The top result of the web search seemed strange at first, almost like a mistake: Tim Lincecum's abnormally high earned run average in September. Since the search was for "Bank Twitter Usage in 2012," the result felt irrelevant.
But in reality, the high-priced yet struggling San Francisco Giants pitcher showing up in such a search is a perfect illustration of how web search techniques, social networking and bank branding are all changing rapidly, in a way that will force alterations in the strategy for all three functions. The Tim Lincecum factoid turned out to be a Bank of the West-sponsored "Tweet of the Day" from September 2012, posted by an ABC News affiliate in Sacramento. The Nascar-style branding of content from a third party partner is a sign of the times. Social networking has become so common and broad-based in its use - there are now more than 500 million Twitter users and more than 1 billion Facebook users - that banks have no choice but to incorporate social networking into their marketing efforts.
"There won't be any turning back on the growth on social media...not just for describing where you are or what your behavior is, but there will be a slow gravitation toward services delivered in the channel," says Michael Versace, global research director, IDC Financial Insights.
While social networking is growing in use, the capabilities of the networks are also changing, giving banks the opportunity to manage customers at a level of granularity not thought possible even a decade ago.
But there are also IT and business strategy challenges as the definition and use of social networks changes quickly. The FFIEC is setting rules around what banks can do in social media. And there's fierce competitive pressure, creating attrition risk.
Some banks outside the U.S. - like Commonwealth Bank of Australia, ASB Bank of New Zealand, and FNB Bank of South Africa - are already letting customers access banking services and digital commercce through their Facebook pages. Inside the U.S., large banks such as Citigroup have hired experts from outside banking to forge social media strategies, forcing other banks to follow suit.
"Social media will continue to force service industries like banking to find ways to engage with customers," Versace says. This month, Bank Technology News spoke with social media experts from the banking, technology and analyst community, who revealed five major trends that will change both social networking and how it can be used by banks.
THE COMMUNITY'S NOW A METROPOLIS
"Forum" is one of the oldest words associated with social networking, and it's still at the heart of how companies can use social networks to engage consumers - either by participating in Twitter and Facebook or by operating their own networks. What's changing is the use of sentiment analysis, content tracking and crowdsourcing techniques to turn a customer service and relationship building exercise into actionable science. Banks are still using social networks for customer service and as a way for consumers to discuss banking and other financial issues with each other, but the use of the content includes study of conversations and content shared on social networks to inform what goes into new products.
Harvey Sipel, who represents the social business practice at Cap Gemini, says the aggregation of the content of social network activity fits in well with crowdsourcing. "It can create ideas for innovation...a lot of people say social media is just Facebook and Twitter. But social is a new way for consumers, employees and even vendors to communicate, interact, and share. It's very similar to email when it first came out."
Barclaycard Ring, the card company's "community-built credit card," for example, includes an internally run online community in which cardholders can pitch new ideas. Among the recent ideas is a reward for cardholders who don't repeatedly call the company for service. The company has also posted information on how reduced customer phone calls to customer service helps it perform more efficiently.
The idea is to encourage fiscal health for both consumers and the card issuer. Barclaycard Ring makes stats available to consumers on how they are using their cards, and how that impacts the card's monthly performance. That performance is important to the card members, who benefit financially via rewards if the business unit that issues the cards performs well. Another carrot in the community is "badges." Similar to retweets and "likes" on Facebook, badges are earned for positive behavior, such as signing up for paperless statements. The user's online avatar in the community earns a ring for each badge. "The platform is scalable and allows us to reach out to folks to develop new products in new ways," says Jared Young, senior director of consumer markets at Barclaycard US.
Young says that by using social networking to bring people into the creative process, the institution is working to improve the way people feel about their financial institution. "U.S. consumer confidence in banks is at an all-time low...and by using the community, we're reaching out to them," Young says.
Sipel says one Cap Gemini partner, a software company that he did not identify, is building what it calls a social platform. Built off of traditional web forum technology, the platform can be customized to create venues for content sharing, discussions and ideas. "A forum such as this is a low-cost way to identify future product demand and customer issues and to spot trends. That can then be used by the marketing team to better target customers with personalized offers and overall brand extension," Sipel says.
Sentiment analysis and customer analytics of social data, integrated with CRM and core banking software, will also be used as part of compliance and to ensure adherence to internal customer service protocols. "The use of sentiment analysis to better anticipate and track where customers' complaints are coming from or track consumer reactions will start to gain traction among financial institutions in the coming years," says Rob Berini, a director at Deloitte Consulting.
IN SEARCH OF SOCIAL
Erica Barry, director of digital marketing for First Mariner Bank, says changes in traditional web search analysis are making social networking sites an increasingly important way in which the bank gathers life stage and other personalized information about its customers. Barry says Google (which last year issued a number of updates to its privacy policies) has made changes in its search engine that make it harder for the bank to track how consumers are engaging web search. That places social networks in a more prominent role in helping the bank glean what kinds of products or services customers may be researching or needing, based on questions asked in social forums or discussions.
"Private browsing is an option that users now have to block cookies from being installed on their computer as they surf the net," she says. Barry says that under the older web search analysis model, companies operating websites were able to use cookies to tell if a user was a returning visitor or a new visitor. "If you are logged into your Gmail and open another window and start browsing, you are allowing Google to in essence follow you around - that's why the ads on the sides of your search screen are so specific to your previous searches." By selecting the "private browsing option" websites lose that information," she says.
Barry says that about a year ago, when Google began encrypting its keywords and implementing "secure search" for anyone performing a search while logged into a Google product, that tracking became harder. While corporate websites had earlier been able to view the main keywords that people were using to get to their site, "Now all we see in Google Analytics is the term "not set,"' she says. Barry says that since Google is the largest search engine, and most people, whether they know it or not, are almost always logged into some Google product as they search, alternative methods of search analysis are needed. "We as businesses are left to draw assumptions and and infer trends based on what we see from other sources (social media, other websites) and the keywords we see from search engines such as Bing and Yahoo," Barry says. Google did not return a request for comment.
Barry says that with Facebook, for example, the bank is able to see demographics and interests: favorite shows, movies, "wives of the Air Force," relationship status, alumni associations etc. "Basically, anything that a person adds to their profile is information that advertisers can use to target. We're able to see where our 'followers' are in their lives. Are they just graduating [i.e. Class of 2013 in their education field]? Are they newly engaged and saving for a wedding [Relationship Status: Engaged to...]? What education level did they get to [Graduate, High School etc.]?...you get the idea," she says.
The bank can then take that information and craft its content to be more relevant to current customers and potential customers (folks who "like" the bank on Facebook but aren't customers yet). "It's a small slice of the pie, but as Google continues to tweak its algorithm, making it harder for marketers to understand their customers, relevant engaging content is going to be the main driving source of online traffic. In other words, no matter what changes on the search and social platform, good content will always be king," Barry says.
Social media sites are also expanding their own search capabilities. Facebook in mid-January announced a search engine called Graph Search that would leverage the company's vast trove of data, which includes more than one billion members, 240 billion photos and more than one trillion interpersonal connections. Graph Search, which was in beta last month, will appear as a bigger search bar at the top of each page. Members will be able to search for information based on friends' jobs, cities lived in and other personal information, such as "friends from New York who graduated in the 1990s." When people search for something, that search determines the results as well as the title for that page. Facebook says this search differs from traditional Web-style searches, contending that web searches use a set of keywords to determine the best possible results, while Graph Search combines phrases to produce a set of people, places, photos and interests that have been shared on Facebook.
For banks, new social search tools such as Graph Search expand upon the search capabilities that already reside in social media sites like Twitter and Facebook to provide new ways to analyze how consumers are networking with other people, and how that can help forge new financial services products or bundles of products for those consumers.
"Social media is changing the face of searching. Customers are using social networks much more now for web searches" than they used to, says Heather McCarty, director for mobile and social marketing for Barclaycard. Her company plans to study what kinds of intelligence it can obtain from social network searches.
SOCIAL MAD MEN
Social networking is also changing how banks will gather information to inform marketing and advertising campaigns. When people use social networking sites, they are revealing information about themselves - what they like, what they dislike, their hopes and aspirations - that can be used to inform marketing and advertising campaigns.
"Comparing Twitter and Facebook, Facebook has a lot more information about followers. You can target down to just about anything - not just age, demographics and geography, but you can tag people who are newly engaged. We can target a new account for starter couples. It's a cheap place to advertise, and people on Facebook will tell you about everything - their favorite TV shows, where they're going, everything," Barry says. "We can see what our followers are watching, and tell our marketing department to advertise during 'Dancing With the Stars,' for example."
Twitter can operate similar to an email list, though one that's more likely to reach younger customer groups with targeted, interactive content. "We can see who is following us on Twitter and Facebook, or who is following us on Twitter but not Facebook and figure out why or why not. If younger people are more active [on one site vs. the other], we can take that information and advertise based on that. Especially at our bank where we have an older demographic, we'd better target younger consumers," Barry says.
First Mariner is also finding Pinterest to be an interesting emerging form of social networking, and a way to obtain information. Pinterest is a site that lets people post photos about a certain topic, and view similar photo collections of other people. These photos can suggest a person who's interested in home improvement, or travel, or purchasing a car, for example. By adopting Pinterest as a social network option for consumers, the bank is including more lifestyle and goal-oriented content into its social mix, and has found it's able to attract younger consumers by giving them a venue to post photos that interest them. "We are pushing more content that's related to people's lives," Barry says.
GOOD CREDIT
Ken Rees, CEO of Think Finance, an alternative lender, says that much like observing behavior during an in-person visit to an office, social networking offers an opportunity to spot behavior that can inform a broad picture of credit risk. While it's rare for people to discuss why they need an installment loan or how they're having a tough time paying bills, there are still tendencies that can be gleaned by viewing other activities on social networking sites.
Rees, who stresses that social networking aids traditional underwriting, rather than replacing it, says the use of social media for credit decisioning is reliant on an analysis of how people are using social networks. The conversations that people have on social networks don't deal directly with debt and credit issues, but do give a view of behavior that can indicate a person's propensity to pay bills.
"Not many people talk about paying bills online, but they do tweet about a car breaking down. That can be an opportunity to reach out to a customer for a loan, or to be aware that they may have a need," Rees says.
Think Finance, which has made about $3 billion in loans to 1.5 million customers over the past decade and doubled from $250 million in 2011 to $500 million in volume in 2012, is increasingly using social networking to supplement the more traditional financial and payment history information that it feeds into its underwriting system. The lender's goal is to find borrowers that are safe enough to offer a rate that's between payday loans and bank loans for its mix of installment loans, pay advances and rent-to-own loans that let people purchase electronic equipment and pay in installments.
Rees says one simple check is finding out if a borrower actually has a social media footprint. Facebook and Twitter have become so ubiquitous that it can set off a red flag if a person doesn't have an account. "It's better to have an online ID. Not having one is like walking into a brick and mortar store without a driver's license," he says.
He also says that when a social media account was set up and how it's being used can provide insight. "If you recently set it up and there's a lot of usage, that may be an indication that there is something going on with that customer," Rees says.
LOCATION GAMES
Deloitte's Berini says social platforms can do a great job at helping banks determine where people are located. They are also a popular venue for games. Both of these can be useful in delivering merchant rewards and other loyalty products.
Emerging social games that have a financial flavor include Empire Avenue, a rewards system in which people create and share content. People can earn "money," or what the game calls "Eaves," by attracting people to invest in them. When users tie their Empire Avenue accounts to Twitter, Facebook, Flickr, YouTube, LinkedIn or blog accounts, their net worth rises based on content they create or share. "Games are a way for customers to feel they are building toward rewards that aren't necessarily in the credit card context, but are tied to a certain outcome," Berini says.
First Mariner's Barry says the bank is also looking at gaming as a way to increase use of social networking, by allowing players to connect with each other via a social networking site operated by the bank. One of the benefits would be a shot in the arm for the bank's strategy of appealing to younger demographic groups. "The gaming idea is for younger users, people in the 18 to 25 year old range. It's a different way to advertise and get to customers," Barry says.
Whether it be marketing, branding, service, gaming or building loyalty programs, the expanding scope of social networking will require integration between departments at the bank and between different tech platforms.
Mark Newcomer, a digital strategist for Accenture, says that will lead to partnerships between banks and companies that play in digital commerce, such as Salesforce.com (which owns Radian6), that can help bridge the gap between social media and a bank's internal marketing systems.
"In the process of building a Tweet, for example, you may touch seven to ten different technologies or functions that may be owned by different people inside the bank. To understand the ROI and all of the technology that goes into a social networking and marketing ecosystem, banks will have to put together a cohesive tech stack. And they will run into challenges if they have disparate systems that don't talk to each other," Newcomer says.
SOCIAL MEDIA BY THE NUMBERS
Any doubts that social networks are becoming as common as television or radio should be put to rest. According to Internet World Stats, Facebook had 243 million users in Europe alone in the fall of 2012. Asian users totaled 236 million and there were more than 184 million users in North America.
Penetration numbers for Facebook are even more impressive. Based on Census and other local national population counts, Facebook penetration in 2012 surpassed 50 percent in North America. In Europe, penetration is nearly 28% and in Asia it's just under 10%, up 50% from the prior year.
According to information compiled by MediaBistro and Mashable.com, about 175 million Tweets are sent daily. Twitter's projected advertising revenue was on pace to reach $260 million in 2012, and $540 million by 2014. Of particular interest to retail banks should be the numbers for customer service. Thesocialskinney.com says social media users are willing to pay a premium of more than 20% for brands that deliver good service through social media. Also, social media users whoo receive good service tell an average of 42 people, compared to nine for non-social media users. And 83% of social media users abandoned a purchase because of poor customer service-and inform 53 people-compared to 17 people for inactive social users. Among businesses, 90% of marketers use social media channels for business, 93% rate social networking as "important," and 43% report improvement in sales due to social networking marketing campaigns. The most popular sites for marketing are Facebook, followed by Twitter, LinkedIn and blogs. And for banks considering social network sites as a log-in venue, 60% of users engaging with social log ins use Facebook, while 12% use Yahoo, 11% use Twitter, 10% Google and 7% LinkedIn.
