The 2.0 phenomenon is going strong. Despite Facebook's unbridled success, Twitter's storm to the popular vernacular and FourSquare's recent fanfare, some traditional marketers, bankers and observers still don't get what all the fuss is about. But increasingly they need to...

Social media is about giving power to the people. I know it sounds corny, but it's true. Social media, however, is more powerful than simply a voice for the humble consumer. Social media is creating tribes, groups of friends, networks, viral onslaughts and enabling key influencers in ways that traditional companies can only dream about, or maybe that should be have nightmares about. Social media is here...to stay...in a big way.

Last week I faced an issue with my bank, HSBC, where I am a Premier customer. I agonized over whether to blog over this issue because HSBC is a great client and I have many friends (FB buddies and Twitter followers) from HSBC also.  Generally I'm one of their biggest advocates, but the experience I faced in a local Singapore branch was such an illustration of banks in general being out of touch with the types of customers they serve these days that I had to put fingers to keyboard. I did so to see if I could get a response from HSBC to my problem or some sort of official momentum behind the issue by blogging my concerns in a very public forum. Based on my regular Blog readings and traffic I could expect around 30-50,000 people to read my article, so I suspected word would get back to them fairly quickly and then I theorized that I would be able to sing HSBC's praises about their responsiveness to my problem via the blogosphere and Twitter. Unfortunately, no one but the innovation team who follow my Twitter feed was listening. So...they passed it up the chain. What happened next?

Nothing...

At least nothing yet!

HSBC is unfortunately not on their own. In September of 2009 Ann Minch launched a very public and scathing attack on Bank of America for hiking up her credit card interest rate (APR) from 12% to "a whopping 30%" by posting a very clearly articulated message on YouTube. In the words of Ann Minch, "I could get a better deal from a loan shark!" BofA's response was absolutely typical - they didn't respond. Not until local media picked it up, and then they defended their position telling Minch that it was in her terms and conditions that they could make these sorts of changes. How did that work out for them? Within a few short weeks Ann Minch had coverage on major TV networks, newspaper coverage, as well as over half a million views to her YouTube video. In the end Bank of America really didn't have a choice - they reversed their decision. In doing so, they set a precedent for the millions of BofA credit card holders who could now cite Ann Minch's case if they tried to do the same thing to them. Yep, BofA was screwed.

Now there is some that might say that BofA shouldn't have jacked up the APR to 30% in the first place, but that is not really the issue. The issue is that they completely underestimated the power of the consumer in the new socially connected, viral, mobile, tribal world. When they had their chance to quickly resolve the issue, they thought like a bank - not like a customer service organization.

Social media will kill you if you don't start responding to customers in more effective ways, because social media is powered by people who have a stake in the game. Individuals who believe in those around them.

There are an abundance of stats out there now that shows beyond any slither of a doubt that if you put a Bank's PR machine up against Social Media it will lose every time. The fact is, participants in social media networks believe their networks, far more than they'll ever believe the spin or brand messages from a bank.

Recently ANZ suffered from a little of this too. On April the 16th ANZ announced it was dumping it's m-banking WAP service. The bank sent customers a letter warning that the service would be discontinued from 14 May. Although they were going to continue to support text services and their iPhone m-portal, that was not the message customers got. Even those that read the letter believed that mobile banking was simply being turned off. Why? Because in the letter ANZ emphasized that you could use Internet and Phone Banking to do those things you used to do on WAP m-banking. You can't send messages like this to Tribes in the social media landscape.

Within just hours of the release of the letter Twitter was abuzz with tweets such as "What was ANZ thinking when they suspended mobile banking?", "ANZ kills mobile banking", "ANZ to kill mobile banking", "What's with ANZ losing #m-banking?". What's the old saying about bad news travels faster?

The Twitter response was technically incorrect, because ANZ had not killed mobile banking in its entirety, they had just suspended their old WAP portal which has been replaced by better mini-browser and text based m-banking support anyway. What they should have done, utilizing social media, was talk about their great NEW m-banking services and buried within that announcement let their customers know that the 'old', out-of-date WAP service was effectively redundant and thus being phased out. Such an approach would require thinking less like bankers, and more like customers. That's tough.

Social media is here to stay and it is an extremely powerful tool. Banks, however, just don't conceptualize of a world where customers have any opinion about their bank that isn't fed to them by PR consultants and Ad agencies. I guess they'll just have to learn the hard way...