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Gauging the Effectiveness of Social Media in Financial Services

  • Published:
  • 154 Pages
  • Timetric

Synopsis

Examining the suitability of social media for financial service providers, this report:

  • Provides insight into social media practices
  • Details the demographics of current social media users
  • Examines the potential costs, and ROI, of social media strategy
  • Examines different platforms and methods of engaging with customers
  • Includes case studies including American Express, Jyske Bank, Bank of America and BBVA

Summary

Social media and Web 2.0 are characterised by

  • Access to direct contact with virtually anyone, person or institution, connected to the Internet
  • Access to print/publication and wide potential dissemination
  • Quick responses
  • Permanency (all content published at any date and by any publisher can easily be found through simple research)

These factors have generated

  • A new code of social interaction and communication
  • By extension, because social media is becoming the predominant medium of interaction between people, new demands from customers

Scope

  • A best seller from 2011, this report has been updated to take account of the frenetic activity in social media into 2012
  • It examines the future use of social media in financial services, as well as prospective trends
  • A wealth of data and case studies are provided
  • This report examines in detail the difference between Web 2.0 and 1.0 which preceded it
  • The elephant in the room is also discussed - can social media ever become profitable?

Reasons To Buy

  • Be brought up to speed on the latest thinking, data and trends in this highly visible, specialist area of social media
  • Social media is consumer led. Find out how consumers and financial institutions are reacting to each other
  • See what direction the interaction is heading with tablets and smart phones
  • Find out what the key metrics should be

Table of Contents

Executive Summary

Table of Contents

Table of Figures

List of Tables

1 Introduction: What is social media?

  • 1.1 Definition
  • 1.2 Penetration
  • 1.3 Categories
    • 1.3.1 Blogs / Wikis
    • 1.3.2 Social networking
    • 1.3.3 Case study: Facebook
    • 1.3.4 Case study: LinkedIn
    • 1.3.5 Case study: Twitter
    • 1.3.6 Case study: YouTube
  • 1.4 Is Web 2.0 a Revolution?
    • 1.4.1 Web 1.0
    • 1.4.2 Web 2.0
  • 1.5 Summary

2 The risk of financial disintermediation

  • 2.1 Arrival of newcomers - social banking
  • 2.2 Creative start-up examples
    • 2.2.1 Leveraging collective intelligence to provide curated financial information
    • 2.2.2 Case study: seeking alpha
    • 2.2.3 Ex. SumZero
    • 2.2.4 Why contributing / sharing?
    • 2.2.5 Proven efficiency?
    • 2.2.6 Case study: Fool.com
    • 2.2.7 Case study: value investors club
  • 2.3 Direct competition with traditional institutions
    • 2.3.1 Case study: theflyonthewall.com
    • 2.3.2 Social money
    • 2.3.3 Peer-to-Peer lending
    • 2.3.4 Currency exchange P2P
    • 2.3.5 The big players
  • 2.4 Causes
    • 2.4.1 Transparency
    • 2.4.2 The customer is more knowledgeable
    • 2.4.3 Technological progress and adoption rate
  • 2.5 Limits of the Porter model in terms of distribution channels and the innovator's dilemma
    • 2.5.1 Porter model perspective
    • 2.5.2 Innovator's dilemma perspective
    • 2.5.3 Characteristics
  • 2.6 What could stop these newcomers?
    • 2.6.1 FS regulated, risk disintermediation limited
    • 2.6.2 Customer retention: What they say and what they do
  • 2.7 Conclusion: how can banks face the challenges newcomers propose?

3 Estimation of ROI

  • 3.1 Introduction
  • 3.2 ROI measurements
    • 3.2.1 Social ROI: measure what matters
    • 3.2.2 Finding the right key performance indicators
    • 3.2.3 Quantitative measurements
    • 3.2.4 Qualitative measurement
    • 3.2.5 Competitive measurement
  • 3.3 Budgeting a social media project
    • 3.3.1 Case study: social media project basic budget
    • 3.3.2 Internal changes and ROI
  • 3.4 Sales and ROI
  • 3.5 Advocacy and ROI
  • 3.6 A study of "The true value of social media"
  • 3.7 ROI and cost savings
    • 3.7.1 ROI and PR/advertisement
  • 3.8 ROI and communication costs
  • 3.9 ROI roadmap
    • 3.9.1 Establishing a baseline
    • 3.9.2 Create activity timelines / compare with sales revenues and number of transactions
    • 3.9.3 Measure transactional precursors - Analyse sentiment

3.10Overlay for analysis and look for patterns

  • 3.11 Conclusion: leveraging relationships creates ROI

4 Are social media platforms made for financial services

  • 4.1 Is social media made for the corporate world, especially financial services?
  • 4.2 Do customers really want a relationship?
  • 4.3 The top 150 banks on Facebook
  • 4.4 Financial services on Web 2.0
    • 4.4.1 Reluctance
    • 4.4.2 Inexperience
    • 4.4.3 Global objectives
    • 4.4.4 Actions taken

5 The New customer of social media

  • 5.1 Demographics of social media users
    • 5.1.1 Gen Y is not the largest segment
    • 5.1.2 Social media in banking
    • 5.1.3 Private banks lagging behind in social media
  • 5.2 Look for Gen X, Boomers, and Seniors
    • 5.2.1 A few key findings on social media by Nielsen, May 2011
    • 5.2.2 The rise of women
  • 5.3 Why are social media users drawn to financial services online?
    • 5.3.1 Reasons to look for financial services online: information
    • 5.3.2 Reasons to engage with companies: discounts and promotions
  • 5.4 Gender differences
  • 5.5 Reasons for buying online: a better price
  • 5.6 A multichannel approach: ROPO effect
  • 5.7 Other key facts
    • 5.7.1 Google is the portal
    • 5.7.2 Familiarity matters
    • 5.7.3 Trust and customer advocacy
  • 5.8 The social world and the reality: customer loyalty and retention

6 Uses of social media for financial services

  • 6.1 Image
    • 6.1.1 Live image management
    • 6.1.2 Corporate communication
  • 6.2 Branding
    • 6.2.1 Case study: Smartypig.com
  • 6.3 Smaller players fare better
  • 6.4 Jyske Bank: Differences - how to create a strong brand identity
    • 6.4.1 Empowered branch staff for empowered customers
    • 6.4.2 Branch design
    • 6.4.3 Building brand awareness - Jyske Bank
    • 6.4.4 Jyske: A cultural overhaul
  • 6.5 Customer engagement / advocacy
    • 6.5.1 Advocacy
    • 6.5.2 Case study: Facebook
  • 6.6 Real-time market research
    • 6.6.1 Case study: Procter & Gamble
    • 6.6.2 Case study: Bankrate.com
  • 6.7 Product Development
    • 6.7.1 Case study: Priority Club rewards credit card product.
  • 6.8 Support & customer relations
    • 6.8.1 Complaint resolution
  • 6.9 Community support and "crowdsourcing"
    • 6.9.1 Case study: E*TRADE
    • 6.9.2 Case study: American Express OPEN small business online community
  • 6.10 Sales
    • 6.10.1 Improvement of sales channel
  • 6.11 Disintermediation of sales channel
    • 6.11.1 Case study: Myrate.com
  • 6.12 Innovation of sales channel
    • 6.12.1 Case study: tu cuentas BBVA
    • 6.12.2 Case study: Kasasa
  • 6.13 Networking and Information Sharing
    • 6.13.1 Case study: Investment banking IM / Twitter
    • 6.13.2 Case study: Twitter and farmers
  • 6.14 Human resources
    • 6.14.1 Foster innovation and improvement
  • 6.15 Recruitment
    • 6.15.1 Case study: UPS
  • 6.16 Conclusion

7 Difficulty of implementation of social media for financial services

  • 7.1 Limited appeal
    • 7.1.1 Boring content - limited audience
    • 7.1.2 Time constraints
  • 7.2 Poor fit with a web 2.0 environment
    • 7.2.1 Loss of control
    • 7.2.2 Trust
  • 7.3 UK branches are a powerful customer-retainer for banks
  • 7.4 Compliance limitations
    • 7.4.1 Case study: Twitter
    • 7.4.2 Case study: Bank of America Merrill Lynch
  • 7.3 No vision of social media
    • 7.3.1 Wrong perception of social media
    • 7.3.2 Lack of consistency
    • 7.3.3 No long term vision.

8 Social media strategy

  • 8.1 Introduction: The range of a social media strategy
  • 8.2 Before venturing into social media
    • 8.2.1 Listen
    • 8.2.2 Engage and organize conversations
    • 8.2.3 Set up a communications policy
    • 8.2.4 Prepare for a variety of content and an efficient handling
    • 8.2.5 Set correct expectations on the users' side
  • 8.3 Optimize the communication channels
    • 8.3.1 Blogging
    • 8.3.2 Social networking
    • 8.3.3 Rating and reviews
  • 8.4 Acquire new skills
    • 8.4.1 Accept to cede some control
  • 8.5 Counteract the anonymity
    • 8.5.1 Adopt a new tone
    • 8.5.2 Case study: National Australia Bank
  • 8.6 Propose different kinds of participation
    • 8.6.1 Give exclusive content
    • 8.6.2 Give entertainment and/or prizes
    • 8.6.3 A word of caution
  • 8.7 Projects involving entertainment should be carefully conceived
    • 8.7.1 The right team
    • 8.7.2 Overcome the silos
    • 8.7.3 Protect and comply

9 Suggested Roadmap

  • 9.1 Several levels to social media action
    • 9.1.1 Minimum presence: public relations / CRM (basic)
    • 9.1.2 Raise visibility and profile: become a news provider
    • 9.1.3 Start conversations to get to know customers: business intelligence /marketing /product development
    • 9.1.4 Immersion in social media: advanced social media use
  • 9.2 Elements to concentrate on in developing a social media strategy
  • 9.3 Considerations to keep in mind

10 Trends to come

  • 10.1 Introduction: 3 phases of behavioural disruption
  • 10.2 The move to mobile and tablets
    • 10.2.1 Smartphones
    • 10.2.2 Tablets
  • 10.3 Mobile and tablet-based innovation in service
  • 10.4 Sales and marketing merge
  • 10.5 Values of social media

List of Tables

Table 1.1: Facebook subscriber growth between 2011 and 2012

Table 3.1: Leading banks with Facebook likes

List of Figures

Figure 1.1: Years for technology to reach mass adoption

Figure 1.2: Social Media: Technologies & Trends

Figure 1.3: Facebook/Twitter - Growth of users (In millions)

Figure 1.4: Number of visitors Facebook/MySpace/Twitter/LinkedIn

Figure 1.5: Region wise growth of Facebook over past five years (2007-2011)

Figure 1.1: Obstacles and solutions for online payment in Russia

Figure 1.2: Lending via bank or P2P

Figure 1.3: Worldwide examples of social lending - past & present

Figure 1.4: Currency Fair advertisement

Figure 1.5: Hyves Payment logo

Figure 1.6: Do you shop around for financial products? EU customers

Figure 2.1: What percentage of your financial institution's budget is allocated to online/digital marketing?

Figure 2.2: To what extent are the following business objectives of your firm's social media efforts in 2010 and 2012?

Figure 2.3: Does your strategy include business fundamentals like cost saving and revenue generation

Figure 2.4: The Social Media Measurement Compass

Figure 2.5: Methods of Measuring social Media Marketing

Figure 2.6: Social media programs and metrics can demonstrate ROI

Figure 2.7: What metrics are you using to measure the value of your social marketing activities

Figure 2.8: Example of Conversion Metrics

Figure 2.9: Return on Investment

Figure 2.10: Organize digital actions by categories

Figure 2.11: Partition of customers' actions

Figure 2.12: % of those who initiated conversations about the brand

Figure 2.13: Where people talked

Figure 2.14: How much they talked

Figure 2.15: How much they talked - Results

Figure 2.16: How they influenced purchases

Figure 2.17: The number of purchases influenced by 100 consumers

Figure 2.18: Example of cost savings through social media

Figure 2.19: Diagram of communication channels

Figure 2.20: Baseline establishment

Figure 2.21: Measure transactional precursors - 1

Figure 2.22: Measure transactional precursors - 2

Figure 2.23: Overlay all timelines

Figure 2.24: Percentage of Firms that Consider the Following to be a Strong Objective of their Social Media Efforts

Figure 3.1: How often do you tweet

Figure 3.2: When did you first sign up

Figure 3.3: How often do you log on to read tweets from those you follow

Figure 3.4: How many accounts do you follow

Figure 3.5: Wikis, forums and blogs have popular appeal

Figure 3.6: Top 25 industries on the Netprospex Social Index

Figure 3.7: Top reasons for defection from banks in 2011

Figure 3.8: The most satisfactory channel of banking

Figure 3.9: Why did you become a fan of Facebook?

Figure 3.10: Why did you become a fan of Twitter?

Figure 3.11: If your financial advisor invited you to be a friend on Facebook, how likely would you be to do so?

Figure 3.12: Top 20 jobs on the Netprospex Social Index

Figure 3.13: Which statement best describes your firm's experience regarding social media

Figure 3.14: Which statement best characterizes your financial institution's online marketing efforts

Figure 3.15: In what two areas do you believe external social networks can provide the biggest boost to your organization in the future?

Figure 3.16: Which of the following marketing tactics does your financial institution actively deploy

Figure 3.17: Web 2.0 and Social Media applications your financial institution actively deploy?

Figure 3.18: Type of industries most active on Twitter

Figure 4.1: Frequency of using social media sites - by age

Figure 4.2: Age distribution on social network sites

Figure 4.3: Social Networking Penetration among Worldwide Demographic Groups

Figure 4.4: the male and female population of social media sites

Figure 4.5: Top countries Facebook users

Figure 4.6: Top countries Linkedin users

Figure 4.7: Top 10 online categories by share of total Internet time >>Home and Work

Figure 4.8: Average Hours per Visitor on Social Networking by Region

Figure 4.9: Social Networking Engagement among Worldwide Demographic Groups

Figure 4.10: Top 10 US Social Networks and Blogs >>Unique Audience (000s), Home and Work

Figure 4.11: Top 10 US Web Brands by Total Minutes, in Billions, Home and Work

Figure 4.12: Reach of Top Categories in Europe for Web browsing

Figure 4.13: Average number of webpages visited during online research process

Figure 4.14: Number of financial search queries launched by customer on average, by product category or contract

Figure 4.15: What is the primary reason you are a Facebook fan

Figure 4.16: What is the primary reason you are a Twitter follower

Figure 4.17: Reasons for Engaging in Social Media with your Bank

Figure 4.18: Number of brands followed on Facebook

Figure 4.19: New contracts by sales channel

Figure 4.20: Share of new contracts, by sales and research channel

Figure 4.21: Online channel is of fundamental importance

Figure 4.22: Mean number of pages visited/search queries made

Figure 4.23: Share of online research processes

Figure 4.24: Share of search queries by customer with new contracts, by type of keyword used

Figure 4.25: Shares of search queries, by type of keyword and time of search process

Figure 4.26: Switching behaviour comparing data

Figure 5.1: Capture screens of negative tweets about banks

Figure 5.2: Which of the following marketing tactics does your financial institution actively deploy?

Figure 5.3: Probability of buying/recommending a brand product since becoming a fan/follower

Figure 5.4: Screenshot of BofA Twitter page

Figure 5.5: Screenshot of Citibank Twitter page

Figure 5.6: USAA screenshot

Figure 6.1: Duration of visits to financial websites

Figure 6.2: How much do you trust the following industries to do what is right?

Figure 6.3: Social Media Strategy is not Digital Marketing Strategy

Figure 7.1: First direct live screenshot

Figure 7.2: Does your organization have a formal policy regarding employee use of external social network sites such as Facebook, Twitter and LinkedIn?

Figure 7.3: Has your organization's reputation ever been negatively affected as a result of employees' use of social networking sites?

Figure 7.4: Social Media Strategy Model

Figure 7.5: Characteristics of linkbuilding sites

Figure 7.6: Google search for "Wainwright Bank"

Figure 7.7: NAB advertising board

Figure 7.8: Comparison of assets and mentions for financial services companies as resensed on Social Media

Figure 8.1: The Brand Reality

Figure 8.2: Forrester vision of the future of digital financial services

Figure 9.1: Behavioural disruption for banking due to new technologies

Figure 9.2: Smartphone operating systems

Figure 9.3: E-commerce and Related Services Accessed by % of Smartphone Users

Figure 9.4: Smartphone Penetration in EU5 and US by Market Reach

Figure 9.5: Number of Mobile Phone Global Users

Figure 9.6: Top Activities Performed in a Retail Store by % of Smartphone Users

Figure 9.7: Percent of Mobile Owners That Also Own Tablet in EU5

Figure 9.8: Share of Connected Device Traffic in EU5

Figure 9.9: Share of Device Page Traffic over a Day in EU5

Figure 9.10: Wells Fargo ATM finder screen capture

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