Cardholders can vote on funding loans, Wilmore adds, and extra profit the company makes above a certain threshold will be shared back with the community, in forms such as money back to individual members or donations to a charitable cause of the community’s choice. Members also will have access to the card’s financial profit-and-loss statements.
The pilot community was initially opened to a few thousand cardholders by private invitation, according to Wilmore. “We wanted to change the dialogue with the consumer and be honest and open in everything we do,” he says.
According to Wilmore, three main factors drove Barclays to create these “online financial communities.” One, “America’s trust in banks is at an all-time low,” and Barclays wants to try to counter that perception by getting its customers more involved in the decision-making process. Two, he says, the new regulatory environment requires financial institutions to be more open and transparent. And three, the explosion of social media and sites such as Groupon and Living Social are “literally redefining how products are made and how they are priced.”
Wilmore adds that once the decision to create these online communities was made, the bank partnered with Emeryville, Calif.-based community software and social media marketing company Lithium to help create them. “We know how to do credit cards — that’s in our wheelhouse,” he adds. “The community side of it is something new.”
Wilmore notes that the fact that Barclays is a relatively unknown brand in the United States will play to its advantage in launching the new card. “This is a very, very clean brand that is known for doing innovative things,” he says.
American Express ($152 billion in assets) also is trying to capitalize on the popularity of social media and so-called “daily deals” websites. The card company teamed with Twitter in March on a program in which cardholders can synchronize their cards with their Twitter accounts. When they tweet using customized hashtags, couponless deals are loaded directly onto their cards.
“We know that many of our cardmembers and merchant partners are already actively engaged in Twitter, and we wanted to create a way to help them get more out of the platform,” says Bradley Minor, vice president of social media communications at American Express (New York). According to Minor, the program is powered by the company’s Smart Offer set of APIs. Amex earlier this year utilized these APIs to run couponless deal promotions with Facebook and Foursquare.
“No more showing your phone to a cashier to receive a discount,” Minor says. “No more wondering if that offer your business served up in an application actually delivered increased business. It’s the equivalent of embedding a coupon in your card. In digital, and especially mobile, this user simplicity and non-clunkiness is key.”
American Express created a specialized Twitter handle, @amexsync, that serves as an automated notification system when someone sends a tweet that includes one of the special-offer hashtags, Minor explains. This handle detects if a user’s card is already synced and either confirms offer enrollment or provides the cardholder with a link to first sync the card.
Change Sciences’ Ellis notes that ultimately, whether a bank is successful using social media to promote its brand comes down to authenticity. But more banks than ever before are coming to the realization that social media is not going away, he says. “It’s fair to say,” Ellis adds, “banks on the whole are taking this more seriously.”