Social media in german banks

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This was about Social CRM and its application to Retail Banking in Germany.

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Social media in german banks

  1. 1. Social CRM in German Retail Banks Goethe Business School Global Consulting Project 2010 BearingPoint - Frankfurt September 6, 2010 Shridhar Dharne| Vijay Gaikwad| Gaurav Sharma| Venkat Srinivasan| Laura Vantellini | Martin Wellnitz
  2. 2. Agenda 2 German Retail Banks – Post Crisis What is Social Media Power of the Community – Examples of Social Media in Corporations Social CRM for a German Bank Implementation Steps Q & A
  3. 3. 3 Financial Crisis led to loss of trust General opinion that banks make profit at customers’ expense Banks are trying to rebuild their image after the crisis German Retail Banks – Post crisis “Most banks make money by keeping their customers c BankSimple Changes in Customer Relationship Higher Customer Advocacy leads to more repeat business 1 2 3 4 Need to maintain customer loyalty Build fundamentals for cross selling Regain customer trust No hard-selling Urgent Need for Customer Advocacy 5
  4. 4. 4 German Retail Banks – Post crisis “Banking is necessary, banks are not” – Bill Gates, 1994 BankSimple was born out of our frustration with banking. We were fedup with our bank: the fees, the constantly changing rules, the crappy customer service.”. –-BankSimple website. Changes in market conditions  Fierce Competition  Competition to get new customers  Competition to retain existing customers Reasons for changes in market conditions  Difficult business landscape  Lack of differentiation  New ‘non traditional’ players demand a piece of the pie  P2P Banks  Social Banks  Direct Banks 1 2 3 4 Focus on differentiation strategy & build stronger relationship with existing customers 5
  5. 5. 5 Internet usage for financial products in Germany Top 4 Retail Banking products researched online by Germans 1 2 Savings/ Deposit Accounts Stocks and Shares 3 Current Accounts 4 Personal Loans Top 4 Retail Banking products bought online by Germans 1 2 Savings/ Deposit Accounts Stocks and Shares 3 Credit Cards 4 Current Accounts 25% of consumers researched at least 1 financial product online 11% bought at least 1 product 1 2 3 4 5
  6. 6. Agenda 6 • German Retail Banks – Post Crisis • What is Social Media • Power of the Community – Examples of Social Media in Corporations • Social CRM for a German Bank • Implementation Steps • Q & A
  7. 7. 7  Online communities are interactive group of people joined together by common interests or friendship  Characteristics include: Reach Accessibility Usability Recency Social Communities “A group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of user-generated content. It transforms and broadcasts media monologues into social media dialogues” – Andreas Kaplan Social Communities Family Colleagues Interest- groups Friends Blogs Social Networks Virtual World focused: “Online Social Communities” Real World focused: Forums Customer Twitter ONLINESOCIAL COMMUNITY 1 2 3 4 Banks 5
  8. 8. 8 German Banks don’t like Social Media German retail banks are very traditional, conservative and risk averse. Social media are unconventional, non-traditional, and carry some risks with them. Skepticism towards user generated content  Less structured  Less formal  No single point of distribution No measurable ROI  There is no simple way of measuring ROI of any social media initiatives.  Social Media initiatives cannot be ‘accounted’ for properly. Power of communities  News travels very fast using Social Media  Bad news travels faster. Legal Issues  Bank’s communication to the public has legal implications  Legal departments prefer to monitor fewer and less complicated channels of communication Reasons why German Banks are not interested in Social media… Reasons why German Banks are not interested in Social media… 1 Source: http://managementchords.blogspot.com Half duplex Communication  Banks prefer half duplex communication not full duplex. They like to send out messages but not receive feedback simultaneously Differentiation  There is no way of differentiating customers from non-customers. No Cookbook recipe No Early Adoption  German banks are usually not early adopters of new technologies.  There are no established ‘Best Practices’ and there is no cookbook for social media. 1 2 3 4 5
  9. 9. Agenda 9 • German Retail Banks – Post Crisis • What is Social Media • Power of the Community – Examples of Social Media Usage • Social CRM for a German Bank • Implementation Steps • Q & A
  10. 10. 10 Social Media in Action Some examples of social media use  Hornbach  ING Direct USA  United Airlines “United Breaks Guitars”  Bank of America Negative Examples Positive Examples 1 2 3 4 5
  11. 11. 11 Negative Example: United Airlines  “United Breaks Guitars”:  The power of the groundswell  10% drop in share price within 4 days from the day the video was released.  Twitter used as product promotion tool, rather than as a service portal  Facebook page not carefully taken care of  Social media: YES  Social media strategy: NO Impact 1 2 3 4 Social media initiatives 5
  12. 12. 12 Negative Example: Bank of America  Facebook page (4,400 followers) is completely empty and not maintained  There is a Facebook page called “Bank of America SUCKS” with almost 3,000 followers and a page called “I hate Bank of America” with 1,000 followers  No reaction from Bank of America’s side  Strong focus on Twitter: they have a portal on it (customer service and career information) which was opened early 2009  No holistic social media strategy Bank of America 1 2 3 4 Social Media Initiatives 5
  13. 13. 13 Positive Example: Hornbach Numerous examples exist, on how companies managed to profit from the dynamics of existing social communities.  Strong Twitter and Facebook presence where they continuously build and support an engaged community  Strategic use of social media and all channels to support the “Make It Yourself” community  Social media (Twitter, YouTube, Facebook and own page) and its community used for viral marketing actions like “Das Grenzenlose Haus” Integrated Social Media Strategy 1 2 3 4 5
  14. 14. 14 Positive Example: ING Direct USA  Different business model: direct online bank – no branches, just “banking cafés”  All their customers already online  Easier online interaction and use of platform  “wethesavers.com”:  “The official blog of savers”  Creation of a community of savers with a 10 point “Declaration of Financial Independence”  Funny polls (funny but useful for sure)  20,500 followers on Facebook:  Useful information  Links to interesting money-related information  Strong community feeling  Mostly positive feedback Successful Social Media Implementation 1 2 3 4 5
  15. 15. Agenda 15 • German Retail Banks – Post Crisis • What is Social Media • Power of the Community – Examples of Social Media in Corporations • Social CRM for a German Bank • Implementation Steps • Q & A
  16. 16. 16 German Banking 2.0 (Competitive landscape & innovations) Whofinance.de: an advisory website where bank advisors create their own profile and offer advice. Customers rate these advisors based on their advice quality.  Consultants have to pay a fee to the website for commercial advice  The site also sells leads  They have a “Best Bank Contest” based on bank ratings and the results are published in the “Bildzeitung” Quirn Bank: Uses ratings as a way to establish and show greater customer confidence, increase service levels and get more customers. Socially responsible and sustainable banks. Kd-bank.de ethikbank.de umweltbank.de pax-bank.de bkc-paderborn.de ligabank.de noabank.de triodes.de Social bank Advisory Services Source: BearingPoint Internet Research Fidor Bank  They are social media savvy and so are their customers  Their motto is “What would google do”  Social media is in their vision, strategy, and culture  They co-create products with their customers  They use all social media channels and use the ‘word of mouth’ strategy Auxmoney.de Smava.de P2P Banks 1 2 3 4 5
  17. 17. 17 Germany: Deutsche Bank 1 2 3 4 Present in several social media channels but no social media strategy to engage customers 5
  18. 18. 18 How can a German Retail Bank benefit?  A chance for banks to add to their brand  Be seen as an innovative company  A chance for banks to add to their customer centricity drive  Provide support and fast and easy resolution to customer queries  Design better products  Reduction in customer acquisition and retention costs  Drive deposit generation  Opportunities for cross selling  Improve MROI  Reduce churn rate  Increase contribution margin per customer  Social media is a trend that every bank will have to adopt.  Generation Y and the generation of digital natives is becoming an important market segment  Banks will need to enhance their existing customer advocacy drive  Customers will demand faster solutions to their banking issues and seek answers through the social channels  The way banks traditionally communicate with their customers will have to change, banks will switch from half-duplex mode to a full-duplex mode. Non-Financial Impact.Future trends in German retail banking 1 2 3 4 Social media can impact sales, maybe not directly but this is a good chance to influence the decision of online financial product researchers Financial Impact 5
  19. 19. 19 Opportunities in German Retail Banking  The communities already exist, they need to take the community online and to their social media assets  Organize communities around the local events sponsored by these banks (sports, cultural events, festivals)  Build special interest local communities by utilizing their local knowledge. For example: community of entrepreneurs, students wanting to study abroad, home buyers  They can be called social banks because they are involved with the community.  These Banks are deeply rooted in the regional economic life  They have excellent knowledge about the local market and personal contact with the people in the region and that is their main business strength  They support the local cultural and social activities in their respective regions How can they leverage their strengths?Characteristics Huge opportunities: Especially for Volksbanken, Raiffeisenbanken, Sparkassen 1 2 3 4 5
  20. 20. Agenda 20 • German Retail Banks – Post Crisis • What is Social Media • Power of the Community – Examples of Social Media in Corporations • Social CRM for a German Bank • Implementation Steps • Q & A
  21. 21. 21 Social Media Strategy for: a German Retail Bank 1 2 3 4  Establish a baseline before you begin  Create a time line for creative activities  Pick a small number of social media goals for the coming year and start engaging Pre-cursors of a strategy Strategy 5
  22. 22. 22 Listen  Who is talking  What are they talking about  Needs & Complaints  Customer perceptions  Engagement platforms & channels  Facebook/Twitter/Blogs  Engagement spread, level & diversity  # Involved customers  Identify influencers Identify Reach of one influencer 62 Tools 1 2 3 4 5
  23. 23. 23 Engage Full Duplex dialogue  Join the conversation discussions (e.g. blogs, Facebook, forums) and enhance the conversation  Build your own community on various social networking websites  Facebook/Twitter/Blogger/Youtube  External community driven websites focusing on common interests  Drive traffic to your social media assets using various sources  Don’t be afraid of negative feedback. Responding appropriately to negative feedback shows that you care  Have a “call to action” in your communication  Invite the community to contribute or interact (e.g. ING Direct)  Have engaging and creative posts/communications  Have a URL to your other social media assets of your website in your communication  Interlink the social media assets for a seamless user experience Radian Engagement console 1 2 3 4 5
  24. 24. 24 Support Support  Get employees to contribute to the channels, on which people are talking  Offer free advice about common questions and concerns in blogs, over Twitter or Facebook  Have some dedicated staff offers customer support over “verified” Twitter accounts 1 2 3 4 5
  25. 25. 25 Measure (What is the ROI of a smile and a warm handshake?)  Dollars Earned  Costs  Cashflows  Risk  NPV What the management wants to measure  Customer satisfaction  # of followers  Community Sentiment  Reduction in Call/email volume  Customer loyalty  Site traffic  # of comments  Community Engagement  Response speed  Post/ comment ratios Available matrices  Customer satisfaction  # of followers  Community Sentiment  Reduction in Call/email volume. Savings  Reduction in acquisition cost  Increase in customer lifetime value due to reduction in acquisition and retention cost  Customer loyalty What banks should measure There is no straight forward way of calculating the monetary value of a social media initiative. There are some recommended methods but each bank will have to devise its own way of calculating the ROI from social media initiatives based on the social media initiative goals.  Net present Value (NPV) of social media initiatives = (Cash inflows – Cash outflows)/Time  Cash outflows= Manpower, IT, Opportunity cost, Consulting fee, Miscellaneous  Cash inflow = Reduction in acquisition costs, Reduction in support cost 1 2 3 4 5
  26. 26. 26 Innovate Innovate  Gain customer insight through the listening process  Identify their needs  Find creative ways to get feedback from customers  Opinion polls  Blog comments  Facebook Analytics  Website Analytics  Design new products and services based on the insights gained  Improve service levels based on complaints Provides a channel for community members to contribute new ideas through crowdsourcing and collective intelligence 1 2 3 4 5
  27. 27. 27 Q & A
  28. 28. 28 How are some banks using Social Media as a CRM tool? 28
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  31. 31. 31 How are German Banks using Social Media as a CRM tool?
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  37. 37. 37 Facebook is the fastest growing medium with over 20 banks on Facebook  Deutsche bank is the most active with more thatn 3000 followers  The next in line is GLS bank with 400 followers  Cortal Consors has a facebook page and a facebook app. Youtube: Some banks are on youtube but it is mostly used for marketing.  Volksbank Raiffeisenbanken had a contest channel on youtube where they showed how human needs create the need for financial services. They got 300,000 visitors per day till mid Jan.  Fidor bank founder posts videos of himself and his vision for banking and the bank. German Social media platforms: studi.vz ; schueler.vz ; werkennetwern.de ; lokallisten.de are there but they are not as mature as Facebook and thus are only used for advertising and not for dialogue None of the banks have integrated their social media channels with their traditional marketing and support channels. Social media channels run alongside with their classical marketing and sales campaigns. Customers going to the main bank website don’t see the social media activities. No german banks have their own newsrooms

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