In an article called, "Why Social Media is a Waste of Time for Most Banks & Credit Unions," Jeffry Pilcher, writer and publisher of a blog, The Financial Brand, offers 11 reasons why banks shouldn't bother with social media. The first two: Banks and banking are boring. "Let's face it: Most financial institutions have dull, colorless personalities," he writes. "Consumers view banking like a utility. It's about as sexy as many of life's other necessities, like toilet paper or the cable company. Generally speaking, the less people interact with their financial institution, the happier they are. Just because people love money as much as they fret over it doesn't mean they want to spend time a whole lot of time talking about it, especially with you. Even if people did feel like 'engaging around financial matters,' they'd prefer to talk with their friends and family -- even total strangers."
One valid point Pilcher makes is that social media interactions are hard to turn into business results. "When you have no strategy and no clear motive, you are inevitably going to wind up measuring the wrong stuff," he says. "Few financial institutions have figured out how to translate 'pageviews,' 'video views' and 'comment counts' into anything meaningful. Your YouTube video was viewed over 100,000 times? So what? How many of those folks are actually within your service area? How many opened a new account?" He argues that banks ought to try to measure the connection between social media conversations and new relationships, loan volume, return-to-member/shareholder, funds-under-management and products-per-household.
Pilcher also points out that financial institutions often fail to communicate internally and provide mixed messages about social media to their employees. For instance, many block their employees from accessing sites like YouTube and Facebook. "How can an organization simultaneously reject and embrace an idea?" he writes. "Isn't that hypocrisy akin to saying you oppose nuclear war while you stockpile an arsenal of warheads?"
Dan Marks, chief marketing officer of First Tennessee, offers strong counter-arguments. "Banking is not entertaining, but it is an area where a personal connection is important to build trust and loyalty," he says. "In research from third parties like Forrester and our own primary research, a high percentage of affluent and Gen Y households expect their banks to provide the option of social connections. Finally, there is actual usage. We have about 3,000 fans on Facebook while still in our experimental phase before we've even promoted it on a large scale. USAA has over 75,000 fans on Facebook. In the B2B realm, we expect to see more adoption on LinkedIn and perhaps Twitter. LinkedIn has more high level decision makers than the WSJ and BusinessWeek combined."
A quick look at First Tennessee's Facebook page shows the bank engaging very successfully with customers about a wide range of topics, including local football teams, holiday shopping and accounts payable. One customer recently posted, in an accounts payable discussion, "I've banked with 1st TN for over 25 years and i love them." If such interactions aren't generating immediate business, they're surely not hurting the brand or its marketing efforts. And Marks told us yesterday in an interview that the bank is building the ability to measure the impact social media has in driving visits to its website, calls to the call center and product purchases.
First Tennessee is not alone. USAA has 11,065 followers on Twitter and also gets heaped with customer compliments there. ING direct has 14,332 Twitter followers and employees have a light touch with their Tweets, e.g. this answer to a customer's question about remote deposit today: "It takes time (& really tiny people) to build a branch in your pocket. No ETA yet, but the techs are hard at work on remote deposit."
Rob Garcia, another outspoken critic of banks' social media initiatives and senior director, product strategy at P2P lending site Lending Club, sees no reason for banks to throw in the towel. "This is similar to those who said, back in the early 1990s, that companies did not need to have a web presence or ecommerce site because a physical address and a call center was all you needed to engage customers," he said in an email this morning.'"There is lots to be done to establish social media as a new channel to engage your customers in meaningful conversations that could ultimately reestablish the bank as a 'trusted' entity and create long term loyalty. I most definitely think banks should be making a more concerted effort to establish an engaging presence in social media."