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

1. Social Media: Opportunities and
Challenges for Banking
Ishwar K Sethi
Oakland University, and
Integrated Knowledge Solutions
isethi@oakland.edu, iksinc@yahoo.com

2. Outline
• Introduction
• How Can Social Media Help Banks?
• Social Media Analytics
• Social Media Adoption Challenges
• Summary
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3. INTRODUCTION
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4. What is Social Media?
“media for social interaction, using highly accessible and scalable
communication techniques. Social media is the use of web-based
and mobile technologies to turn communication into interactive
dialogue.” Wikipedia
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6. Social Media is About Conversations
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7. What Makes Social Media Attractive?
Instant low cost
communication
Traditional media is one to many while
social media is many to many
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8. What Makes Social Media Attractive?
• No distinction between media producers
& consumers
• User generated content
• Free borrowing and sharing of content
• Rich user interaction
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9. Social Media Characteristics
• Great variation in quality
• Immediate consumption
• Long tail characteristic
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14. Why Social Media?
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15. Why Social Media?
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16. Why Social Media?
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17. SOCIAL MEDIA & BANKS
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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
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20. Social Media Usage Examples: Virtual
Branch on Facebook
Auckland Savings Bank offers a
virtual branch on facebook.
With just one click you can start
chatting with one of the bank’s
agent.
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21. Social Media Usage Examples: Community
Building
Young & Free credit union of Alberta created a community of its target audience and
gave them a platform to connect and discuss not only finances but other issues of
interest as well. Result: Over 2000 new customers and over US$ 4M new deposits
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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. Social Media Usage Examples:
Customer Service via Twitter
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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
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25. Social Media Use at Indian Banks
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26. Social Media Use at Indian Banks
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27. SOCIAL MEDIA ANALYTICS
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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.
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29. Analytics Example
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30. Analyzing Tweets
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31. Analyzing Tweets
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32. Sentiment
Analysis
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33. Sentiment Analysis
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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. Tracking Likes on Facebook
http://monitor.wildfireapp.com/
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37. Locating Influencers
http://tweet.grader.com/
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38. A Framework for Social Media
Measurements
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39. Aligning Social Media Measurements
with Business Goal
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40. SOCIAL MEDIA ADOPTION
CHALLENGES
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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
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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
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43. Social Media Adoption Challenges
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44. Social Media Adoption Challenges
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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
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46. SUMMARY
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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
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