Social Media and Financial Institutions: Facts, Findings & Recommendations

Tuesday, December 14th, 2010

Smoke-Signals6

As compiled by a colleague at IBM Research. Offer to refer you if you are interested in source documentation. I especially agree that these communication techniques are widely ignored by established businesses; maybe because they seem to lessen traditional organizational controls. May the best methods win.

Facts
■About 30% are following their bank on a social networking site
■of those who are following 2/3rds are male, however female activity
is growing significantly faster so this will level out
■of those who are following 2/3rds earn $100K+
■significant age differential
♦18-30 years most active
♦31-49 less active
♦50+ least active
■Websites, social media and financial social networks are bringing
much greater transparency to consumers as they learn about and buy
financial products from providers. This increasing transparency
places consumers in the driver’s seat in their financial services
relationships.
■The financial services marketplace is evolving from a one-to-one
relationship between customer and bank, toward an environment where
multiple financial partners will influence customer choices.
■Understanding the workings of a community will be more about
ethnography and human behavior than about technology issues.
■For Gen Y – order of web visit volume: Facebook, Search, E-mail,
Porn (traditional distribution search then porn)

Key Findings
■Use of social networking still in its infancy and few financial
institutions use it strategically
■Social will become a key customer channel that no business can
ignore
■Early adopters focus on marketing (at the cost of reducing print
and TV add budgets)
■Slightly more than half of the firms surveyed have a Facebook
presence today, with two‐thirds of the rest planning to use the
site. Twitter was the next most popular tool, used at 44% of firms,
followed by YouTube, in use at 38% of FIs.
♦Financial Institutions use this today
♦63% Facebook
♦49% Twitter
♦44% LinkedIn
♦33% YouTube
♦32% Blog
♦21% User‐generated content
♦17% Flickr or other photo sharing site
♦15% Customer review sites
♦7% Financial services social networking sites
■Chief compliance officers (CCOs) in institutionally oriented firms
are more inclined to ban social media than permit it, as the
monitoring of employee activity alone can take a staggering amount
of time. The world of social networking is booming with various
types of general and niche‐ category platforms, and a litany of
associated applications that help individuals repost videos, share
information, and vote on content. It’s quite a lot to track,
particularly given the business, client, and operational processes
that compliance teams must already stay on top of.

Recommendations
■Use customer data more efficiently and effectively. Look externally
to retailers to learn lessons and internally to sources such as
payment data to make this work.
■Break through the hype and understand how customers really want to
use technology — for example, mobile phones — and deliver products
and services that customers will actually want to use.
■The best approach in the short term will be to focus on social
networking’s core strengths: communication, relevance, and
community.

All Souls Day – Social Networking of the 11th Century

Thursday, November 1st, 2007

I grew up in New Orleans where parochial school children enjoyed two entertaining annual holidays:

– the well advertised Mardi Gras, a Tuesday day-off in mid Winter

– the Wednesday after Halloween to celebrate All Saints or All Souls Day

The headlines are occupied by the rise of oil, the fall of the dollar, the kick-off to the presidential race (so far it’s been preseason) and the finale to the sub-prime collapse.  Amidst the dour mainstream news, consider the escalation of the Microsoft vs Google campaign which should influence our own 2008 planning: 

- Microsoft invested $240mm investment in Facebook (1.6% stake) last week and Google countered immediately with an open standards alliance, Open Social, including LinkedIn, Ning, and Orkut (Google’s own social network).  Google does not want Facebook to become the operating system of social networks.  Quick aside: News Corp.’s 2006 100% acquisition of MySpace for $580mm looks brilliant.

Are we blindly returning to Act II of the dot-bom?  I think not and I believe that Social Networking or Community Building as promoted by Facebook and others could be adopted by our own kinds of enterprises to better connect our widely dispersed knowledge bases: employees, customers, partners, supplier in the spirit of ‘What if we knew what we all knew?!’

Right now I have eleven (11) applications opened to manage my work inside and outside of the firewall: email, sms, two types of instant messaging, two browsers, plus the associated tools for calendar, address book, word processing and a mobile phone.  I would value a workspace where I could link all of my activities to ‘connect those who know with those who need to know, regardless of their employer.  I see a Facebook-like model helping me to achieve this.

Eric Schmidt, CEO of Google, is quoted in Monday’s NY Times:  “One of the things to say, very clearly, is that social networks are very real.  If you are of a certain age, you sort of dismiss this as college kids or teenagers.  But this is very real.”  Google closed over $700 today, up 54% YTD.

‘Start small, grow fast, get involved‘ might be a productive way to explore the potential of Social Networking or Innovation Networking in 2008.   No holiday required.

Perrien

Web 2.0 lessons-learned this summer

Wednesday, September 26th, 2007

Welcome to Autumn,

1. Mobile Search with related advertising opportunities remains the investment rage amongst Google, Yahoo, and Microsoft.   Apple’s iPhone campaign fueling this fire (stock up 80% since announcement in Feb. 2007).

2. How to get started, not Why is the theme of the customer discussion. A shift from the spring due to notable F500 investments such as News Corp acquisition of Dow Jones (parent of the Wall Street Journal) and Microsoft offering $300mm for just 5% of Facebook.  Agreement that there is something to this notion of Community Building or Social Networking.  Starting inside the enterprise to harness collective wisdom of employees, with a goal of improved innovation, is compelling.  Existing business processes and right mix of staff are inhibitors to taking advantage.  Is the benefit in early adoption or fast-following?!

3. Not much of a wow factor in related tools: blogs, wikis, feeds etc as judged to be the basics but not project justifiers.

4. Positive reception to IBM’s own related experiences: Jams, Think Place, Technology Adoption Program, and quantity of internal blogs, wikis etc.  A concerted offering would be valued by marketplace.

5. Mash-ups of enterprise data could be a big winner; need cohabitation story with portal capabilities.

6. Appear Bigger than You Are via Web 2.0 (YouTube, Community Building) is an attraction to mid-market customers.

7. Mid-sized firms attracted, increasingly so, to hosted apps by likes of Google (e.g. Google Pack, NetBooks)

8. Web 2.0, as the friendly face of service-enabled architectures (SOA), is not yet obvious to customers and to sellers. Remains a tough, internal sell from IT to its business sponsors.

9. Information Security is top of mind, well beyond a traditional IT control point:  ‘If I move outside of enterprise with Web 2.0, how would I handle InfoSec and legal hurdles?’

10. Not much Web 2.0 budget in ’07 and being budgeted for TBD projects in ’08.

Amplifying remarks at your request; comments welcomed.

Christopher Perrien