Social Media In Financial Services: The New Silver Bullet?

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Some time ago, I published a post defining a sickness that plagues many many marketers, that I called Silverbulletitis:

A condition in which the sufferer expects easy answers and solutions to difficult problems.

This condition has been prevalent in financial services for a long time. When I first started working with the industry full-time, the silver bullet was online banking. Subsequently, online bill pay, eBills, and PFM each took its turn as the silver bullet. All were touted as the panacea for poor customer relationships.

I couldn’t help but think that social media was taking its turn on that list.

But a new report from financial services communications firm Cicero, as well as my own research on financial advisors is making me reconsider whether or not social media is the new silver bullet among financial services executives. Instead, I’m coming to believe it’s being hyped more by the providers to the industry than among industry professionals themselves.

The Cicero report starts out with this claim:

“Social media offers the financial services sector an opportunity to resuscitate its relationship with the public after the financial crisis.”

My first reaction was: Oh really? Prove it!

But reading on, I realized that maybe I wasn’t alone in this sentiment. A number of data points from the study (which, by the way, I’m not knocking — it appears to be a perfectly legitimate piece of research) caught my attention. Here are a few — as they were presented — and my take on them:

“25% of respondents felt that social media offers a new way to communicate to tomorrow’s consumers.” This means, of course, that the vast majority of respondents — 75% — don’t feel that SM offers a new way to communicate to tomorrow’s consumers. In highlighting this finding, is the communications firm implying that these 75% somehow “don’t get it” when it comes to SM? Maybe the 75% have tried SM and have found that it doesn’t offer a new way to communicate.

“30% of those surveyed see social media as the future of communications.” Again, an interesting choice of which number to highlight, since this finding implies that  the majority — 70% — don’t see SM as the future of communications. After the study highlights the fact that Facebook reached 50 million users in less than four years, it goes on to show that just 22% of survey respondents believe that “consumers respond to social media.” Are the respondents clueless or do they know this from experience?

“One quarter of respondents are daunted by the volume of traffic on social media and how to monitor and manage it.” By now, you should be getting pretty good about doing the math, and have already figured out that 75% — or what we could call the “vast majority” — don’t find SM volume daunting, or find the monitoring and managing of it to be daunting.

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The question, or issue, here is this: Are financial services executives somehow missing the boat on something that social media proponents are seeing and advocating for?

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If you read the mainstream media, it might be easy to come to the conclusion that financial services executives are evil morons, clueless about how to develop customer relationships. Given the decline in the traditional mainstream media, this is the pot calling the kettle black.

There is a popular sentiment that the financial services industry is a “laggard” when it comes to social media, or is “struggling” with it (h/t to the Financial Brand for pointing this out a number of times to me).

But the evidence doesn’t support that. What the evidence supports is that financial services firms are doing plenty of things with social media — and that they aren’t seeing huge, transformational results.

This conclusion isn’t based on just the viewpoints of bankers.

I recently published an Aite Group report based on a survey of more than 400 financial advisors. We surveyed advisors about their use of technology in 2009 (including social media) and surveyed them again this year. I titled the report Financial Advisors’ Use of Social Media 2011: The Bloom Is Off the Rose.

There are three findings from the survey that stick out, one of which is not surprising: The percentage of advisors that use social media to support their practices has increased since 2009.

More surprising, however are these findings: The percentage of advisors that have reaped benefits from social media has declined since 2009, as has the percentage that say that social media is a strong contributor to a range of key business objectives.

One of the key messages I tried to get across to wealth management firms who are looking to help the advisors they support use social media was this:

Social media does not make you a good marketer. Good marketers figure out to effectively use social media.

Predictably, there were a number of negative responses to my report, primarily from vendors with a vested interest in providing technology related to social media.

Bottom line: While financial services executives have shown signs of silverbulletitis in the past, there is growing evidence that many are not drinking the kool-aid this time around, as it concerns social media. Social media proponents need to prove claims that SM can have a dramatic impact on customer relationships with theories and explanations for why social media is superior to communicating through firms’ web sites, call centers, and branches.

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