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Missed Opportunity: Banks Slow to Use Twitter

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If success were based on Twitter followers, banks and credit unions would look like losers.

Citigroup, the bank with the largest following, had roughly 107,000 followers in November, less than half the followers of retailers like Target, Amazon and Walmart, which had more than a quarter million.

"Many banks are just going through the motions, tweeting about things that are irrelevant to their followers," Ron Shevlin, an analyst with independent research firm Aite Group, writes in a recent report, "What Bank Marketers Should Do With Twitter."

Banks and credit unions averaged a mere 2,000 followers and tweeted an average of four times a day. More than one in five (21%) were characterized as "Twitter quitters" for abandoning their Twitter accounts.

"With so few U.S. consumers following their primary financial institution on Twitter, banks and credit unions are deceiving themselves if they think their tweeting activity is having any meaningful impact on the quality of their customer relationships," Shevlin writes.

More specifically they're missing out on an opportunity to connect and engage with customers, particularly highly desired Gen Y investors who experts say are rapidly accumulating wealth.

While relatively few consumers (9%) follow their primary financial institutions on Twitter, the ones who do are what Shevlin describes as "financial management junkies." They routinely engage in financial management activities such as analyzing the return on their savings and investments.

"They're not your average consumer," Shevlin said in a telephone interview. Customers who follow their banks on Twitter are much more engaged with the management of their financial lives than most people. For example, 65% of bank Twitter followers seek out recommendations on which financial products are best, compared with 15% for non-Twitter followers.

Bank Twitter followers are also big users of their banks' online personal financial management offerings. Seventy-one percent use their financial institution's PFM tools.

They're also more likely to look to their primary financial institution for help with managing their finances, according to the report. More than one in four (27%) want their bank's help with managing their finances and another 35% said that although they rarely think of using their financial institution to help them manage their finances, they believe that they should consider it.

Chances are they're Gen Y investors, individuals between the ages of 23 and 35.  Almost one in five Gen Y investors (19%) follow their primary bank institution on Twitter. Only 7% of Gen X investors and 3% of Baby Boomers, in contrast, follow their banks on the social media platform.

What does this mean for advisors? Shevlin sees an opportunity for advisors to connect with existing customers, but from a prospecting perspective, he sees little, if any, potential. "If you're prospecting, forget it," he said.

One advantage of Twitter is that it might relieve time-strapped advisors from the onus of having to write email newsletters for their customers. With Twitter's 140-character limitation, advisors "don't have to worry about crafting great sentences," Shevlin said.

In the report, Shevlin urges bank marketers to tailor their tweets to their audience and to focus content on personal financial management help, or "tips and tricks to manage money."

"In order to have a more meaningful impact on customer relationships—and perhaps attract prospects, as well—banks and credit unions that are serious about using Twitter as a relationship-building tool should monitor Twitter for questions and comments about managing one's finances. Responding to the financial management-related tweets gives financial institutions an opportunity to show how they can help their customers better manage their money," he writes in the report.

He also recommends that banks and credit unions develop a tweeting schedule and boost their tweeting activity. The two bank Twitter accounts that most aligned with the report's recommendations — Bank of America's @BofA_Tips and Citigroup's @Citibank — tweeted an average of once and four times a day, respectively, during the third quarter of 2012. "That's not nearly enough to have any measurable impact on customer engagement," Shevlin writes.

Lastly he urges bank marketers to integrate their tweets with other channels such their banks' mobile banking and PFM offerings. "Banks should increase the probability that followers will see tweets by posting them in PFM notification areas and creating mobile alerts that will send tweets directly to consumers through the mobile banking platform," Shevlin says in the report.

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Comments (2)
Indeed Twitter could be a potent weapon for customer advocacy particularly with young middle class population that are surging in India but for inclusive banking it would have to wait till the poor r adequately educated to participate.
Posted by souren | Tuesday, January 01 2013 at 8:50AM ET
There is a lot to be gained from the use of social media. The potential use cases range from relationship building to prospecting to simple customer service. I completely agree that most banks are just going through the motions. However, the banks that are active on Twitter (Citigroup for example) are making an impact on customer satisfaction and loyalty.
Posted by Alex Johnson | Wednesday, January 02 2013 at 1:44PM ET
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