. We’ve forgotten to use the “5 Why Technique” when evaluating the real motives behind SM strategies, and radically overestimated how interesting banks and credit unions are to the average consumer. Thanks for providing a much-needed voice of reason on this over-hyped subject.

  2. Elizabeth, this site addresses a very specific segment of the financial industry: marketers working at retail banks and credit unions. What bond traders and HR departments do with social media is beyond the scope of this website.

    Also, I have repeatedly stressed the value of social media to financial marketers as a peer networking tool (for instance, here and here).

  3. Hey Jeffry. Well done. I think a basic rule of thumb for FI staff is, would you do this? Would you be friends with this Facebook page, or follow this Twitter feed or read this blog? If even a bank or CU’s employees wouldn’t do it, how can they expect their customers/members to? Common sense must prevail.

  4. Amy, great point about listening, but…

    The majority of North America’s 15,000± financial institutions have less than $1 billion in assets and fewer than 50,000 customers/members. Very few of these ever get mentioned on social media sites. Yes, you will find people talking about larger financial institutions like BofA, Chase, SunTrust, Regions, PNC, etc. No, you will not find people talking about smaller financial institutions like South Valley Bank or FivePoint Federal Credit Union.

    Compounding matters, it’s extremely difficult to listen when so many financial institutions have the same- or similar-sounding names. For instance, how can the hundreds of First Federal Banks or First National Banks effectively monitor the social web?

  5. You’re not saying that social media and financial services is a waste of time, you are saying that social media is not a perfect marketing tool to interact with retail banking consumers.

    Why only focus on retail? Social media is being used by banks as a collaboration tool, for training, to interact with their peers and industry. Try arguing that Bloomberg’s IM feature isn’t Twitter for bond traders.

    As for retail – social media is not a magic wand that will gain a bank millions of new ‘Gen Y’ customers. But why turn you back on one way to connect with your customers – at any age? It’s like saying “we as a bank are not using the telephone any more, or email.”

    Why embrace one communications avenue and not the other? That’s just politics man.

  6. Maybe the best and most honest article about social media to date. For my part I have been guiding our CU with the book of Exodus as my reference. The Mosaic Exodus is the first social network in recorded human history. The exodus we are all on now is coming out of the old banking world and into the new one. It requires a strong, vocal leader and no timeline for the arrival at our new destination. However, I have been reluctant to name Social Media as the golden calf, but Jeffrey may have nudged me to that conclusion.

  7. I disagree to the point that if Banks or CUs want to really connect with their clients, then they need to be truly social in their connection (not just put up a page and post sales pitches). If done correctly, this could be a POWERFUL loyalty tool in a market that sees so much migration.

    FirstBank of Colorado has an incredible opportunity to connect with its clients – one of Colorado’s new concert venues is named after them and they offer advance ticket opportunities to concerts and events to current customers. This would be the IDEAL way to reach their younger market in connecting with them on upcoming events.

    Shame on the marketing firms that can’t find relevant ways for this industry to connect.

  8. I agree with a lot of what you’re saying. Yes, people are overwhelmed and innundated by websites, Facebook, Twitter, etc. that are all trying to get their attention. They’re not going to care if their credit union or bank is telling them about the hours they are open or their brand new rates. That’s annoying. If they want to find that info, they’ll go to your website. I also agree that when you’re on Twitter, most of the people following you are other credit union/financial industry people.

    However, I don’t think social media is a complete waste of time for a financial institution. It’s just most places aren’t doing it right. They are boring. They don’t have a personality. Many of the problems come from the fear of doing or saying something wrong. But if you have a purpose for your social media presence, I think it can be a good thing. And I know this has been said many times, but if you don’t have a purpose, don’t use it.

    I’m not saying our credit union’s social media strategy is perfect, because it’s not, but we don’t use it to market the credit union. We post articles and questions to engage our followers and likers. We use what we are known for in the community (financial education and involvement) and extend that to our social media sites.

    We also use it to listen. We’ve been able to engage with members and potential members to help them when they’ve had issues. For example, one potential member complained about something on Twitter. We saw it. We addressed it and reached out to him on Twitter, email, and phone. He opened his account. Then, he became a promoter and told one of his friends to join our credit union, on Twitter.

    Your article is correct, social media can be a waste of time and it shouldn’t be seen as this end-all-be-all for marketing. But I also think it can be beneficial to financial institutions, if it’s used correctly.


  9. Good article and some valid points. However on the flip side we have seen social media work for some credit unions with actual results. The point to note it has not all been driven by SM only. SM has worked hand in hand with other channels.

    In essences, the traditional (broadcast) channels have helped build brand and drive traffic to social channels which in turn are there to build relationship.

    Extensions of your thoughts and points:

    1. You’re boring – yes… banking may be boring but if all you are focusing on in social media is your boring self then of course you won’t have any friends. Instead when you focus on other topics (outside of balancing a check book) and others in your community, then there maybe something worth talking about.

    2. Banking is boring – once again see point above, if you can create relevant entertaining content there may be something worth connecting with.

    3. People don’t have time for you – you note people don’t want to interact but what if you provide on time financial education. Credit unions talk about financial ed and no one wants to attend in person events. Why… see point above… it’s boring. But if it can be made fun and offered online… think edumatainment.

    4. It ain’t easy/It ain’t free – this could be the biggest reason that FIs suck at social media. They think it is easy and is free and when it does not work go to point 7: Risk aversion

    I still say if done right (with a plan) and complementing other channels, SM can work.

    However, for those saying social media is the end all be all… not true.

    In the end it all boils down to the FI, culture and overall way of being.

  10. Tim McAlpine says:

    Good post and discussion. After a couple of dozen well-thought-out comments, I have nothing to add. Is it just me or does anyone else find it ironic that a post about social media being a waste of time generates one of The Financial Brand’s most commented-on articles?

  11. Kelsey and James – Thanks for your comments. While financial education is a noble theme, I think most consumers consider it a fairly dull subject; it’s still “banking” (and “learning,” which Americans seem to equally resist). Furthermore, there are literally thousands of financial institutions engaged in financial education activities, so it’s nearly impossible to differentiate around it. Among those banks and credit unions offering financial education, whether that be through seminars or Twitter, what information do they provide that can’t be found — almost word-for-word — at dozens of other venues? What makes either the content special or the style in which it’s delivered unique?

  12. Great article. First that I’ve read about FI/CU and social. What I think needs to be considered more thoroughly is connected to the beginning of the article and something that was mentioned in “7:Risk Aversion.”

    You talked about searching the web for case studies of FI/CU using social media and then talk about using the same recipe for same results in section 7. I think that is the reason why there are no results.

    Just as twilio is disrupting the “telecommunication” space, others can do the same for banks I believe.

    Consider this idea:
    When I walk into a bank, even after being gone for 6 months, they remember me. Because it is my local branch. They seem to care about my well being and continue to build my trust. I am willing to go to other banks, close in the area, but would prefer to go to *my* bank. SM, for those who wish to use it, can create a ubiquitous space between IRL and online for those in close relation, both in terms of proximity and value.

    Close the gap that technology has made through social media, within the norms of banking regulations and I think someone can have a good strategy.

  13. I think we have found a great way to engage young people with our Concerts for Financial Literacy: http://www.youtube.com/eloquentonline#p/u/1/jLRg5nc4N9Y
    However, the editor is right, learning, esp for adults about banking is pretty dull. Besides, most Americans that want financial ed get it at church from Dave Ramsey et al. I think the point is that social networking is the attempt to connect the member/customer to the brand in a personal way, and most folks neither want or need a social interaction with their banking brand. Just make sure the site works in the AM when I check my balance, but I don’t have time to answer twitter questions and Facebook polls. Too blunt?

  14. You’re right. Financial education is boring. It’s a very unsexy topic. But it’s about adding personality and having a purpose. And I know that’s vague and not everyone will agree that you can add personality to financial education, but I think you can.

    Most people don’t like financial education because they don’t think they need it, or they don’t like talking about money, or they think it’s boring, or it has nothing to do with their current situation. But when you ask opinions and ask them to share experiences, people tend to open up a little more. People love to give their thoughts. Also, it isn’t about being relevant 100% of the time. Information about buying a home isn’t going to be relevant to everyone, but it could help someone.

    Some people don’t want to connect with their financial instituation, and that’s fine. Not everyone likes to receive email marketing, or see commercials, or be told about the newest product. So they opt-out or ignore the marketing. But it does work for some, so we continue to market to them and keep them informed. Some people want to and enjoy going to workshops. And that’s why we still have them.

    It’s not a magical solution to marketing, but it should still be part of the entire mix- with one caveat, it has to be done right. And that will vary depending on each FI and their target audience. I agree with James Robert- it really does boil down to the individual FI.

  15. Brad Blue says:

    Well written article! I agree that there are very few good social media strategies out there. The best point in the article (I think) is that “When you have no strategy and no clear motive, you are inevitably going to wind up measuring the wrong stuff.”

    Pepsi and Coke spent millions of dollars on TV ads fighting for 1% of the market share long before there was any way to measure results in ROI. Is our conclusion that TV ads weren’t a valuable strategy? Or that all other TV advertisers were just lemmings? Coke and Pepsi (and Bank of America, Chase, etc…) are laughing at companies who aren’t trying to reach this audience. If it’s anything like TV, Radio, or even Google Adwords, by the time they’ve got it figured out, it’ll be too expensive for the rest of us.

    We ARE measuring the wrong stuff, there IS risk involved, and companies who take risks often fail… but I think companies who don’t take any risks (especially with this massive audience at low entry cost) are just waiting to be swallowed by the companies who saw risks rewarded.

  16. Good thinking, Jeffery.

    I would suggest that financial institutions struggle with social media because they have brands that do not have powerful consumer resonance – they do not provide a service to consumers that is “delightful”, suggests status, resolves pain or frustration, etc.

    I would further suggest that FI brands are closer to utilities than consumer brands, and as a result the consumer isn’t looking to be associated with them in any significant ongoing manner. The real value of differentiated FI brands may be when the consumer is choosing to associate in the first place, not after the relationship is established (when the relationship is one of almost pure utility).

    As a result successful attempts by FIs to connect with consumers through social media are often about more than the banking service or corporate brand. Three examples come to mind: Vancity’s Change Everything (which is about social change), ING’s “We The Savers” (which is a value statement on personal finance), and a number of FI-affiliated financial planners in this country (who have pre-established trust-levels and a personal relationship and thus become a trusted clearinghouse of financial information).

    Just a theory; I could be wrong.

  17. Don’t worry about being boring, worry about listening!

    The article makes the assumption that social media are like broadcast media where information flows in one direction. The MOST important social media activity is LISTENING and responding. Marketing and not being boring activities only come AFTER => Brand Management, Public Relations, Rumor Control, Crisis Management, etc…

    You can bet your ass customers are out there talking about your organizations whether you like it or not. They don’t care about the FI regulations and they are not bound by any rules of engagement. If they had a lousy experience at your branch, they are going to tweet about it, or share it with their facebook friends, or make a video on YouTube. If they hold a grudge, it’s even worse.

    By the way…
    According to Pew Internet and American Life project, 58% of all Internet users do ONLINE BANKING.

  18. Jeffrey – you ask a great question here. As someone that worked at a large financial services company for nearly 10 years (albeit not at a bank or credit union). A few thoughts about what you’ve written:

    1) while you’re right about social media being around for 5+ years, most businesses have only REALLY embraced social/community ove the last 6-12 months
    2) you hit the nail on the head when you talked about the “interest” and “attention” factor. However, I know a number of people — both young and old — that are desperate to learn more about things like IRAs, checking accounts, mutual funds, budgets, credit, etc. Banks and credit unions could ABSOLUTELY fill this role if they do it in a holistic/lifestyle kind of way.
    3) which brings me to my last point. It’s about the content. If more companies (financial services or not) spent more time focused on great content — courses, videos, articles — that talked about things like creating budgets, how to set up your 401(k), how a checking account works, people would spend more time interacting and sharing. However, these pieces of content a) should not be infomercials and b) should start with the customer need in mind.

    Thanks for getting the creative juices flowing today. And h/t to friend, @RShevlin, for pointing me over in your direction.

    Aaron | @aaronstrout

  19. Well written article. I take it you’ve been brewing on this one for a while. I agree with everything you wrote, kinda.

    I think the thing to remember about all of this is that SM is still a relatively new medium. Advertising has had hundreds of years to evolve. And when we look at what we consider “modern” or “traditional” advertising/communications, we’ve had decades of research, countless case studies, psychological profiles and brilliant minds developing groundbreaking work to draw from.

    SM efforts in the past five years by FIs have resembled the Wild West in comparison. And that’s OK, as long as the innovators are honest and admit that much of what they’re doing today is an experiment. There is no silver bullet when it comes to SM campaigns. Anyone who says there is, well, they’re probably lying.

    The few successes that the industry has had (i.e. Y&F) are critical steps that go a long way in creating a model we can all learn from. But it’s going to take time. Last year my agency, Subcat, launched a Twitter-based scholarship called Tweet for College (http://tweetforcollege.org). The point of entry was easy: high school students were encouraged to tweet why credit unions matter. While not a runaway success, it did get young members talking, and it was great to hear what they had to say. It also gave us a little insight into the SM habits of our target audience. We’ve taken that information and have retooled the program slightly and will launch the second annual scholarship in January. When we launched the initial program, we were very upfront with our clients: This is an experiment.

    As it stands today, the financial industry cannot turn to social media to overcome its challenges. Most of the challenges that CUs face have nothing to do with communications, and everything to do with product and delivery. However, this doesn’t mean that social media efforts should be abandoned. We’re in the beginning stages of a communications revolution, and we have a lot of learning to do. Let’s be honest, even consumers don’t know what to make of it. How many people have dropped hundreds of dollars on an iPad only to say, “cool, now what?”

  20. Ed, you are absolutely right. Generally speaking, financial institutions don’t have brand strategies and have no idea who they serve. Unlike Vancity and ING DIRECT which have clearly defined brands built around very specific audience segments, most financial institutions without a brand strategy will flounder trying to figure out what they should be saying via social media and with whom.

  21. Not to belabour the point but I think a distinction needs to be made between:
    – Advertising on social media platforms (which is similar to “traditional” web advertising), and
    – Using social media platforms as service delivery platforms (which is about leveraging technology), and
    – Using social media to monitor word of mouth health, and
    – Using social media to be, you know, social.

  22. Hi Aaron, thanks for the comment. Ron is a great friend and excellent intellectual jousting partner.

    While you’re right that most businesses have only just started embracing social media, financial institutions were quicker to adopt tools like MySpace and (more recently) Twitter. Anecdotally, The Financial Brand tracks some 700 credit unions on Twitter. That’s over 10%. Also, a recent report found that the financial industry was the third most active in social media. From the view behind my desk, I feel comfortable saying that the lack of successful social media case studies has nothing to do with a lack of effort; hundreds upon hundreds of banks and credit unions try something out every year.

    You are 100% correct about quality content. If you have quality content, the medium almost becomes irrelevant.

  23. Haha Tim 🙂

    I have consistently asserted that social media tools like Twitter, LinkedIn and blogs hold tremendous value for bank and credit unions marketers from a B2B, peer-networking and professional development perspective. The information that is freely exchanged between vendors, banks and credit unions these days is very valuable. But there’s a big difference between @jane_xyzcu_mktg using Twitter to ask and answer questions with other credit union marketers and @XYZ_CU thinking it’s going to use Twitter to “drive engagement and bring our brand alive with social buzz.”

  24. I’d spend more time worrying about how to be remarkable than I would on social media. Have success with the former, and the latter will come naturally.

  25. Kasey Skala says:

    Granted, the title is a bit of a link bait, but I have to disagree. The issue isn’t that social media is a waste of time, it’s that banks and credit unions don’t know how to utilize the tool. They’re still stuck in their traditional mindset and fail to understand how to properly capitalize of social.

    However, to broadly say social media is a waste is like saying the manual transmission is a waste of time for automobiles because not everyone knows how to drive a manual.


  26. This is a great article, with an unfortunate title IMO, which implies that banks/CUs should NOT even bother trying. Instead, I’d call this “11 reasons why social media is harder than you think.”

    But it’s NOT a waste of time for any financial institution. FIs have no choice, it’s a social world, and if they have to “waste time” getting it right, that’s just part of the learning curve for anything new.

  27. Kasey,

    Picking up your analogy, people seem to be saying, “I want a car with manual transmission, even if I don’t know why or how to drive a stick.”

    I’m not saying that the tools are worthless. There may be a lot of cool tools I wish I had in my garage, and thousands more that are very useful…to other people, but not me. Just because a tool serves some necessary purpose to some people does not mean everyone needs it.

    Back to your analogy: Manual transmission might be very handy for short-haul truckers, but it doesn’t serve any purpose or fill any need in my life. You could teach me everything there is to know about driving a stick and I still think I’d be wasting my money if I bought a car with manual transmission.

    Is manual transmission useful? Yes.

    Should I buy a stick shift? No. Why would/should I?
    Even if financial institutions use social media tools flawlessly, how do they avoid issues 1-4 in the list above?

  28. Jim,

    How long did it take financial institutions to figure out how to generate an ROI on other initiatives, e.g., Web 1.0, online banking, mobile banking, email, etc. Why is it taking so long for financial institutions to find success, especially when some very bright people have been applying themselves to this riddle?

  29. Editor comment: – RE: South Valley Bank or FivePoint Federal Credit Union.”

    Did you intend for those links to point to a twitter search? It’s my understanding that if you are looking for an exact phrase on any platform you need quotation marks.

    If you google the string of characters “South Valley Bank” with quotations, the first result takes you to a website for a banking institution in Klameth Valley OR. On the landing page there is a Facebook Logo inviting you to “Ask Bill” Then in a scrolling box in the middle you see the message: “A Bank CEO that answers questions? Now That’s different. Ask our CEO any question you want.” That is different and very smart.

    Editor Question from above-“For instance, how can the hundreds of First Federal Banks or First National Banks effectively monitor the social web?”

    Most social media listening tools allow you to seek out comments within a certain geographic area. Even the free and very basic google alerts allows you to search “nearby”

  30. Amy,

    The “Ask Bill” campaign was reviewed here at The Financial Brand.

    Do most people consider Google a social media tool? Or is it a search engine? Yes, you will be able to find Google results for every bank and credit union in the world. No, you will not find very many people talking about most financial institutions on social media sites like Twitter and Facebook.

  31. From the PCUA (Nov 1, 2010):

    Social Media Guides Available

    Social media is an emerging marketing tool to engage your members and promote your credit union. To assist your credit union in learning about social media, the Association is offering three guides for downloading that will help you.

    1. ‘The Social Networking Marketplace’ is Social Media 101 to detail some of the online tools available.

    2. ‘Credit Union Best Practices in Social Media’ provides examples of what credit unions are doing with social media.

    3. When you’re ready to dive in, the ’10 Easy Steps to Establishing a Facebook Page for your Credit Union’ will walk you through the process of creating a Facebook page.

    Once you’ve created your Twitter and Facebook account, follow your Association at http://twitter.com/PCUA and friend us at http://www.facebook.com/pages/Pennsylvania-Credit-Union-Association/134315798722?ref=sgm.

  32. I love this post. The only broken thing about it is that it addresses social media as a cosmetic – which is how our industry has addressed it forever.

    I wrote a thing tackling each of the 11 points here: http://crash.coop/blog/2010/11/re-why-social-media-is-a-waste-of-time-for-most-banks-credit-unions/

    Very curious to hear each of your perspectives on my take.

  33. You have to be able to objectively answer these questions:
    * How many brands do you think the average consumer is willing to engage with? Three? Five? Ten? Why should Bank X or Credit Union Y be one of them?
    * Why would consumers be more interested in interacting with their bank than their brand of toothpaste or their power company? What makes banking any different than the myriad of other dull industries?

    If you were talking to your brother-in-law Frank — say he’s a marketing guy at Acme Widget Company — what advice would you give him about social media? Would your advice be any different if he worked at Acme Federal Savings? If so, why? What if no one is really talking about Acme online?

    If Frank is going to invest any time in social media, he’s going to have to stop doing something else. He already works 55+ hours a week, and he struggles to fulfill all his current responsibilities. What activity should he give up? Frank’s time is finite, and can be expressed in formulaic terms. For instance, he’s going to have to tell his boss, “I need to stop doing X because Acme really needs to be doing Y so we can accomplish Z.” How does Frank fill in those variables? Why does Y need to happen right now, today? Why can’t Y wait? And why can Frank stop doing X? Was X just a waste of Frank’s time, or does Acme benefit when he does X? If there is value in X, what makes Z more important? If Acme can hire someone to help Frank, should that person help with X or Y? Or maybe a new employee should be doing Q instead? What’s the opportunity cost of not doing X or Q instead of Y?

    Financial institutions are encouraged to perform their own due diligence when comparing the rewards against the magnitude- and likelihood of risk that applies to their specific set of circumstances. They have to figure out what X, Y, Z and Q are for themselves:
    X – what you can stop doing
    Y – what you could be doing with social media
    Z – the strategic or financial impact of Y
    Q – something else you could be doing that you aren’t/haven’t

    Banking, just like any other business, is about mitigating risks in order to maximize rewards. So ultimately this boils down to a choice between two options:
    (1) jumping in now
    (2) not jumping in now
    Choosing to not jump in now can simply mean you postpone action until the risk/reward ratio makes clear sense.

  34. Brent Dixon’s reply to The Financial Brand’s article is excellent — highly recommended. It is smart, insightful and extremely articulate blow-by-blow counterpoint to each of the 11 items outlined above. Click here and read it now.

    Jason at InetSolution has this posted on his website:
    “…You’re wondering how you can use social media to attract more customers, sell more loans or open more checking accounts at your bank or credit union. Stop. Don’t waste your time.” He shares many of the same sentiments expressed in The Financial Brand’s article. Read the rest of it here.

    Pancho Castano, an architect at Geometrica, a company that builds very cool domes, tweeted the following in response to this article:
    “Social media disappointment in one industry http://bit.ly/dqaWMU In our own experience, the investment is large. Haven’t seen the return.”

    And this insightful comment was left by a colleague on LinkedIn:
    “I would argue that it’s a waste of time for anything other than individuals being social with other individuals.” – jjd

  35. Frozen Assets says:

    Interesting you should publish this the day after your Web address was shared with participants via an ABA Webinar on Social Media. Another way to view this list is one that highlights the things to successfully address in order to make social media worthwhile for your bank.

  36. Sorry for my delay in responding. You were probably hoping I had given up, but no such luck. =) I’ve been very busy working on a white paper.

    From Editor above, “Do most people consider Google a social media tool?”

    Absolutely, google alerts are social media LISTENING tools. They are free and easy to use, by the way.

    Also from the Editor, “you will not find very many people talking about most financial institutions on social media sites like Twitter and Facebook”

    It doesn’t matter how many people are talking about a specific financial institution. It takes only one influential social media person with a grudge and an audience to capture the first few entries of a google search for “South Valley Bank in Klameth OR.” Perception is reality and if negative comments go unchecked it can materially damage an organization’s perceived reputation.

    Too often people who are fearful of change LOOK for validation NOT to change. When someone with an audience states, “social media is a waste of time” it’s negligent and can be likened to someone in the early 1900s saying to a bank, “That telephone thing will never catch on. It may be nice, but it is a waste of time. You don’t need to worry about it”

    From the solo-preneur handy-man to multi-national financial institutions can you imagine any organization thriving in the 20th century without telephones? Social media are simply part of the communication continuum that began in earnest with Gutenberg’s introduction of movable type in the mid 1400s and will continue on whether we like it or not.

  37. Frozen Assets says:

    PS. Who wants to share “financial education” this way? Not us. We want to add value to our relationships, particularly with our small business owners, by sharing our experience and business intelligence (thanks to the fact that as a business we face many of the same challenges they do). For instance, a recent national news piece highlighted the fact that copiers/faxes/printers store information on the machine hard drives. If leased, when that equipment is returned, the hard drive goes with it. Holy cow! This is the sort of information we would publish to our “followers,” including a link to the national news story. We might also link to a sample “procedure” or best practices to avoid the disclosure of sensitive/private/confidential information this way. Or particularly good HR practices/procedures/resources, yada, yada ….

  38. Oh, I wish there was a ‘like’ button for Amy comment above. Well, said.

  39. “Too often people who are fearful of change LOOK for validation NOT to change.” – Amy Stark

    Just thought it was worth repeating.

  40. Tim McAlpine says:

    I have loved following along with this conversation and the counterpoints by Brent Dixon on the Crash blog. It feels like the good old lively blogging days circa 2007! 44 comments indicates that this is still a very hot topic.

    What I take away is that Jeffrey and Brent have pointed out a number of key areas that you need to address if you are to attempt to have any success with social media at your bank or credit union. If you ignore these common pitfalls, you’ll fail or be underwhelmed, therefore, why bother. I don’t take this article as a complete damnation of social media. I take it as a sober look at the realities from an expert covering the space.

    I think there is also a lot of confusion about what social media is in this debate with no clear definition. Is is just monitoring? Marketing? Part of an integrated strategy? Sales? Blogging? UGC? Contests? Facebook? Twitter? B2B? B2C? I think it’s important to have your own definition of what your FI wants out of it before attempting anything or deciding to stay away.

    Any way you slice it though, this has been a tremendous debate.

    Jeffry, please correct me if I am wrong.

  41. It’s worth noting that the only people who have stood up to defend social media have a vested interest in doing so.

  42. The article was a very interesting read and had some interesting points, but I have to disagree with a few things…

    “Furthermore, there are literally thousands of financial institutions engaged in financial education activities, so it’s nearly impossible to differentiate around it.

    I disagree with the above comment. Yes, thousands of financial institutions are engaged in financial education activities, but differentiating those activities is not impossible. Is it not easy to differentiate the “crap” out there and see who is really innovating and connecting with the public? Look at Young & Free, Brass Media, Buck The Norm, Servus Credit Unions Feel Good Ripple, not to mention the amount of Credit Unions connecting with members/non-members thru Facebook and spreading the Credit Union love. These FIs and previous examples have used social media and been successful by developing a plan. Without a plan, we become lost and develop uninspired content aka “boring” content.

    “Among those banks and credit unions offering financial education, whether that be through seminars or Twitter, what information do they provide that can’t be found — almost word-for-word — at dozens of other venues? ”

    So if the information is constantly being reposted, why are people not getting the message? If it is boring, why don’t we innovate and make it bigger and better? We shouldn’t just stop because we have the same information, but should challenge ourselves to destroy the box and come up with new ways to present that information. Social media is not the end all be all answer, but it is a way to make that “boring” information and present it a different way.

    “Given the choice, if the typical consumer finds themselves with 10 minutes to spend online, what do you think they’ll choose?

    Menu A – Going to ESPN.com, getting the latest info on “Dancing with the Stars,” or reading Perez Hilton.

    Menu B – Visiting a financial institution’s website, checking a credit union’s Facebook page, or listening to a podcast on investing.”

    or Menu C – Going to Facebook.com, Youtube.com, Blogspot.com, Twitter.com, Blogger.com… All previous sites are in the top 10 most visited websites and are social media sites.

    The main point I am trying to make is that social media has extended a helping hand to expose more people to Credit Unions. Building relationships with members/non-members and educating more people everyday should be on the mind of any CU representative. If we don’t build the relationships with them, the other FI aka bank WILL. You say that there are “probably more important things you could be doing than social media — things with more immediate relevance to your organization’s brand and/or bottom line” but creating another channel for them to speak their mind, listen to a FI who cares and engaged us, is important and relevant to the Credit Union brand.

  43. Hi everyone,

    I run a social media advisory firm to the financial services industry and found this article very interesting. The way I see it is that as long as banks & co. refuse to get really creative, social media will not be an effective tool. I have written extensively about the lack of creativity in the financial services industry here: http://www.reissomnimediagroup.com/category/creativity/ .

    There is however important utility in social media: it can strategically restore public trust that this industry had lost after the 2008 financial meltdown. This aspect of social media for the financial services industry in my opinion outweighs many costs that it entails. And although not measurable, trust is invaluable.

    For those of you who are interested in social media + finance, please join me at the Financial Services Social Communications event on Nov. 18 in NYC http://www.bdionline.com/ . I will be moderating a roundtable discussion about the benefits of creating online tribes.


  44. katherine evans says:

    So much in these discussions resonated: why WOULD anyone choose a financial interaction over just about anything else? Excellent counter arguments about the critical need for relevance . . . that ‘structure follows strategy’ . . . that ‘Cars are sexy, roads are not. Banking is infrastructure, what you enable is interesting’, and that social media doesn’t fix holes.
    Thanks for the recommendation to think on these things, William.

  45. Way to go, Jeffrey! Thanks for having the guts to stand up and say “this is not a silver bullet.” I made that point in speaking at the Marketing Association of Credit Unions (MAC) Annual Conference in May. Like any marketing medium, social media is best used when integrated with other media for a consistent brand message targeted strategically to the audience. The fundamental rules of good marketing remain unchanged.

  46. Tim, I think that your summary is accurate.

  47. Dear Editor:

    Your response made me smile. I hope that was your intent. I also hope that you are very clever and used the title and tenor of your article to elicit passionate comments from social media geeks. I also hope you purposely threw some fuel on the fire every now and again to keep the conversation moving . Like when you made the blanket statement: “the only people who have stood up to defend social media have a vested interest in doing so.”

    Could you please answer just one more question for me – then I’ll do my best to avert my eyes and not pester you anymore. =) What do you think MY vested interest is? Did you really have time to investigate my unique vested interests in social media?

    If you researched beyond my “about” section on my blog or my twitter bio, you would have discovered my vested interest is to keep my home state of Indiana financially viable as our species shifts from the Industrial age to the Information age. This mission has been well-documented since 2007 when I realized that global grass-roots communication at the speed of light would be an evolutionary game changer. Because of this realization I launched the Great Indiana Initiative of Aught Nine and my vested interest in social media from that point forward can be easily found on my blog, my Ning site, and several digital conversations scattered throughout the Interwebz. I’m nothing if not transparent.

    [Editor’s Note: If you would like to read a blog post from Amy that she copied and pasted into this comment, you can head over to her site and read it there.]

  48. Social media is cool and everything, but can we talk about edible spoons?


    Welcome, future. It’s been a long wait, but well worth it.

  49. I’m in marketing. We recommend social media when appropriate for our clients. So, sure, I guess that means I have a vested interest in it. But no more so than I have a vested interest in television, search engine optimization or in-store POP.

    Jeffry Pilcher’s got his basic facts right – I don’t think there’s a credit union in the country who can claim more than 5,000 Facebook likers (Truliant Federal has 4,880, representing 2.6% of the organization’s membership). There may be others with larger absolute numbers or larger percentages. But there aren’t many.

    Does this prove social media is a failure and “basically a waste of time.”

    To arrive at that claim, Jeffry has had to create quite a dust storm – social media is nothing new … current popular platforms are just the latest shiny object on an over-hyped path littered with wikis, podcasts and MySpace pages … credit unions are “commodity brands” that can’t possibly compete with powerful entertainment brands.

    He knocks over a lot of furniture to keep us from catching him.

    But throughout, Pilcher betrays a very old school view of the web. It’s clear he thinks of it as set of destinations or pages. But who bookmarks sites for regular visits anymore? Okay, maybe a couple of news and sports sites, but that’s it. Rather we subscribe to feeds – filtered tweets, Google alerts, and with increasing frequency, status updates … which we read on the one site we do visit regularly, Facebook.

    Pilcher completely fails to note the truly stunning transformation of Facebook in 2010. Liking brands is a brand new phenomenon. Last year at this time, only 1 retailer, Victoria’s Secret, had more than 1 million Facebook likers. Today, 16 have more than a million.

    But the bigger deal is this: Facebook has become the center of social media. And if you can get into someone’s feed, it doesn’t matter how big your brand is or how many followers you have. You are the equal of Lady Gaga (almost 22 million likers) in the eyes of the user.

    Through Facebook, people now monitor a mélange of friends, charities, pastimes and hobbies, favorite personalities, historical figures, brands and products, alma maters and a million other things.

    Are America’s credit unions, and the marketers that serve them (like this publication) so “boring, dull and colorless” that they can’t imagine any way they might exploit this maturing opportunity?

  50. Lady Gaga and Victoria’s Secret aren’t commoditized brands in commoditized industries.

  51. So, I’m sitting in traffic this morning and I look over and there’s a taxicab and I notice that there’s something different about it, and I realize that there are TVs embedded in the back of the driver’s and passenger’s headrests so that the fare can watch TV while they’re being driven to wherever. Sure enough the fare is watching the local Breakfast TV garbage on the way to their destination whilst I’m stuck listening to idiot local sports radio hosts (“Randy Moss or Brett Favre: who’s the bigger moron? We’ll take your calls in 30 seconds!”)

    My first thought on seeing the TV is “Whoa, we’re living in the future”, because I’m thinking of all those movies set in the future where there’s bright screens and highly-mobile people and information everywhere and everyone looks as tired and lonely as the lady watching TV in the back of the cab looked this morning.

    But then I start noticing that the everything else I see doesn’t really look much like the future because I notice that, on the outside, the cab is just a dirty car with four rubber tires driven by some poor schlub who’s driving his TV-on-Wheels around because he got his Engineering doctorate in the wrong country.

    And then I start thinking “having a TV in a cab is cool” but the really cool thing about riding in a cab – the real utility it provides, as the wretched economists say – is that I can place a phone call and five minutes later be whisked around the city to wherever I want by a stranger and all I have to do is give him money.

    My guess is that whoever came up with the idea to put a television in the back of the cabbie’s head made his pitch like “This is the wave of the future!” or “It’ll be a real differentiator!” or “Customers don’t want to just travel, they want to be engaged while they travel!” or whatever.

    And my guess is that if the driver takes the wrong route or doesn’t clean the backseat after last night’s nightclub pickup or drives into a ditch because he’s distracted by the cooking segment on Breakfast TV that all of a sudden that TV doesn’t matter one little bit, no matter what the wave of the future is.

    I keep reading how social media has changed the world, or will change the world, or might change the world, or must change the world. And yet I see it providing the exact same value to some businesses – like, say, banking – as that TV in the back of the headset provides: a wee bit of a differentiator, maybe something that distracts from the boredom of the primary task, a way to catch someone’s eye, a teeny-weeny little tipping point when the fare is staggering out of the pub at 2 in the morning and has to choose between yellow cab with TV or yellow cab without TV.

    Ultimately if that cab company wants to really help me out it won’t spend it’s time figuring out how to put TVs in the cab, it’ll figure out a flying car – or, better yet, a teleporter.

    Peer pressure being what peer pressure is I fully expect that in 10 years all cabs will have TVs and all financial institutions will have a maximum of 2.8% of membership following them on Twitter, and the guys who embed TVs in automobiles will huff and puff about all the consumer value they’ve added.

    But if it still takes me 30 minutes to get somewhere when what I really want is it to take 10 minutes, then the cab business can put 3-D Imax screens in the back of headrests and it still hasn’t really done much progressing, has it?

  52. “Lady Gaga and Victoria’s Secret aren’t commoditized brands in commoditized industries.”

    Neither are credit unions or other community-based businesses in a franchised and nationalized world.

  53. I, like many of you, work in interactive marketing and find this absurd. And, as a former bank marketer, I can tell you that it’s not necessarily that banks are boring but that banks and credit unions MAKE themselves boring. And, traditionally, financial institutions have been absolutely petrified by the thought of social media.

    With the popularity of financial personalities that discuss saving money and fiscal responsibility like Clark Howard and Dave Ramsey, financial institutions have had numerous opportunities to step to the plate and give customers what they really need, consultative advice.

    If a financial institution had a vested interest in its customers’ financial well being as part of its brand or marketing efforts (something more than “great customer service, but true partnership”), social media would be an ideal channel to help customers in that regard with best practices and advice.

    For every client, industry and user, social media’s use has to be right for the organization. No, it’s not for everybody, but to state that because only a few tried and were truly successful, it doesn’t work for financial institutions is absolutely ludicrous.

  54. Nick, I encourage you to re-read the headline and the bottom line.

  55. Social media can be a very powerful tool for the Banking sector – and especially for the Community Banks & Credit Unions. However, the devil is in the details. Execution of social media campaigns by most FIs to date has been weak…

    FIs must find interesting content, compelling offers, and event-driven guidance to draw users into a conversation.

  56. Jeffry right on ! Your rant allows us to pause and re-evaluate to value proposition offered by Web 2.0/social media. Your critique is focused on financial institutions ‘jumping on this hysterical band wagon’. Banks are not selling clothes. Lady Gaga and Brian T. Moynihan CEO|President of B of A are not in the same silo’s…obviously…but why is there such velocity in developing a social media presence in financial institutions and in forgetting the basic underline differences in desired outcomes.

    Any suggestion that the Facebook generation is a unimportant blimp is native which you have not done. Your pointed interrogation in its applicability to financial institutions is vivid.

    As we all have seen others are falling into this vortex as well. The taco cart I frequent also has a Facebook presence which I visit every night and has motivated me to only buy my tacos from them… true PTI (Preferred Taco Institution).

    A recent social media lecture or was it a rave I attended at the The 1 Credit Union Conference was very illuminating. Tara Hunt, offered real perspective on this phenomenon. I urge you to seek her out and the work she is doing. Among other things she suggests is that social media interactions yield a currency which she has labeled “whuffie”. More positive interactions yield greater “whuffie”. She also mentioned that medical researcher have been testing social media junkies and measuring oxytocin, a chemical our brain releases and sometimes referred to as the “cuddle hormone”. Individuals receiving very positive social media interactions have elevated levels of this hormone. Now what does this mean for banks?

    I strained my ears seeking Tara’s insight into social media and its relationship to the business model of a financial institution. She never addressed this question… “If we commit ourselves to weave is a strong social media footprint it will yield results for our financial institution”. But she was convincing in suggesting that to deny it exists will be your peril.

  57. Take a look at these two examples of the kind of advice commonly offered by social media experts.

    (1) “Social Media Metrics” – Raz Chorev, a digital marketing consultant, says “social media can offer some of the best metrics for ROI around.” He talks about counting retweets, comments, Facebook “likes,” video views, Foursquare checkins, etc. These tactical metrics have ZERO strategic or financial value in-and-of themselves. They can be helpful when evaluating the performance of social media tools, but they do nothing to demonstrate or prove a strategic ROI. It’s like saying you can measure the ROI of a car by measuring things like RPMs. It doesn’t matter if a car purrs like a kitten at 5,000 RPMs. What matters is where you’re going.

    (2) “Whuffie *Can* Buy Me Love” (as pointed out by Brett Conway) – This presentation by one of the social media movement’s more noted authors and speakers may look a little more girly than others, but it pretty much contains the same fluff you’ll see at any financial industry conference — e.g., “There are 500 million people on Facebook, so you should be too.” It’s loaded with facts about how popular and neat social media is, while outlining the many ways in which average people use platforms like Twitter. If you were a CEO, you would sit through the entire presentation — all 89 slides long — without ever hearing what the strategic or financial ROI of social media is. The presenter says you can measure the ROI of social media in (no joke) “whuffies.” To paraphrase what the CEO hears, “Social media is like, you know, neat stuff that people are really into, which makes it, you know, really important. You can do some cool things with social media, even if you don’t know why.” Download the presentation and take a look for yourself…then go show it to your CEO and see what she says.

  58. Dan Balkin says:

    This article is thought provoking and makes many valid points with regard to the hurdles faced in using social media to market financial services, however I do believe that there is real opportunity for companies that think through this list of problems and objections and come up with strategies that will work. The strategies will need to be well thought out to work versus just jumping on the bandwagon and throwing money and resources at the opportunity. I also believe most of the winning strategies will NOT come via the corporate communications/central marketing folks, rather they will come from the business lines where the subject matter expertise resides to understand how social media can be additive to the mix. How to manage this within the context of corporate structures (e.g. those corporate communications/marketing departments as well as compliance, etc.) will be a real challenge as well.

  59. There is no question that social media landscape is littered with “experts” who are far from being experts. However, this is true with online marketing, traditional marketing … and (gasp) Banking…

    However, it is without doubt that social media offers yet another opportunity (it is not THE answer, but it is an important part of the answer) to community with the community, customers and prospects by offering valuable services.

    The challenge for most Banks, and especially Community Banks, is that they have no idea what these valuable services are. As the Editor mentioned: “Lady Gaga and Victoria’s Secret aren’t commoditized brands in commoditized industries.” It is precisely because Banking – and particularly Retail Banking – is commoditized, there is an enormous opportunity to break out and create value – for the consumer as well as for the enlightened Bank. Does any such animal exist?

  60. Paul Stull says:

    Social media is a clear example of one time that there was a lot of smoke, but no fire. Strange, but true.

    Billions have been invested, most of it wasted and the net result is just that, a lot of smoke. I have been looking for the right business case for social media and have yet to find the perfect fit. At this moment I believe that social media is a great way to connect with those few consumers who may be passionate, even obsessed about your brand, but the connection stops there. The vast majority of folks do not want to be friends with their financial institution, their shampoo or their big box retailer. I don’t think any of us could envision inviting these folks over for a beer on Saturday night because they are just not fun people, heck they aren’t even people. They are institutions.

    We have been fooling with this stuff for years now and the only thing marketers have learned is that it looks cool to include social media in their media plan. Don’t present a plan without it, but results are optional.

    In the end I believe there are some really great pieces of creative being produced for social media. It has been a creative earthquake. Unfortunately, I fear that those pieces may be like the kings new clothes; only visible in the mind of the owner.

    Being a hopeful person, I will conclude that as marketeers we will figure this thing out if it kills us. Let’s hope we do before it does.

  61. James Kellerman says:

    I believe that in some instances we have been listening to the snake-oil-salesmen too often and have forgotten about sound, valid and proven marketing and advertising programs.

    Like Bill Bernbach said many, many years ago; It isn’t creative unless it sells.

    Have we bought into the Internet as being the only strong tool in the arsenal of growing a business?

    Have we swallowed the Kool-Aid of every huckster out there that is making millions on the backs of individuals looking to be successful by acting like a televangelist and preaching that social media is close to the second coming of Christ?

    Unless you are in the banking profession and realize how interesting and fascinating it can be on some occasions, to most people it is about as exciting as watching paint dry. That is exactly why we are in the position we are in today; There aren’t enough people who take enough interest in it.

    How do you create a social media phenomenon and counter the peoples distrust in the profession that pays 1.5% on a savings account and as much as 28% on credit card debt if you miss a payment?

    In most conversations I have with people, and doing some research, most of them have only negative things to say about their bank.

    It’s not like people are going to be establishing chat rooms and spending hours in their talking about their checking accounts or how wonderful their bank President is because he/she just helped someone buy a brand new Mercedes.

    If banks are looking for a good way to promote themselves they have to start thinking in terms of “We have seen the enemy and it is us.”

    It’s a very difficult analysis to face, but success starts with admitting you have a problem.

  62. Just curious… What would happen if you substituted “printed newsletter mailed to members’ homes” for “social media”? Where’s the ROI? Why are we doing that?

  63. Paul, coincidentally I just received an email from another reader (he works in PR) who said, “Paraphrasing, ‘The Emperor’s New Clothes.'”

  64. ACU Frank,

    That’s a very good question. Why are credit unions publishing printed newsletters anymore? Why aren’t newsletters online and digital, with RSS subscriptions and comments?

    For that matter, why are credit unions still blowing money on Yellow Pages ads? And why do some give away a car just to lure members to the AGM? All are very good questions. The answer is usually, “Because that’s what everyone else does,” or, “Because that’s what we’ve always done it.”

    Most credit unions could probably tell you they get positive feedback on their newsletters, so management feels okay about sustaining the investment. That’s not a strategic approach. In my experience, most financial institutions cannot articulate their newsletter strategy. What strategic value does the newsletter have? How does it align with- and reflect the brand? How does it help the organization accomplish its strategic goals and live out its mission?

  65. Social media, newsletters, online marketing, etc. are just tactics. I bet that 10-15 years ago there were people out there saying that businesses did not need a website. Social media is only a few years old – and the question for most Banks is where do you jump on – at the beginning of the hockey stick growth pattern or at the top where the rewards are much smaller.

    However, we should recognize that marketing – whatever its form – is a tactic for growth. Given this, a broader set of questions might be – “How many Community Banks and Credit Unions have a growth strategy?” How many evaluate their competive strength & weaknesses? How many look for innovative approaches to market their products & services that shifts them from a commodity player to a value provider? How many react to these implications and measure their performance?

  66. Bottom line is that conversations about banks are happening in social media whether they invest in it or not. Either they can join the conversation and have a chance to change some perception for their brand or just stay on the sideline and let the social media participants ruin your brand.

    Serendio just mined thousands of conversations from the web about banks and their products and found some interesting conclusion which you can find on http://www.serendio.com/finance

  67. Jeffry, thanks. I continue to appreciate your position on social media and the tactics you use to create your own buzz here on the financial brand. 

Those of us that have been working on the web for more than 5 years understand why social media is just the next thing. Its not “if” we use it, but its “how” we use it that could make it worthwhile… just like years ago when we were building some of the first corporate websites developed by credit unions.

    Many who in recent years jumped on the social bandwagon to create a career in consulting often push the idea that twitter, facebook and whatever blogging platform has the best looking themes ARE the web, potentially devaluing corporate websites as they exist on their own. Those that understand the symbiotic relationship that social media, websites, print and traditional marketing must employ to succeed have the potential to be game changers.

    Four years ago when I was told by some peers that “we are now in web 2.0″, I disputed that it wasn’t a version number for the web, but a poorly coined term describing what it had evolved to be. It wasn’t re-invented, it just evolved. It will continue to evolve, and there will be something bigger than social media, probably sooner than we expect.

    Its funny that the evolution of the web has been driven by the fact that most don’t have the skills to maintain their own websites, well written content, online brands, or internet marketing campaigns so user generated content and tools that are easy and free came about. Guess what, most still don’t have those skills, and that’s why the social media sites are appealing… they are an easy and ‘free’ way to post fresh content. The problem is that the social content is separate from our brands. It sits within other websites that are so full of noise that most people can’t listen. Nevertheless, we all have a desire to be rock stars. Whoever has the most friends and followers, the sexiest profile pic and the most thought provoking 140 characters wins.

    Social media is not the internet. It is not the web. It is not technology. It is a result of the three. Twitter is just a website. Facebook is just a website. How did they get so many users? Not by tweeting or liking each other. By working hard to make their businesses work, just like we all have to do. If social media fits in, great. If not, hopefully financial institutions can recognize that it doesn’t. For those that can’t, I would recommend that they follow your guidelines.

  68. Megan McKeon says:

    James Kellerman’s comment is genius! “If banks are looking for a good way to promote themselves they have to start thinking in terms of ‘We have seen the enemy and it is us.’”

    Thanks! Great Blog!


  69. Jeff Berg says:


    Someone with the intestinal fortitude to stand up tall and speak the truth! The bottom line is that there almost NO true ROI in social media for banks and credit unions. People simply are NOT making key financial-service decisions based tweets or FaceBook “likes.”

    Social media might be fun and cool and hip and modern (at least for people who have nothing better to spend their time on than monitoring feeds and posts) but very few banks are acquiring new deposits, cross-selling products and services, or gaining new mortgage loans as a result of maintaining a red-hot blog.

    Now that this issue has finally been resolved, let’s DO please talk about SpooNachos! Yum!

  70. There is no “true ROI” (as in measurably worth more in sales than it costs to make) in most social media. At least most social media for banks and credit unions. Then again, there is no “true ROI” in branch design, POP, customer service, events, or even a commerce website. For that matter, there is no “true ROI” in most non-direct marketing. Does that mean we shouldn’t put a sign on the store? Offer friendly customer service? Invest in design to make the website more functional and easier to use? Or ever run a TV spot again?

    Oh, how words get in the way.

    Social media, particularly Facebook, is not primarily media, it is primarily PROPERTY. (Maybe “owned media”?) That social networking through Facebook (or whatever) comes with *some* media benefit is certainly a plus. But if that benefit is minor, it does not mean social media is not worth investing in, even by small credit unions. (Social also comes with a not insignificant research benefit, BTW, even when the audience is relatively small.)

    Really, I do not understand the anger here, particularly from those who are frustrated that banks and credit unions aren’t changing their products or ways of doing business fast enough. There is nothing like having to deal *socially* with your customers to force you to be responsive.

  71. Just to add a bit to the previous: though there is no “true ROI” in most social media, there is measurable (and significant) ROI potential in promotions that take advantage of the “network effect” of social media. Brands with relatively large fan and follower bases can trigger “the network effect” by promoting promotions through their social media outlets. However, most brands (and almost all banks and credit unions) have to goose their social promotions through more traditional marketing channels.

  72. I guess the point I hoped to make earlier, when I pointed out there was no measurable ROI in printed newsletters mailed to members’ homes… is that like newsletters, social media is a means to an end. It’s a tool, nothing more. But whether it is an important tool depends on the skill with which you use it and what you want to build.

  73. Jeffry,

    These are great points. Where should a community bank spend its time and other resources in drawing their target market(s) to their brand? I believe those points can also be made for all forms of “brand” advertising, yet community banks spend plenty of resources there.

    We need to take a look at what we are trying to portray via social media. If I’m in a bank strategy session, and senior managers say their vision is to be the #1 small business bank in their markets, then shouldn’t the drive of their marketing strategy (including social media) be geared to position the bank as an expert on small business financial management? Instead, they tweet about new hours in the Jeffville branch.

    ~ Jeff

  74. Jeff,

    Yes, you are right, there are many things financial institutions do that they don’t need to be doing. For instance, we examined the subject of newsletters in some of the comments above. Continuing with your example, if a bank wants to position itself as an expert on small business financial management, then why would it be mailing a newsletter about personal financial issues to all its customers? And while almost every bank gives money away to local charities, why should this bank? How does giving money to the local charity X help position the bank as small business experts? What’s the strategy there?

    Central to this issue is the subject of priorities, and how those priorities align with a strategy. There are plenty of financial institutions that have fuzzy priorities and no real strategy (especially for their brand). In a vague and hazy culture, it’s easy to get distracted, misdirected and manipulated into executing a mish-mash of different initiatives (e.g., Facebook). A clear, focused brand strategy/position should be able to help answer all the questions a financial institution faces: Where should we advertise? Should we even be advertising? Where should we put our next branch, what services should it offer and how big should it be? What charities should we support, if any? What should our newsletter be about? What kind of employees are we looking for? And, of course, what should we doing with social media, if anything?

    Most banks can’t/won’t/don’t focus their brand position down as narrowly as “to be the small business banking experts,” even though they should. But they can’t resist the urge to serve everyone by being “all things to all people,” so their mission turns into a giant run-on with zero compromises and no focus: “We will be the small business experts who can also serve you personally as well as your entire family and their friends and neighbors with a lifetime of financial solutions including checking, savings, loans, investments, insurance, wealth management, trust services and a Super Snazzy Kids Club Account.” When everything is important, nothing is.

  75. What is the cost of ignorance? If you’re not on Facebook or Twitter you may be missing entire conversations about your company that are taking place behind your back. Remember the story about Jet Blue? It took an incident where their passengers were tweeting about being held captive on the tarmac before they joined the conversation. But they corrected and now they’re having REAL conversations with real passengers (clients) on a regular basis, and getting a great response. Smoked almonds anyone?

  76. Jon, JetBlue flies 26.2 million passengers in and out of 61 cities every year. That’s way more people and opportunities to trigger social media conversations than most financial institutions would ever expect to have. To put it in perspective, there are only 372 credit unions out of 7,710 that have more than 50,000 customers. There just aren’t that many people talking about these smaller financial institutions on social media sites, no matter how hard they may listen.

    Many consumers view banking as something that is so highly commoditized that they refer to their financial institution simply as “my bank.” “I hate my bank.” “I love my bank.” “I have to go to the bank.” “I just got off the phone with the bank.” And what about financial institutions with all those similar names? It’s tough sorting through the extraneous results if you’re searching Twitter for a brand containing words like Peoples, First, Federal, Community, Trust, National, Savings, etc.

    The advice offered in the article is not a strategy of ignorance. It’s about practicality, priorities and opportunity cost. Social media enthusiasts have essentially preached a one-size-fits-all approach: “Whether you are a $50 million credit union with 15 employees and 3,000 members, or Bank of America with a gazillion customers and $2 trillion in assets… You must be on Facebook! You must be on Twitter! Regardless of the other things you could/should be doing, regardless of whether you have the staff or not, or whether people are talking about you or not, you absolutely must be involved in social media!” It isn’t strategic. The vast majority of financial institutions are small. They lack sufficient resources to successfully tackle the issues and challenges outlined in the article.

  77. I’m still hearing the same arguments I heard in the ’90s when people wondered why we should have a website. Some things, you just do.

  78. Sorry for being late to the party, but after spending a couple hours sifting through all the comments, I felt compelled to throw my two cents at the topic.

    I think we can all agree that social media for FIs is not a right or wrong, black or white issue – it is entirely gray. Probably the reason this is such a polarizing topic. First, I think social media for FIs, like most marketing problems, requires answering two questions:

    1. What’s the objective?
    2. What’s the value? (for all the stakeholders – FI, customer, employee, etc.)

    If you can’t answer both, don’t bother doing it.

    The limited barriers make it easy to jump in without really defining the objective we hope to accomplish in realistic, quantifiable terms. And, I think many FIs are still struggling to understand what value they can possibly deliver to customers via the social Web.

    So, let’s assume we can answer these questions.

    Objective? Expand HH relationships and increase referrals through Facebook.
    Value? Increase HH balances, cross sales, HH profitability, referrals and retention for the FI. For the customer, maybe its incentives (special pricing, cash, prizes).

    (not saying these are the right answers; it’s just an example)

    Once we know the objective and value, what’s our opportunity? Like Jeffry points out, the volume of fans, likes, followers may be limited for most FIs.

    Let’s assume 50,000 customers/members – that’s probably a CU with more than $500MM in assets and a bank with assets over $1B – not giant, but much larger than most FIs in the US.

    With 50,000 customers, how many “fans” can you expect?

    Currently 7% of consumers have been to any FI’s social media site, and 3% of consumers have been to their FI’s social media site. Used as benchmarks, you could anticipate 1,500 fans (3% of 50K) if you do as well as the average FI and at most maybe 3,500 if you are truly exceptional (7% of 50,000).

    (I created a simple Excel model that uses a few more variables and includes profit/breakeven considerations – you can download it here: http://www.theraddonreport.com/?p=4244. It may help you assess what you can accomplish through Facebook.)

    Now, how much effort and budget will it take to generate 1,500 fans, and once you have them, what will it take to lift their relationship value to pay for your investment? I’m not saying it can’t be done, but it’s not easy or cheap and it requires talent.

    That being said, I don’t think your social media strategy = Facebook page, Twitter account and blog. It should be about identifying the best way to use the social web to grow your business, which may or may not include these things.

    Jeffry – as a fellow marketer offering “thought-leadership,” I’m in awe of what you’ve accomplished here.

  79. Dennis Bourland says:

    Dennis came up with another point:

    “Any business that needs a drive-thru to please their customers does not need a Facebook page.” I guess that comes under “Banking is boring.”

  80. Matt Davis says:

    Ask Dennis what that means for Starbucks’ 17 million Facebook friends…or McDonald’s’ 5 million.

  81. I need to clarify some things.

    First, I am not “a consultant in the social media branding, naming, integrated marketing and advertising space (who may simply be drumming for business),” as Penny Crosman has written at Bank Systems & Technology. I stopped offering consulting services in 2009. The website I once used for consulting was pulled down months ago and my LinkedIn profile has listed only The Financial Brand for quite some time. My job is to publish The Financial Brand, period. The arguments asserted in this article can be dissected without shifting focus to the author (an illogical form of argument known as an “ad hominem circumstantial”).

    Some people have suggested the headline was used as “link bait.” That is not the case. The headline is a direct reflection of my feelings, and precisely what I would tell nearly any bank or credit union CEO straight to their face.

    Personally, I have no inherent bias against social media. I use WordPress, Twitter, LinkedIn, Google Alerts, RSS feeds, etc. I’ve been using forums since they were called “Bulletin Board Services” (BBS). But I also have maintained an open mind and objective perspective towards the use of such tools in the business world. I have not allowed my personal enthusiasm for these things to cloud my judgment.

    I’m not rooting against social media as a tool. In fact, quite the opposite is true. My job as editor of The Financial Brand would be a lot easier if I could publish an article about “social media” in banking every day. I only need to whisper the words “social media” in an article and it will get read a thousand times. In my role as editor of this publication, I spend around two hours every day scouring the web for interesting marketing projects to share. And based on what I’m seeing, I truly believe social media is a waste of time for most financial institutions.

    My motive(s) for writing the article centered around the lack of social media success stories in the retail banking space. There are very few people in the world who spend the time I do looking at bank marketing stuff. I wrote the piece because I think it’s unfortunate I continue seeing so many financial institutions screwing around with social media. What the article contains is a collection of reflections that have been accumulated over time. Rather than write one article after another about every crappy little social media project every bank and credit union has ever run, I wrote this one article instead.

    It is important to note that I did not say “social media is a waste,” nor did I say “social media has no relevance in banking.” Yes, there is value in using social media tools to listen…provided you can actually find people talking about you. Yes, large financial institutions like Chase ($2 trillion assets) and Vancity ($14B assets) can make social media a meaningful component of their Corporate Social Responsibility programs. Yes, megabanks such as BofA ($2 trillion assets) and Wells Fargo ($1.3 trillion) can use Twitter to augment customer service. Yes, financial marketers can find value in social media as a B2B, peer networking and professional development tool, as I have repeatedly stressed.

    But every single bank and credit union marketing conference since 2006 has had at least one speaker extolling attendees to “jump in and join the conversation,” and yet the only successful examples people can come up with involve a handful of rather large financial institutions. For instance, Bank Tech’s blog talks about First Tennessee ($30B assets) and USAA ($80B assets). Others talk about ING DIRECT ($90B assets) and American Express ($114B assets). The magnitude of scale here has little relevance to the vast majority of financial institutions – those banks and credit unions with less than $1 billion in assets. Talking about businesses like Starbucks (60 million customers) and Victoria’s Secret (whose fleshy assets include things like $2 million bras) are equally unhelpful. And Lady Gaga, an entertainer with a personal brand that has attracted over 10 million fans, holds almost no instructive value for banks and credit unions. Saying things like “there are 500 million people on Facebook” is not a strategic reason to hop on the bandwagon.

    My point — what the article tries to make plain — is that most financial institutions invest more time and energy into social media than its worth, specifically from a marketing perspective. Social media is not an effective marketing tool, and most marketing departments have better things they can/should be doing — especially those at smaller financial institutions. For further clarification, I encourage you to read my comments here and here.

  82. Most Community Banks and Credit Unions are challenged with successful execution of “traditional” marketing programs much less social media. This is not an indictment against social media, rather it must serve as a realization that the vast majority of Banks / Credit Unions are failing to tell their story, to differentiate themselves from the other 16,000 FIs, or even the 30+ other FIs in their footprint. In what other industry do you see most participants telling the same story, much of which is not believed by most customers?

    Most Bankers believe that the secret lies in cross-selling a customer into 3, 4, 6 or some other number of products to “lock” them into the bank. Not only is this a skewed view of the vendor/customer relationship; but most banks have no plan, no value proposition to convince the customer to do more business with the bank. I have yet to find a (small) bank / credit union articulate how they are different from the bank down the street or across the country; why a consumer should do business with them versus BofA, Wells Fargo or another mega-bank.

    New industry entrants have already cannibalized “bread & butter” business of most Community Banks and Credit Unions; but this is just a beginning. Ally, ING, Discover Bank, Amex Bank, Everbank and a slew of others have created a value proposition that is very attractive to the consumer.

    Community Banks / Credit Unions have yet to respond. Now we see the likes of Google, PayPal, Apple making initial moves into the banking sphere. Community Banks/Credit Unions must wake up and act quickly to avoid becoming obsolete.

    Bankers must recognize that retail banking is a commodity business and they have two options – 1) price products and services like a commodity (eg. low prices on loans; high yields on deposits) or 2) differentiate and offer something uniquely attractive to the consumer based on value-pricing. Most banks seem to want to sell a commodity with value-based pricing — this does not work and as a result, most (small) banks are risking their viability.

    Either of these strategies offers significant opportunities to communicate with customers AND prospective customers. And the discussion has nothing to do how friendly the bank staff is, the hours of the institution or anything like that. Regardless of the channel(s), Community Banks / Credit Unions need to begin speaking with customers and prospective customers in a different way; in a way that is meaningful to the consumer; they must offer value.

  83. This is a great comment string. If only my blog generated such comments, I would be a better consultant for it.

    I rarely see marketing personnel in bank, thrift, or credit union strategic planning meetings, either as participants or observers (although there are exceptions). Perhaps if they were, they can weave a marketing strategy that includes social media and all facets of marketing to line up with the FIs strategy. Their absence may very well be a cause of the mish-mash of marketing tactics used to promote the FI, and why Jeffry calls social media a waste of time for most of them.

    ~ Jeff

  84. Jeff, I agree. Strategic planning and marketing are seldom disciplines that financial institutions combine with much success. Marketing has to earn its seat at the table, but that’s not going to happen if they show up talking about viral buzz, Facebook or Whuffies.

  85. @Editor – Seems to me that the problem FI’s find themselves in is not one that marketing has caused. Seems like a lot of finance and accounting folks need to earn their seats at the table as well.

  86. Lori Philo-Cook says:

    You make some good points and I love this discussion because it’s really made me rethink things. I am glad I found my way here.

    Ironically, I have been taking the opposite viewpoint. I have been feeling that community banks, as conservative businesses with mostly conservative management, have been too SLOW to embrace social media. I have been thinking that as a banking industry we are being left in the dust, while large, often non-bank competitors continue to be more innovative and find ways to take away pieces of our business, even in small towns across America. I have worried that by the time small- and medium-size banks wake up and start engaging with their customers on the social media front, it will be too late. And if we’re stuck in our traditional approaches, how will we engage Gen Y and build loyalty? Will we lose them?

    And yet, as a long-time bank marketer, an avid student of social media, and most recently as a bank marketing consultant to mostly small community banks, I absolutely agree that most do not have the time or resources to do social media, let alone do it well. There are so many one-person (or two) marketing departments struggling to stay on top of basic marketing functions. How can they find the time and resources to add social media? And, in many banks, marketing has very little support, respect, or appreciation, making it tough for them to get their management to be innovative or to get the support they need to be innovative in their marketing (a whole other topic).

    And, I have always felt that if you can’t do something well, you shouldn’t do it. So, maybe you’re right. Maybe many community banks shouldn’t get involved in social media, at least not yet.

    What really resonated with me was the point you made about most banks having “dull, colorless personalities.” I believe that is really the issue. If that describes your bank… if you don’t have an interesting approach to banking, if you’re don’t stand out in your markets, if your marketing isn’t different, if you aren’t innovative in the way you develop your products and services, your traditional marketing is probably not that effective to begin with. So, how will you stand out in social media and how will you inspire people to engage with you? Quite simply, you won’t.

    I don’t think the answer is to just give up and hand financial services over on a platter to the big banks and non-banks that have the resources to do it well. The answer is to back up and start with the basics and develop a true personality (brand) for your bank that is worth talking about in traditional marketing, gets people excited, and makes them want to engage with you in social media, too. If you’re boring now, you’ll be even more boring in social media where there’s a whole different level of expectation.

    This is all so interesting, isn’t it?!

  87. As banker I agree with many of the articles arguments, but not at all with the conculsion (how could I? :-p ).

    I think there’s a roll to play for banks & other utilities (like toiletpaper :-p) as long as you (the brand) determines clear & well reflected objectives. The whole idea of “social” is about conversation & helping(&fun?), not about shoving products & unwanted info down your customers/prospects throat.

    We have many initiative in development, but I’m really curious to know what you guys think about our first initiative on Facebook, launched approx. 6 weeks ago.

    LionDreams is a Facebook app from ING Belgium that lets you share your dream with your friends & so they might be inspired to help you get the necessary funds. Each month we select a dream that we sponsor for €1.500 (no strings attached ;-p)


  88. Okay, this is an interesting article, and I agree with a lot of it, but I still think that Social Media can be effectively used in Credit Unions. That’s just me.

    Also, am I the only one who finds it a little ironic that you can link this to FB and Twitter?

  89. A little late to the game, but because the ROI/Social Media in Credit Unions blew up today on EverythingCU.com, I felt it time to reply: Social Media is not a waste of time for most Credit Unions.

  90. Adam Weight says:

    Brilliant post. Well said.

  91. Rich Nadworny says:

    I’ll bet you that banks and financial institutions used the exact same arguments as to why they should move online either. In fact, I know they did. Yet it turned out that online banking is one of the most popular activities for adults online (see Pew’s recent study).

    Your problem is that you’re falling into the trap of equating “social media” with “marketing campaigns.” The opportunity for banks and service industries, and especially in industries where there are lots of customer questions and complaints, is to catch those questions in social media and build out a way to respond very quickly to people with questions and solve their problems.

    And banks already have that infrastructure with their call centers and tellers; that’s what they do all day. The banks who do this will see a smart return on their time spent in social media and build happier customers to boot. The big banks are already doing this. Frank Eliason is about to help Citi roll out a unique social customer service program.

    This post just feels very old…

  92. Rich Nadworny says:

    Thanks for the thoughtful reply. Yes, providing online chat is a great place to start. No, people are not spontaneously talking about banks (or most other brands for that matter) on social media. Only the big ones.

    I disagree with your idea that social needs to be a big, time consuming investment. I think, as it relates to customer service, it can be a very modest time investment with significant potential rewards.

    If someone is bad-mouthing your bank online, how much are they bad-mouthing it offline? Is it worth ignoring? That’s an ROI question that never gets answered.

    I do think that social media has it’s place (not a big place, but a place nontheless) in a banks customer service offering, especially if that bank is trying to move more people online. It should fit in with the other online services (chat etc) that they provide as well. No one was using online banking before banks brought it online either. But it’s good that they did.

  93. Rich, I understand you are enthusiastic about social media, specifically to resolve customer service issues. But your reaction is based solely on the theoretical potential of social media while ignoring practical realities. You are offering blanket advice to all financial institutions regardless of size. Yes, resolving customer issues is important. Yes, social media can help. Yes, a megabank like Citi with trillions of dollars in assets can make it work. But no, your advice/approach does not apply to all banks and credit unions.

    As I’ve pointed out many times on this website, the number of times a financial institution is mentioned on a social network is very, very low. Fewer than 0.1% of customers comment about their financial institution. For BofA, the number of customers mentioning the bank’s brand on Twitter is 0.04%, and the number actually following the bank on Twitter is much less than that. For the average retail banking institution with an audience around 50,000 customers, you’re talking about 20 people. How many of those mentions are service-related mentions that might require action? Maybe one or two.

    Equating social media (which is only one aspect of the online experience) with the magnitude and significance of the entire internet is faulty. Online banking addresses a core task that almost everyone everywhere needs every day. Using social media to resolve service issues only applies to a small segment of the customer base, and on a very infrequent basis.

    Quite frankly, if improving customer service is a financial institution’s goal, they stand to gain much more by providing live, online instant chat at their website than by hopping on the social media bandwagon.

    Bottom Line: Can social media be useful? Sure. But are most financial institutions facing more pressing problems? Do they have more important priorities? Are there more meaningful activities they can invest in? Absolutely.

    Just because something like social media has potential does not make it a priority.

  94. There are so many things wrong with this article I dont know where to start. Without a listening program (i.e. monitoring online conversations) I would imagine its hard to know whether investing in social media is worth it or not, and in what form. Im not sure how you can be so sure about social media’s usefulness without having seen these conversations. How do you know if they are a priority or not without even knowing if there are any issues out there?

    All financial institutions should at the very least have a listening program in place. That goes without saying as far as I’m concerned.

  95. I defend Social Media – except in the case of Banking..because Banking IS Boring.
    Nice article!

  96. Charlotte says:

    I am wondering if over the past 8 months since you wrote this if you have re-visited your stand? As a consumer, I was recently on the phone with my bank….strike that…I was on the phone TRYING to talk with a real live person about a possible identity theft issue. The frustration level continued to rise as they were difficult and unable to assist me. I turned to twitter with my concerns (complaints) within MINUTES a rep tweeted me back asking me to follow so we could DM contact information. They then had their superior call me, we had the whole issue worked out in a reasonable time frame. I am very glad my bank is on social media, I both follow them and like them on FB.

  97. Hi Charlotte,

    Thanks for your comment. There’s nothing wrong at all with banks and credit unions trying to deliver service to customers via social media channels. However, it seems that this strategy only makes sense for the largest financial institutions. If you have the chance, please read this article from The Financial Brand on social CRM: Should You Join The Social Media Conversation If No One Is Talking About You? Along those lines, I’m curious if the bank you are referring to is one of the larger players?

  98. Ed Brett says:

    I would add as a reply to Charlotte’s comments that a corporation’s hyper-attentiveness to the social media channel – and what appears to be a pretty profound neglect of the traditional channels – actually TRAINS consumers to use the very public medium of social media to resolve complaints. It’s interesting to note that your first choice was not social media but a traditional channel.

    In essence, by moving faster than the rest of the organization social media practioners are providing a perverse incentive to consumers to move the complaints process to a public forum. I would characterize the situation Charlotte described not as the success of the social media channel but the clear and profound failure of the traditional channel.

  99. Bob Henderson says:

    Is a mapping software social media?

    Like the word “bank”, “social media” covers a diverse population. The advantage that I see with sites like Yelp, Foursquare and even MapQuest, is that they are more of a reference tool for consumers to find a business that is near them (like the closest branch). Their mobile applications allow one to find a merchant or F.I. on the go. It also provides a relatively unfiltered (most of the time) look at the experience (some) customers have had with a particular business. This, of course is the double-edged sword that F.I.’s also fear – and is being challenged in some cases (I predict a Supreme Court case with the AMA on that one!). Additionally, I have seen SM increase search engine optimization, i.e. Facebook boosts Bing rankings according to a SEO conference I attended last night.

  100. @Bob – No doubt that geolocational reference tools like Foursquare, Yelp and MapQuest have value to consumers. But what’s interesting about those three examples specifically is that they all require very little from financial institutions. There isn’t much a marketer can do on platforms like those. Much like Wikipedia, it is each site’s community that builds the content for [Bank X], not the other way around — as it is with Facebook and Twitter, where the marketer has to constantly publish content and hold promotions to build their community.

    If you looked at the bottom half of all financial institutions ranked by assets, you would find very few Foursquare check-ins. A $200 million credit union with one marketing employee would find only a handful checkins every month. Which raises the question: Should a small financial institution with limited staff and limited resources work to engage such a small segment of their base? What does that engagement look like? How does it benefit the financial institution? And, strategically speaking, should you even be rewarding more Foursquare checkins at your costly physical branch locations? Or should you be discouraging that kind of activity?

    And yes, social media definitely does have a positive effect on SEO. However, most financial institutions organically rank high (enough) already, so how important is improving SEO to them? Generally speaking, a search for “XYZ Bank” will yield results ranked according to the relative size of institutions bearing the “XYZ” name (or something similar). A financial institution’s SEO ranking is largely a factor of its assets: more = higher.

  101. Bob Henderson says:

    Good point on the check-in’s if they want to discourage more lobby traffic. I think that FourSquare, Loopt and Yelp are the main ones on that. But if you aren’t offering incentives for check-in’s, I wonder how many people are going to a F.I. just to do that? I think that there are a few reasons, even if SEO is not important to them:

    Anyone can claim a business (if no one else has, and I’m seeing a lot that haven’t*) on dozens of these sites. I would want to take control of that from a security standpoint, as well as making sure the location is correct, hours, contact information, photo/logo, etc. If (big if) proximity to brick and mortar is still driving the initial selection of a bank or credit union by many consumers, wouldn’t it help to have your presence on a mobile app? If a F.I. wants to draw new younger customers, I think that registration on these sites might be worthwhile. It’s free and easy to do.

    Most of all, I would want to have some monitoring of these internally to see what the public is saying, good or bad. As I said, anyone can register a business on many of these sites, except for the big guys like Google and Bing that require a post card confirmation and website code insertion, respectively. 

    As far as the marketing potential, I agree that it hasn’t proven any significant results that I have seen, and may not. Running specials and adding coupons on places like Google Places is free the last time I looked. I wonder if that might be worthwhile? Most of this seems designed for general merchants, like restaurants and retailers. I’m just wondering if there is a place for it with F.I.’s? Is Google Places even being considered Social Media? MapQuest or a GPS? In general, I wouldn’t put a lot of resources into it now, but I would want to have at least a physical presence and my ear to the ground. 

    *I do see that the regional’s and above have more of a physical presence on these sites when I search F.I.’s in the mobile search categories.

  102. Steve,

    Your comments disappeared because the site had to be restored from a backup this morning. The site’s webhost (WPEngine, who is being fired right now) screwed up the code yesterday, causing all kinds of problems. This is why you were unable to get any links to load.

    The backup that had to be used was from Sunday, so all articles and comments published after that were lost in the restore.


  103. Steve Cohen says:

    No worries. Really my high level point was that the big banks are proving the value of social channels, and the smaller banks will pick up on these models thanks to all the experimental work the big guys did to find the social media sweet spot. This is typical of any emerging web concept or technology.

    Also, your value proposition for banks value vs “Likes” is one way of looking at social media value. But many of the banks are getting additional value from other social models, such as conversion (new customers, educating customers to switch to electronic bank statements, etc), shares, mentions, traffic and distribution, feedback, reach, demographics, and customer service (among others).

    Have a look at these larger global banks and you will see these models in action:

    Citi Bank: http://www.facebook.com/citi?ref=ts&rf=111930638833820
    Wells Fargo: http://www.facebook.com/wellsfargo?rf=108592235838512
    Met Life: http://www.facebook.com/metlife
    HSBC: http://www.facebook.com/HSBCAdvance http://www.facebook.com/hsbcstudents?ref=ts
    Deutsche Bank: http://www.facebook.com/DeutscheBankGroup
    TD Money Lounge: http://www.facebook.com/TDMoneyLoungeCanada
    ING Direct: http://www.facebook.com/SuperStarSaver

  104. Steve Cohen says:
  105. Believe it or not, I’ve actually read every single one of those already. I’ve had a Google Alert running on “social media” and “banking” since 2006. There’s actually an ad on the website right now for the first link.

    The Financial Brand does not place much/any value in a ‘Like.’ Analyses about ‘Likes’ and Followers are used merely to illustrate social media’s relatively small reach. An audience of 50,000 sounds like a lot until you realize the organization has 50 million international customers.

    You might want to peruse the rest of The Financial Brand’s articles on social media:

    You may like this one in particular:

  106. Steve Cohen says:

    Likes are just one small indicator, and like I said there are many indicators, which will prove or dis-prove your social tactics.

    I agree that fan base numbers are meaningless unless they are targeted and fit the profile. Also, social media is almost useless on it’s own and needs to be integrated into traditional marketing strategies and tactics.

    Thanks for the additional links.

  107. Steve, we probably agree — in principle — about most of this more than you might think. But there are big problems when it comes to the practical application/execution. It’s not that social media is useless or pointless. I’ve looked at every single bank and credit union social media account out there, many of them 5 times or more. We’re talking about thousands of Twitter accounts, thousands of Facebook pages and hundreds of YouTube channels. I see how much work goes into them, and I can say without hesitation or qualification that at least 90% of these financial institutions would have accomplished much, much more by focusing that time and energy somewhere else.

    Yes, social media can be very useful. But most financial institutions are going to suck at it for one or multiple reasons. Yes, they can accomplish meaningful things with social media. But most financial institutions could accomplish a lot more in other, more pressing areas. Most financial institutions have internal, operational, cultural, sales, service or marketing issues that need to be addressed (1) before they should dive into social media, and (2) because they take priority over social media, and will have a greater organizational impact. Learn to walk before you run. Get your ducks in a row first. Pick all that low-hanging fruit before pursuing more difficult prey.

    I think you’ll see what I’m getting at if you can bear through this 22 minute webinar. The first part will probably chap your ass, as it’s mostly a reinterpretation of this article. But the second half is probably very similar to the strategic points you make with your clients.


    In 20 years of marketing, there are very few things I can say are good for every/most organizations. I’m a former ad man, and I don’t even think advertising is appropriate for maybe 25% of the companies out there today. And that’s one of my big struggles with social media advice. Every article, every consultant, every report talks as if “financial institutions” are this one homogenous blob, and that “social media” is this singular powerful tool. Yes, in theory, it all sounds great… engagement, service, brand awareness. But people get all caught up in the abstract without looking at the specifics. There’s a big difference between a $100 million credit union toying with a YouTube channel and a $2 trillion credit card company’s Facebook page.

    More than anything, my hope is that banks and credit unions give social media more thought than they have so far. Having looked at thousands and thousands of social duds, I’m pretty sure most launched their efforts for one or both of these reasons: (1) someone in the marketing department is bored and wants to do something cool and trendy, and/or (2) people see others doing it and read all this press, and just give into the peer pressure without using any kind of strategy or strategic process. They don’t really know what they are doing, how to do it, whom they might be talking to nor why they should. They think, “Heck man, I use Facebook already for personal stuff. This will be easy.” In my opinion, the adoption of social media has been about the least strategic thing I’ve seen financial institutions do in my lifetime — just a bunch of sheep chasing each other.

    They’ve pursued this gold rush with reckless and wild abandon. I’m just trying to get people to stop and pause and think before they pack everything into their wagon and go west. This article might an abrasive splash of cold water, but that’s what it takes (or at least “took” back in 2010 when the article was published) to dampen the firestorm of press telling people to “hop on the bandwagon” or “you’re going to get left behind.”

  108. Steve Cohen says:

    Absolutely, without a well thought out strategy and goals (best practices), your social channels and tactics will be useless. This is just like good marketing practices. And you are right, first thing most business owners say is, “my kids are on FB/T so it must be easy”. WRONG.

    And then there are policies and procedures. But as these processes filter down to the small guys, there will be many opportunities to help them develop a solid social media plan.

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