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Channel Innovation: Building Online Relationships

Looking to connect with Gen Y and other hard-to-reach consumers, banks are getting more creative in reaching out to customers online, particularly with personal financial management tools and social media.


In addition to financial management tools, social media is a big part of 1st Mariner's efforts to attract and retain younger customers. Kruskamp and Lynch blog and participate in social media networks regularly. Kruskamp posts messages and videos, including information about upcoming events and industry news, on behalf of 1st Mariner on Twitter, Facebook and YouTube. In fact, a year ago the bank introduced a checking account for Gen Y based on feedback received in social networks.

"We look at Twitter as an extension of communication with our customers," Kruskamp says. "You no longer have the number of customers coming into the branches and having a one-on-one relationship with the managers. So we wanted to see if there was a way that we could get back those relationships that are somewhat lost. Twitter, the blog and Facebook offer a channel where our customers and prospects are already there." The bank doesn't use social media to market products but rather to carry out overall public relations, Kruskamp emphasizes.

Twitter, according to Lynch, lets the bank connect with local businesspeople and industry peers. Facebook, however, is more of an opportunity for the bank to interact with customers and prospects in a more social setting, where the bank shares pictures, promotes fundraising efforts and personalizes the brand.

"Facebook brings a transparency that didn't exist before," Kruskamp suggests. "Unless someone came to our back office or one of our picnics, they wouldn't see what we're doing, that we really enjoy what we do."

Although the bank has not laid out a strict business case for the Geezeo and social media initiatives, Lynch stresses that social media efforts are inexpensive compared to traditional channels and they're increasingly necessary. "The branch transaction level is continuing to decline, call center volumes have dropped from 65,000 to 70,000 calls a year to 59,000 or 58,000," he notes. But 1st Mariner's online customers more than doubled, from 2,500 in 2008 to 5,500 in 2009. "People are interacting with us, that's the business case."

Like 1st Mariner, Atlanta-based SunTrust Banks ($172.7 billion in assets) is experimenting with both online PFM tools and social media. The bank's mostly anonymous LiveSolid Network, which primarily targets 25-to-45-year-old women, went live Feb. 1. The site took about five months to develop with an outside marketing firm and falls under the bank's marketing budget, according to Broud Koun, director of digital marketing and direct mail.

Many of the articles offered on the LiveSolid site are from women's magazines, such as Fitness and More. "It's an explicit part of our strategy to be a facilitator of content, not just SunTrust speaking to clients and prospects," explains Koun. "We feel that to our clients and to our consumer base, there are many different sources of relevant information, and our goal is to bring that information to them."

But SunTrust's name barely registers on the site, which offers information unrelated to financial services. "It's not new for SunTrust to try to support our clients, especially in times like this," says Koun. "Recent times have made people refocus their priorities and try to solidify their financial and personal situations. In our research we found that our clients don't necessarily separate financial life from life. We wanted to speak to our clients and other consumers in a language and mind-set we found people to be in, as opposed to from a financial services/bank mind-set."

SunTrust is not trying to hide the fact that it's behind the site, Koun notes, pointing out that the bank's logo does appear on the homepage. "But we've found that translating the bank's brand and personality into the social media space requires a different approach and attitude," he says. "The last thing we want to do is say, 'Welcome to the SunTrust Facebook page, how about a checking account?'

"It's more about helping clients live a more solid life. We hope that that will lead them to do more business with us and recommend us to others."

The LiveSolid site offers more than 100 tools and calculators designed to help visitors manage debt and finances alongside other life challenges. The bank hopes to reach new customers and serve existing ones, but it's not too ambitious about the numbers. "If the only people who ever use the site are our clients, and it helps them live their lives in a more robust, solid, responsible fashion, we would be very happy with that," Koun insists.

He declines to comment on page views, but he says the average site visit lasts about four minutes. And while he also declines to share demographic information about visitors to LiveSolid, Koun observes that the demographics of social media sites are sometimes surprising. "It would be incorrect to assume that Facebook, for example, is all about 19-year-olds," he says.


Not every bank is jumping on the personal financial management bandwagon, however. A recent Aite Group survey found that only one in five banks overall -- and only one in 20 large banks -- offers online personal financial management. (Of the remaining firms, 60 percent said they will evaluate whether to offer PFM tools in 2010.)

According to Aite's Shevlin, one reason many banks have not advanced PFM strategies is a perceived lack of demand. "Bankers tell me they ask their customers if they want PFM and are told, 'No, people don't want to manage their money,' " he relates.

The other challenge is a hard-to-define return on investment. "At best it's hard to compete with other projects, like mobile banking and online bill pay, that have direct impact on the bottom line," Shevlin concedes. Yet, he notes, the Aite research showed the benefit of PFM to customer retention -- a quarter of all PFM users said they are less likely to switch their primary banking relationship as a result of using PFM.'s Shergill acknowledges that the business case for a PFM site isn't obvious. "If you're launching a new product within the bank, you can see the exact revenue model for the product," he says. "If it's a PFM product, you have to ask: One, is it going to allow me to capture new customers? Two, will someone put more of their relationships with me because I'm offering this PFM solution? And three, will someone not leave me as a bank because I offer this PFM solution? But since there are no strong [data] on any of those three levels, banks are finding it difficult to justify the business case."

For 1st Mariner Bank's Lynch, however, the more important question is whether a bank can afford not to have PFM tools. "Our perspective," he says, "is that this is a requirement that customers may not know they need yet, but they will."

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