A Nielsen IAG online survey conducted two years ago showed that customers who had seen more advertising by their financial service providers (banks, insurance firms and investment firms) were more confident about the financial health and soundness of those
institutions, leading a senior executive at the research firm to conclude that “…. ‘out of sight' can mean ‘out of business.”
In that context, the findings of a recent study on the social media habits of retail banks are quite worrisome: 60% of respondents have no plans to use social media and very few (6-7%) plan to use it to address customer queries.
If, as the Nielsen study says, advertising/ media exposure is indeed a key component of customer confidence, by absenting themselves from the highly visible social media, are financial institutions shooting themselves in the foot?
Experts certainly think so, and say that banks lagging in social media adoption are vulnerable to being overshadowed by their faster-moving competitors.
Although there are several regulatory and security-related reasons for banks to approach social media with caution, there are as many reasons why they should go ahead for their customers’ sake:
• Customers are receptive to the idea of a social ‘customer service’ channel. Wells Fargo, among the most advanced banks on the social curve, uses Twitter to answer questions about checking, savings, and online banking accounts.
• Customers want to participate in financial product development, and social networks provide the ideal co-creation platform. First Mariner Bank asked questions on social networks, and used other social tools to identify what was needed in the market. The result:
a new type of checking account, which is seeing success.
• Customers trust banks that are transparent and open in communication. Social networks score big in this aspect, stripping customer engagement of any official veneer, and allowing customers to directly connect with their banks. Some banks have brought unprecedented
transparency to the banking relationship by getting very senior executives to answer customer queries one-on-one in their blogs or disclosing how they’ve used funds received under various bailout programs, and so on.
A pretty convincing argument, don’t you think?