Sykes Enterprises: Can banking make friends with social media? – Kirsten Jepson and Nick Sellers
Although compliance and regulatory issues still remain something of a grey area, the banking industry is starting to harness the growing Web 2.0 capabilities at its fingertips in a bid to interact with customers through every available channel. Ross Davies talks to Kirsten Jepson and Nick Sellers of Sykes Enterprises to find out more.
When Mark Zuckerberg set to work developing an embryonic version of Facebook in 2004, initially intended to be an on-campus social networking site, it is unlikely - despite his unwavering self-belief - that the Harvard sophomore envisaged the international banking community forming part of its customer base in the coming years.
However, when Facebook announced this September that its membership had surpassed 800 million users, it would have been to the considerable interest of various multinationals and card issuers.
While initially slow on the uptake in comparison with other industries, banks are now beginning to take advantage of the growth benefits offered by ever-expanding social media channels. And it's not just Facebook; financial institutions are also turning to the likes of Twitter and YouTube to better interact with customers. This was substantiated by a survey conducted in December 2010 by the Council on Financial Competition, which found that 80% of distribution and channel management executives had highlighted social media as a major focus for 2011.
While many banks still have some way to go towards integrating online channels into their services portfolio, it is clearly on the agenda. In light of this, Sykes, a global-leading provider of customer contact management solutions as well as services in business process outsourcing, has created the viewpoint 'Social media in financial services: do it now or do it later' to highlight areas in which there is room for improvement.
"That banks have been fairly slow on the uptake hasn't really come as a surprise due to the conservative nature
of the industry," says Kirsten Jepson, co-author of the paper and global marketing director of Sykes' financial services division. "Right now, we are seeing banks primarily use it for marketing, but the ultimate goal is definitely to develop more of a customer service focus."
Banks' social networking intentions have been impeded by the unavoidable regulatory compliance issues synonymous with the financial industry, in which institutions are prohibited from publicly identifying account holders. The sector is subsequently faced with the double-sided quandary of looking to interact with their customers while recognising that much of this constitutes personally identifiable information (PII) and cannot be discussed openly in a public forum.
"When it comes to customer service, while much can be done in a public environment, there are also limitations," says Jepson. "With regards to PII, banks and card issuers can look into queries but really have to deal with them offline as quickly and privately as possible so as to safeguard the customer."
At a time when banks are still being held culpable for the recent recession, reputation is certainly a germane theme. While on the one hand stepping up to the social media plate could be viewed as an illustration to customers that the respective bank is au courant, according to Nick Sellers, Jepson's co-author and director of global marketing for Sykes' technology division, in joining the likes of Facebook, banks are also laying themselves bare to potential reputational damage as a result of unregulated - and often critical - public forums.
"Banks and card issuers that go into social media with the hope of doing customer service actually have a rather tricky job ahead of them," he says. "To use it for marketing is fine, but, a lot of the time, 'friends' end up saying some quite unfriendly things about them. Instead of building a customer base, it gives people the opportunity to vent unconstructively."
Does banking language translate?
Banks must adapt to the informal style and etiquette found within social media. Running counter to the traditional and official approach associated with the financial sector, can banking jargon really translate in the 140-character-limited ambit of Twitter?
While Jepson and Sellers concede that Twitter "uses a different language", they both agree that it can be used as an open door to direct customers to other platforms for information and advice.
"Social media such as Twitter can certainly be used by banks to lead somebody in," says Sellers. "It can also be used as an invitation to look at or find out about something else. Banks can definitely make the most of Twitter as a promotion tool."
"Have you ever seen Basel III explained in a tweet?" adds Jepson. "However, I do agree that from a customer service perspective, it can definitely be used to forward someone on to another platform. This could be Facebook or another community environment where there is more space for advice and conversation."
Before the rise of social media, particularly its boom over the past two years, the sole online outlet for interaction with customers was the corporate website. Despite still being utilised as a directory of company and product information where customers can also carry out transactions, in terms of interaction and advisory services, the general consensus appears to be unfavourable among consumers.
"The reality is that the website is the showcase for the bank's products and is just where you go to log in to your internet banking," says Sellers. "Apart from that, there isn't much else on offer. There appears to be some hesitancy on the part of banks, particularly those who are still learning about the ins and outs of social networking and communities, and who may have worries about regulatory compliance."
Jepson agrees. "I can only think of a handful of examples where banks have incorporated social media on to their websites," she says. "On the whole, even some of today's most progressive banks have been a bit slow on the uptake - that applies to building societies as well."
Nonetheless, as previously alluded to by Jepson, there have been examples of banks successfully making use of social media for marketing and advertising purposes.
Notably, in September, Capital One joined FarmVille, CityVille and the Pioneer Trail, the social network games found on Facebook, exposing the company to the triumvirate's 131.5 million monthly users. Also, last year, in a bid to tap into its younger customer base, HSBC ran a student bursary competition, which offered £15,000 bursaries to eight winners, resulting in a considerable surge on the bank's 'friends' list.
While there are still lingering question marks concerning the viability of whether customers can truly enjoy beneficial interaction in such a regulated industry, such cases will be encouraging to the many other banks looking to follow suit and dip their toes into Web 2.0 waters.
"Banks are starting to become more familiar with the possibility of saving costs by using social media platforms," says Jepson. "There is also an awareness that people are using social media more and more in their daily lives - to enable customer satisfaction, banks need to provide services in the environment most preferable to the customer, whether it be advice or the ability to transact something more formal."
As social networking continues to mushroom beyond younger generations - in August, the Pew Internet & American Life Project released a report revealing that there had been a 20% rise in US adults aged between 50 and 64 using a social networking site in a typical day compared with the previous year - Sellers agrees that there is every reason for banks to be optimistic in better establishing relations with a new demographic.
"There has always been a need for banks to stay current," says Sellers. "Social media is definitely here to stay. A lot of companies are still figuring out how to use it effectively and safely, but I believe that they will figure out how to do so."