Faced with increasingly negative perception by the public, banks must nor shy away from using social media to interact with their customers, and in some cases completely reinvent their brand.
That was the takeaway from a study of how top banks use the social media channel, conducted by New York-based research and strategy consulting firm Change Sciences Group.
The study looked at how 22 leading banks, credit unions and investment firms approach the social space in a variety of benchmarks.
USAA and Ally Bank were the top firms in the ranking of banks using social media to interact with customers. Steve Ellis, a partner with Change Sciences, says one of the main factors in what separated USAA, Ally and the other banks that scored well from those who didn't was authenticity. Ellis says banks must avoid merely having "placeholder" social media presences, or setting up auto responses to customer queries.
Ellis further notes that banks who successfully use social media not only take the time to personally address customer grievances, but to create online communities they foster and engage with.
Adds Pamedla Pavilscak, an author of the report, "Part of this trend is people banding together online to encourage things like saving, budgeting, and smart investing. Financial firms are beginning to think of ways to tap into this, and social media is the place where it's happening."
Ultimately, for a bank to best utilize social media, "It has to be a top-down concerted effort in the organization," notes Ellis. "These social channels are just another channel through which you are going interact with your customers. It's just as important as the branch channel or the telephone channel, and in many ways it's more important because its so public."
Another key aspect for banks to effectively utilize social media is to not try and control the entire narrative, Ellis says. For example, he notes that USAA and Ally both allow customer reviews, something many banks remain leery of.
"Most banks don't want to open that up," he says. "There a real fear there, but it shouldn't be that way.