KPMG recently released a well written, salient overview of the social media landscape within banking today. Entitled “The Social Banker“, it has a global perspective, and associated inputs & consultations accordingly, and is broad in perspective, yet specific in problem & opportunity identification.
It stops here.
Which I respect.
Consultancies have a single unique asset: their intellectual property. What they know, and how they apply that knowledge, is what we [industry types] pay for. As the Joker said,
“If you’re good at something, don’t do it for free.”
Putting aside the megalomaniac, psycho-path behind the quote, it’s a valid business model.
Unlike consultancies, (Canadian) banks have a product environment with high (regulatory) barriers-to-entry, a “friendly” oligopoly, and a saturated market. Not conducive to “a burning platform” to push forward with change.
The social banker paper, suggests (warns) that social media is to be dismissed at an organization’s peril. Although the [Canadian banking] environment may seem immune to competitive threats (direct and indirect), social (media) is, according to one section of the paper,
“.. a game changer for banks.“
The paper looks first at the need for a cross- functional team when designing, governing and managing the shift to a social banking environment. A variety of functions are required to successful implement a social strategy, that should cover all aspects of a banks operations. Many banks have suggest this is too difficult, and does not allow the tradition ‘control’ banks prefer. The authors are quick to point out that organizations which choose to avoid social as too difficult to control, miss a fundamental truth. Social chatter will (does) take place about brands. Banks have only the choice to participate or not.
“… conversions regarding poor service are happening on social networks anyway, participation may be the only way that boards can effectively influence them.”
As for the concern that frontline staff may post contentious comments online, yet again a truth has been missed. Bank staff interact with customers daily, in uncensored and often un- recorded forums. Social not only replicates that, it does so in a recordable way, as all content is via digital channels (in social). Arguably, social posses less reputational risk, as it allows organizations to identify and respond to sentiment faster, and more efficiently.
In a the sections around building a single customer view, the article by Tim Oakes (Royal Bank of Scotland), suggests social media actual allows bank to “trend- spot” issues, before they become issues, and complaints. In other words, banks are able to predict customer, consumer sentiment, and thus mitigate it before they become issues.
“An increase in the number of customers who report ‘waiting in line at my branch’ may lead the bank to consider adding more tellers or extending branch hours. An out of service ATM may result in a tweet to customers within proximity based on geo- tracking or usage patterns.”
The geo- tagging got me thinking. Most (rational) consumers can appreciate there are costs to maintaining an electronic- network, with a physical infrastructure. Imagine then, via the use of mobile GPS, if you required an ATM, but your bank was not within a pre- determined distance (say 300 meters), you could use an ATM with no fee. This would have the added advantage of customer ATM use patterns, allowing the bank to better allocate ATMs.
Along with team structures, and trend- spotting, the paper examines the need for a clear strategy to be in place, outlining why the company wants to go social, and it’s expected benefits and opportunities. This may sound pretty obvious. Why would an organization not have a strategy around it’s social goals? Simply put, few organizations know what their social goals are, and many of those that do, suggest it’s revenue generation, which is at odds as to why consumers want to engage with a company via social channels. In other words, few organizations have a well thought through, authentic and customer engaging strategy.
“Gameification” is introduced by Marty Carroll (KPMG UK), as part of how to build a social community, that is open, transparent and, “flawsome“. Such a community scales the banking business model, via an early adoption of a trend already beginning: peer-to-peer marketing & customer support. Today’s [banking] customer is as likely to go to the public for financial guidance, than their bank. Further, basic transactions, such as peer-to-peer lending, are happening without bank involvement at all. Accordingly, the identification of, and engagement with, advocates is critical. Advocates are, in the eyes of the customer, more reputable in their responses to inquiries and complaints, and represent a key leader to customer generated content to an organizations social presence; a desired objective for social success. As social media forces the evolution of the financial model, regardless if they [banks] like it, traditional revenue streams will disappear (eg. micro-loans, paid advice).
In addition, as suggested in Michael Jordann’s (CEO, FNB) article, the creation of a physical identity for a bank, such as FNB’s RBJacobs, or RBC’s “Arbie“, is important to establishing a successful presence in the social world. It brings a personality to the social world.
In a section by Frank Meylan, KPMG Brazil, an interesting point is made, all be subtly. Meylan suggest,
“Before long customers were not just tweeting about their complaints with [Brazilian] banks, they were posting photos and videos too, creating a much larger impact and capturing the imagination of friends and the general public.”
Although not explicitly said (the article focuses on the security & monitoring of social), probably the single most important objective of social, is user generated multi- media content on a company’s social platform(s). As much as negative sentiment is the focus for most boards & marketing departments, positive sentiment needs more consideration.
The remainder of the paper examines the need for larger data repositories and scalable operation models, the immaturity of social governance and regulatory frameworks, and the trend that more and more transactions will be conducted via atypical channels and thus skew the well defined revenue models of the entire banking industry.
It would seem then, the writing-is-on-the wall, both in the digital and non- digital worlds of social. Those banks that embrace social media as not “just another channel”, but as a fundamental change to the industry will to more than capture market. They will redefine it, the relationships with their customers and, ultimately, their role in society.
Now that is evolution, and as Darwin said,
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”