The social-media landscape is still an untamed jungle for many financial institutions, but a few intrepid companies have cut a clear path for themselves.
Services such as those offered by Facebook Inc. and Twitter Inc. are not yet big money-makers for banks and other financial-services companies, though many are interested in and are making investments in social media as a new channel.
Vantage Credit Union of St. Louis says it has dramatically improved customer engagement by enabling members to access Facebook and Twitter from within online banking. Those who access Facebook and Twitter through its online-banking tool spend twice as much time on the credit union’s website as the users who do not.
“We basically integrated many social-media applications into online banking, so while customers are paying bills, if they want to check their status on Facebook, they can do this in the online channel,” says Cameron Minges, Vantage executive vice president for information.
Vantage’s strategy today is an evolution of a 2009 service it introduced called Tweet My Money, which enables members to send a message through Twitter to the credit union, which in turn would tweet back the user’s account balance as a direct message viewable only by the accountholder.
Vantage, which has $680 million in assets and 103,000 members, half of whom bank online, also created an online and mobile-banking suite for consumers ages 18 to 25 that it launched in June. Called Not Your Mama’s Account, the service integrates social media and personal financial management tools. Users may check balances and automatically track spending while updating their status on Facebook. The account also offers users electronic coupons that provide discounts on various goods and services, which they can share with friends over Facebook and Twitter.
“[The account] was tailor-designed for this age market,” Minges says.
Of the total Internet traffic accessing the credit union’s online services, 10% comes from mobile devices to these accounts, which is twice the industry average for mobile access to financial institutions’ websites, he says. So far, the credit union has 2,300 such accounts.
“The 18-to-25-year-old market clearly told us that they want to interact with us online, and they are not interested in branch infrastructure,” Minges says, noting some of the account’s features, such as penalizing for bounced checks once a year, in fact are money-losers for the credit union.
But they may have a longer-term impact on young users, such as greater customer retention. “We are not going to make money on them right now, but in the future,” Minges says. “When they graduate from college and want a mortgage, and all the other services we offer, we hope we will be the first one they consider.”
SunTrust Banks Inc. of Atlanta started its own social-media program about a year ago. Since then, SunTrust says it has had conversations with about 15,000 customers on Facebook and 1,500 on Twitter on topics ranging from buying homes to getting a mortgage. SunTrust has 5 million customers.
“It is a savvier client who thinks that if they engage with us publicly and have this conversation in this open forum we will hear what they have to say,” says Bianca Buckridee, SunTrust social media engagement manager.
SunTrust’s social-media campaign has two components lumped under its “Live Solid, Bank Solid” branding initiative. At Livesolid.com, SunTrust uses Twitter and Facebook to try to engage customers in a conversation about general financial topics, such as the correct way to go about paying children an allowance, or what to do if you discover you are dating someone with a lot of debt.
The second part, which fits under its Bank Solid label, involves SunTrust representatives monitoring the online conversation customers are having about the bank on social media, interceding where necessary to handle customer-service issues or complaints.
For this program, SunTrust sometimes guides customers out of public forums to one-on-one communication with the bank as a precaution to protect any account details that might need to be shared for SunTrust to address customers’ issues.
SunTrust also created a new chain of command to handle account requests made over social media. When questions come in through Facebook or Twitter, three dedicated social-media specialists channel them to about 40 “stakeholders” in various business units at the bank who are directed to answer, regardless of the type of account the consumer has questions about.
The program is too new to gauge whether it has led to more accounts or more sales of products, though she says customer input has led SunTrust to view certain products in new ways that may change certain offerings such as mobile banking, Buckridee says. She did not share any details.
“When you demonstrate the willingness to listen to what consumers have to say, it builds loyalty. And when you build loyalty, you know the products will come,” Buckridee says.
The results of a November survey from Fiserv Inc. demonstrate the potential a strong social-media strategy can have for financial companies (
It is difficult to determine whether social media is the cause or the effect for customers who tie in to online banking via social networks to have more accounts, experts says. One possibility is that customers that already had more accounts were later drawn to engage with their banks over social media.
“It is more likely that someone on a social network is using online banking,” says Nicole Sturgill, a research director at TowerGroup. “But it would be more difficult at this point to show that those same people have more bank products than those who do not connect with the bank this way.”
Very few banks have invested in social media, according to a November report by Aite Group, which studied 166 financial-services companies in the U.S. and Europe. Boston-based Aite found that 60% of participating financial services companies considered themselves novices when it came to social media, and only 8% considered themselves to have an advanced knowledge of the medium. Moreover, 30% devoted no funding at all to social-media campaigns, while more than half of banks said their funding was too small to measure.
But this picture is expected to change dramatically by 2012, when 90% of firms surveyed said they would have dedicated funding in place for social media.
A minority of consumers uses social media to connect with their banks, and they probably have been using it for a short time, perhaps less than a year, says Ron Shevlin, an Aite senior analyst.
“Any change in retention and account ownership or account balances can’t possibly be big enough to measure so soon,” Shevlin says, adding Aite’s survey of Gen Yers in 2009 suggested only 2% followed their banks on Twitter.
Other observers say use of social media is comparable to the early days of e-commerce, where a small percentage of early adopters, primarily the wealthy, paid bills and accessed their accounts online.
“If you go about social media in the right way, you will find some positive business results,” says Cathy Graeber, founder of the consulting and research firm Swimming Upstream in Monterey, Calif. “But you can count on one hand who can quantify this.”
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