October 04, 2010

At the Bank Systems & Technology Executive Summit in San Diego today, Dan Marks, chief marketing officer, First Tennessee Bank pointed out that the way people want to do their banking has changed dramatically over the past 70 years, just as the the way we consume music has changed from LPs to iTunes.

Among the shifting channel preferences of the past few years are the gravitations toward debit cards, mobile banking, electronic bill payment, mobile banking and social media usage. "In 2008, debit cards overtook credit cards as a preferred form of payment," Marks pointed out. Usage of teller services is dropping quickly while electronic bill payment is growing.

Mobile banking use quadrupled between 2008 and 2009, driven by increased use of smart phones, Marks said. There are 235 million mobile subscribers in the U.S., 49 million of whom have smartphones. One out of three U.S. smart phone owners use mobile banking. And the rate of smartphone ownership is increasing in the U.S. by more than 10% per quarter.

On the social media front, Marks shared that a survey conducted by HubSpot found that 41% of companies are acquiring new customers through Twitter, 41% through LinkedIn, 44% through Facebook and 46% through a company blog (First Tennessee uses all these tools except blogging).

On a more conservative note, Marks acknowledged the regulatory and compliance risks of social media. First Tennessee has established a governance committee for social media that oversees usage guidelines, the social photo usage policy, terms and conditions, and training.

Marks was asked about the risk of fraud, and whether or not First Tennessee has experienced phishing a on a social channel yet. Marks said no, but that "social media will accelerate behavior that is there," he noted.

He offered the example of a customer who posted a question on Twitter about how his bank had offered him money to switch from First Tennessee, and before the bank responded, three people Tweeted comments such as, "why would you switch, First Tennessee has good service."

Marks also pointed out that banks shouldn't try to exert too much control in the social media networks it monitors. "At a cocktail party, you wouldn’t try to control what people say," he pointed out.

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