Social media in banking

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Presentation to a workshop organized by Institute for Development and Research in Banking Technology, Hyderabad, India (May 2012)

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Social media in banking

  1. 1. Social Media: Opportunities and Challenges for Banking Ishwar K Sethi Oakland University, and Integrated Knowledge Solutionsisethi@oakland.edu, iksinc@yahoo.com
  2. 2. Outline• Introduction• How Can Social Media Help Banks?• Social Media Analytics• Social Media Adoption Challenges• Summary 2
  3. 3. INTRODUCTION 3
  4. 4. What is Social Media?“media for social interaction, using highly accessible and scalablecommunication techniques. Social media is the use of web-basedand mobile technologies to turn communication into interactivedialogue.” Wikipedia 4
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  6. 6. Social Media is About Conversations 6
  7. 7. What Makes Social Media Attractive? Instant low cost communicationTraditional media is one to many whilesocial media is many to many 7
  8. 8. What Makes Social Media Attractive?• No distinction between media producers & consumers• User generated content• Free borrowing and sharing of content• Rich user interaction 8
  9. 9. Social Media Characteristics • Great variation in quality • Immediate consumption • Long tail characteristic 9
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  14. 14. Why Social Media? 14
  15. 15. Why Social Media? 15
  16. 16. Why Social Media? 16
  17. 17. SOCIAL MEDIA & BANKS 17
  18. 18. How Can Social Media Help Banks?• Monitor their brand identity• Test new products and get feedback• Develop conversations and build trust• Find good quality employees 18
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  20. 20. Social Media Usage Examples: Virtual Branch on FacebookAuckland Savings Bank offers avirtual branch on facebook.With just one click you can startchatting with one of the bank’sagent. 20
  21. 21. Social Media Usage Examples: Community BuildingYoung & Free credit union of Alberta created a community of its target audience andgave them a platform to connect and discuss not only finances but other issues ofinterest as well. Result: Over 2000 new customers and over US$ 4M new deposits 21
  22. 22. Social Media Usage Examples: Marketing via Blogging Wells Fargo has six other blogs or microblogs. These are working well to build their customer base and brand loyalty.blog.wellsfargo.com/ StudentLoanDown 22
  23. 23. Social Media Usage Examples: Customer Service via Twitter 23
  24. 24. Social Media Usage Examples• Product Research: 1st Mariner Bank (in Maryland) created a new type of checking account using customer feedback through social networking• New social services: – Peer to Peer Lending – Personal Finance Management 24
  25. 25. Social Media Use at Indian Banks 25
  26. 26. Social Media Use at Indian Banks 26
  27. 27. SOCIAL MEDIA ANALYTICS 27
  28. 28. Social Media Analytics• The goal of social media analytics is to provide meaningful insights to an enterprise from social media conversations. It involves for example, measuring and tracking customer sentiments, identifying “influential authors” etc. to gauge ROI. 28
  29. 29. Analytics Example 29
  30. 30. Analyzing Tweets 30
  31. 31. Analyzing Tweets 31
  32. 32. Sentiment Analysis 32
  33. 33. Sentiment Analysis 33
  34. 34. Sentiment Analysis: Another Example Week 1 Estimated Approval Gallup Approval Estimated Disapproval Gallup Disapproval 43.10% 43% 43.50% 48% Week 2 Estimated Approval Gallup Approval Estimated Disapproval Gallup Disapproval 45.3 43% 43.2 49% Results of a class project on using Twitter to estimate President Obama’s approval 34
  35. 35. Tracking Likes on Facebook http://monitor.wildfireapp.com/ 35
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  37. 37. Locating Influencers http://tweet.grader.com/ 37
  38. 38. A Framework for Social Media Measurements 38
  39. 39. Aligning Social Media Measurements with Business Goal 39
  40. 40. SOCIAL MEDIA ADOPTION CHALLENGES 40
  41. 41. Social Media Adoption Challenges• Factors inhibiting effective social media adoption – Strategic • Many banks view social media as another channel for corporate communication and not as a collaborative medium. Thus limiting social media’s effectiveness – Financial • Not enough funds • Not convinced about ROI 41
  42. 42. Social Media Adoption Challenges• Factors inhibiting effective social media adoption – Regulatory • Many of the regulatory, compliance and legal issues are new, causing banks to move slow – Organizational • Effective social media use transcends traditional organizational boundaries calling for organizational changes that are difficult to implement 42
  43. 43. Social Media Adoption Challenges 43
  44. 44. Social Media Adoption Challenges 44
  45. 45. Approach to Social Media Adoption• Must be customer centric – Understanding how customers use social media and their preferences is crucial• Clear goals and metrics – Social media initiatives’ objectives must align with the bank’s business objectives• Strategy – Must be guided by an enterprise vision and must encompass objectives, market analysis, governance, performance metrics etc.• Technology – Social media platforms must be integrated with bank’s analytics, CRM, marketing, and security applications 45
  46. 46. SUMMARY 46
  47. 47. Take Home Message• Social media growth is unstoppable; the platforms might change• Banks can ignore social media only at their own peril• Employing social media with well defined business objectives has shown to yield success• Although social media deployment can be outsourced, initial implementation should be in-house to better understand social media’s usage and organizational issues that might crop up 47
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