5 social media misconceptions (and opportunities) in financial services
The financial services industry feels like it’s not ready for social media. You may think that this is due to regulatory restrictions, but there is more to it than that – and there are opportunities for the brands that overcome these misconceptions:
1. Financial services companies are worried about the risk of brand damage if they start talking with people online, because the industry’s public image is seriously wounded.
It’s easier to pretend a relationship hasn’t been hurt than to talk about the awkward feelings, but the current fraught market offers a big opportunity to re-invent the relationship financial services firms have with customers. The public increasingly favours honesty & transparency. Who dares wins.
2. Consumer banking isn’t where financial services firms make their money, so the compliance & customer service burden of “switching on” social media doesn’t feel worth the investment.
This is a false economy, because the thing that makes social media so powerful is the way it enables small groups of motivated people to influence many people, very quickly. Financial services organisations put themselves at risk by failing to establish ways to connect meaningfully with customers online as well as in branches and over the phone.
3. Senior decision makers in the financial services sector still believe that social media effort will create the burden of monitoring new KPIs based on engagement metrics and Facebook likes.
The reality is different: these metrics are meaningless for senior people in organisations of all kinds. However, low-level social media metrics can be aligned with existing business metrics, like those normally used to measure customer acquisition and retention. If social media effort is to be useful, it should contribute to existing business aims and measures, not create new ones.
4. Of all industries, the financial services sector has been the slowest to catch on that social media isn’t just a marketing channel (see: social business).
Strategic uses of social media can include improving recruitment & internal career development; enabling teams working in different parts of the world to collaborate effectively or customer-led product innovation. The key to understanding the strategic importance of social media to an organisation is to understand what separates a business strategy from a plan for implementation. A business strategy describes a way to win in the marketplace given the competition and any external forces such as regulation. In an organisation of thousands, the strategic opportunity with social media may not involve marketing at all.
It may involve discovering how many hours are wasted per working week per capita on ineffective document collaboration or customer relationship management. Let’s assume replacing MS Word or Excel document control with a collaboration tool could save an average employee 1 hour per week for 48 weeks a year. An organisation of 5,000 employees paying £15/hour would save £3.6M pa .This would be a strategic use of social media which could give an organisation a genuine competitive advantage.
5. The financial services sector is concerned about the ROI of social media investment.
I heard a great story from @benjaminellis at a conference last year:
When the telephone came into popular use by the 1930s, salesmen knocked on the doors of big businesses and said: “You’re going to need phones to talk with your customers. To enable this new kind of connection, you’ll also need a room in your office filled with expensive equipment and new secretaries to route calls. You’ll also need to create a new role for an electricity manager, because the telephone system uses a lot power.”
That must have been a tough sales job. Decision makers would have asked “We’ve managed with face to face meetings and letters for decades – what’s the ROI of this investment? Are our customers even going to want to call us?”
10 years later, nobody was asking the ROI of the telephone. I doubt any organisation in the world now works out the ROI of having telephones on the desks of its employees. It’s just the way we do business. In 2021, every organisation will use social media to talk with their existing customers and to talk with prospects, whether they work in retail, financial services or FMCG.
Which means that right now in the financial services industry, there is a significant strategic opportunity to win in the marketplace by being the first to make the move.
Photo by Richard Fisher
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