Why retail banking needs communities

Social communitiesand why retail banking needs them... Some thoughts from Kurtosys

What is an online community? Rate & Review functionality that lets customers leave feedback &recommendations about products & services Community based peer-to-peer, or expert based advice Q&A A chance to involve customers in NPD & innovation A way of connecting customers & building stronger networks Anything you want it to be...

Branded communities are thrivingin other sectors...

“Collaboration is a powerful new lever to cutcosts, innovate faster, co-create with customersand usher organisations into the 21st centurybusiness environment.”Don Tapscott / Anthony Williams, Wikinomics

But why do banks need tocatch up with community?

Social customers are demanding changeThere is a growing gulf between the needs of retail banking customers and the clientengagement models within some of those retail banks... Customers want digital experiences that are: Many banks continue to  Informational offer generic, Engaging transactional Entertaining experiences in return, Mobile which are impersonal & And highly don‟t reflect the social personalised customer‟s channel of choice. They want „to belong‟

Social customers are demandingchange“By leveraging the social model, thebanking industry has the potential for adynamic period of innovation, and an evenchance of remaining relevant to ourcustomers.”Americanbanker.com

Social networking is universal... • 77% of consumers now see the internet as the best way of researching financial advice. • 43% think financial discussion boards are a valuable source of info. • 39% think the web is a good place to get a second opinion after seeking financial adviceIf customers can’t talk about you on your own website, they’ll do it somewhere else...

Communities drive positive behaviour Customers who join in with communities:  Feel more positive about the company (76%)  Are more likely to recommend the business to others (82%)  Spend 54% more than non-community members  Believe that the company is concerned about what they have to say (89%)  Think the community helps them give candid feedback (91%)  Remain customers for 50% longer than non-community users(Sources: 1-5, Communispace/Harvard Business Review; 6: AT&T,2002)

Whilst W.O.M is powerful...and free 93% of customers think word of mouth is the best, most reliable source for informationabout products and services. 70% of word of mouth conversations have an impact on brand purchase 76% of consumers believe that companies don‟t tell the truth in advertising 94% of customers regularly give and seek information about products(Sources: 1 – NOP; 2 – Keller Fay; 3 – Yankelovioch; 4 – eMarketer)

“A dissatisfied customer used to tell10 people. Now they tell 10 million.”Paul Gillin, The New Influencers

There are 7 essential C’s of communicationConversation Customers want to engage in an ongoing, 2-way dialogue that is not transaction based. Community Customers want to feel „part of something that matters‟ whilst connecting with each other Customers want to contribute to the debate, add opinions or advice and rate & reviewCollaboration products and servicesCommitment Consumers want to feel valued Credibility Peer to peer advice is the most trusted form of recommendation Character Customers want to make a connection, to „belong‟ Customers want to complain in public. How you deal with it will set you apart from theControversy crowd.

And communities can help achieve them via their own, self-sustaining, virtuous circle... Customer accesses valuable contentParticipation grows and Positivemore valuable An online community can W.O.M attracts content is new clients created sustain itself cost effectively, generating „earned‟ rather than „paid for‟ advertising. Feedback is Customers acted on/ create new customers feel content & valued leave feedback

“Social networking enables banks to reachcustomers at multiple and relevanttouchpoints, thereby being inclusive ratherthan intrusive – the difference betweencustomer retention and customerrejection.”Europeanfinancereview.com

Communities can fulfil a wide range of roles Engage & Listen & Create Acquire Retain ambassadors Grow Learn • In-house, • ‘On-board’ • Set up testing • Create • Set up ‘rate & compliance introduced laboratories for positive reasons review’ social media customers NPD / to ‘talk’ functionality campaigns • Create • ‘Listen in’ & • Create a focal • Create a way campaign identify cross • Create a point for to share good microsites e.g. selling needs customer forum retention news ‘What are you / benchmarking efforts saving for?’ group that’s • Promote a quicker & • Monitor for sense of • Lifestage • Target ext. cheaper than early signs of belonging communities Customers with traditional behaviour e.g. Students, highly targeted, research changes • Act quickly to families, HNW relevant offers resolve issues • Test pricing Reduce Increase % Cost effective Reduce Grow acquisition wallet / Insight attrition advocacy costs lifetime valueCreating a self-sustaining virtuous circle of customer satisfaction, profitability and growth.

But why not just use Facebook? 49% of people never read and research on social networkslike Facebook or Twitter when planning purchases. Building your own online community puts you in control – ofdesign, costs and compliance. What will be the next big thing... Google+, something new...Building your own community means it doesn‟t matter.Source: E-tailing 2011 online shopping survey

Some FS brands have begun already(1/3)Zopa

Some FS brands have begun already (2/3)First direct Lab

Some FS brands have begun already (3/3)AmEX OPEN Forum

...and more look set to join in

For more information on how wecan help kick start your community...Please contact Simon RoseTelephone +44(0)20 8605 9770Email simon.rose@kurtosys.com

About UsKurtosys is a global provider of digital technology to thefinancial sector. Since 2002, our team of industry expertshave been using digital media to transform the way thatfinancial information is shared and consumed.Headquartered in London, Kurtosys has offices in NewYork, San Francisco, Cape Town, Gurgaon (India) andManila. Our presence spans five continents and our clientsinclude some of the world‟s largest asset managers .

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Why retail banking needs communities

by Kurtosysuk on Nov 18, 2011

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