Frank Eliason has learned to be skeptical about pitches and promises from social media vendors.
Buyers "must use caution," says Eliason, senior vice president of social media at Citigroup. "Anytime I hear, 'You must have this,' I get concerned."
If a vendor boasts to Eliason, for example, that it can help Citi send tailored marketing offers to customers through social media — but the vendor's pitch arrives in Eliason's spam filter — it's a bad sign.
"If you're so good at it, why didn't I hear about it through social media?" Eliason says. "Banking is a relationship business. So are banks' relationships with vendors: they center on trust."
Before striking a deal or even shopping for a vendor, you should set clear objectives, Eliason says. If you know precisely what you want and can articulate that to the vendor, you minimize the chances of a misunderstanding. Bankers, consultants and lawyers warn that miscommunication in vendor negotiations can lead to compliance issues, penalty fees or reputational damage — or an out-and-out public relations disaster.
It's also a good idea to try a vendor's cloud-based tools before signing any contracts, Eliason says.
"Don't be afraid to ask," he says.
Not only will the test trials help you see whether the technology works, they will also show whether the tool aligns with the company brand, Eliason says.
Technology will not change a brand's "culture," Eliason says. "The tool must fit the culture. … Every company is a little different."
One of Citigroup's newer social media partnerships is with Sprinklr, provider of an enterprise social media management system. The bank has used the tool in the United States for a few months and is in the midst of a global rollout.
"We had parameters and knew what we needed to accomplish," Eliason says.
"These tools are changing rapidly, as are the social media sites," Eliason says.
"That security assessment you did at the beginning of the relationship with the vendor, especially in social, could change significantly within six months," says Mercedes Kelley Tunstall, of counsel at Ballard Spahr in Washington.
Banks using outside companies to serve as the voice of the bank in social media must be particularly careful, Tunstall says.
In the social channel, which demands quick responses, an outsider may see what he perceives to be a run-of-the-mill consumer complaint and hastily respond in a way that causes more trouble, Tunstall says.
Banks should monitor the social media activity of such partners, she says.
Edward Kramer, executive vice president of regulatory affairs for Wolters Kluwer Financial Services, offers similar advice.
"Periodically review what is actually happening in real time," Kramer says.
Managing outside relationships is difficult for banks of all sizes.
"A lot of banks are doing their most innovative work by working with smaller technology companies," Tunstall says, and that has its pitfalls.
Among the issues some banks face when working with younger startups is their eagerness to trumpet their big wins. In typical vendor contracts, a bank stipulates a no-press-release clause about the relationship if it's worried it will be seen as endorsing a company.
"This is pretty easy to lock down and control in paper and TV," Tunstall says.
But now, young companies itch to make announcements through social media channels to the point that they will accept less in fees in order to announce the wins, she says. Banks should stay tuned to how their partners distribute the news.