Financial services are a key aspect of our lives, used every day for one reason or another. So why aren’t social media and finance widely perceived as compatible? Why aren’t financial service brands using social media to its full potential?
Social media has become an integral part of people’s lives: with 82 percent of the world’s population engaged with social networks, social media is now instrumental for brands, whether communicating with mass audiences or engaging on a one-to-one basis. Through social media, people are able to connect with friends and family, keep updated with news, and interact with brands that affect their daily lives.
Which brings us back to financial services.
According to Ian Morgan, Google’s UK Head of Financial Services, almost half the UK adult population used the internet to research or purchase financial services last year. Despite this, financial service institutions are slow to engage on social media, and as such are missing key opportunities to drive business.
As a channel for multidimensional, real-time communication, financial brands can use social media to engage consumers and answer specific queries. With 18 million UK consumers turning to social media for customer service reasons, and 83 percent of consumers who make a complaint on Twitter liking the response from the company, it is obvious why social media is such an important communications channel.
From a company’s perspective, engaging with customers on a one-to-one basis via social media enables a more in-depth understanding of individual customers to develop, increasing personalization and relevancy of products and services.
What Restricts Financial Services from Using Social Media?
One of the main factors financial service institutions face when debating the implementation of social media strategies is the extensive regulation they must comply with. Both the Financial Services Authority (FSA) and the Financial Industry Regulator Authority (FINRA) have expressed a desire to track what regulated brands are saying on social platforms, and how they’re using them.
Compliance with extensive guidelines* from regulators is time consuming, and difficult to understand. Internally systems haven’t yet adapted to the social age, and it often takes time for communications to be approved by rigorous compliance teams, and marketing managers are struggling to overcome compliance issues.
Customers don’t want to use social media to conduct financial service transactions, as these often involve sensitive data. Given the transparency of social media, customers are understandably concerned about protecting their data. This means that even where financial service institutions are using social media, their customers may choose alternative means of communication.
So we’ve established that social media is highly regulated for financial services, and that customers are leery of it -- should financial services organizations even bother with social?
How are Financial Services Using Social Media?
Slowly, financial service institutions are overcoming the aforementioned challenges and beginning to implement social media strategies. Morgan Stanley, has permitted its financial advisers to use LinkedIn and Twitter to communicate with customers.
While Morgan Stanley is demonstrating some much needed leadership in the social arena, their approach is not without flaws. Advisers are only permitted to broadcast messages on Twitter from a pre-approved list. This approach uses social media as a broadcast tool, rather than an engagement tool, which is not exactly the point of social media.
What happens when a customer engages with an advisor’s Twitter feed, seeking feedback that deviates from the pre-approved list of messages? Unless the adviser is able to communicate via direct message, or follow up with the customer offline via telephone, this diminishes the benefits of social media.
A financial brand which is using social media more effectively is Capital One. Capital One goes beyond using social media to simply promote its products and offer customer service. This brand is using social media by incorporating online games such as FarmVille and CityVille, which makes sense -- financial services are integrated into our real lives, so taking a social approach that integrates financial services into users’ virtual lives is perfectly logical.
Capital One proves that innovation is possible for their industry. On its Facebook page, which boasts over 2.5 million likes, rather than broadcasting pre-approved messages about products and services, Capital One encourages user-generated content and reviews and develops communities by enabling customers to comment on each other’s stories. Facebook is suited to relationship-building (at the group and individual level), whereas Twitter is ideal for real-time communication and reputation-building, so Capital One’s activity on Twitter is rightly dedicated to customer service.
Capital One has even taken steps to address customer anxieties about their data security. Each day the first Tweet from Capital One is the same:
Capital One @AskCapitalOne
Good morning everyone! We’re here to help! Send us your Tweets!! No personal info like account #s or other personal info please. Thanks
While this may seem repetitive, it’s an important reminder to customers that they can engage with the brand on Twitter and have their queries answered while giving guidance regarding the safest and most secure way to do so. Furthermore, it addresses regulatory requirements to place disclaimers and risk warnings on communications. If that wasn’t reassuring enough, Capital One has listed a link to its social media policy on its Twitter profile rather than the company website. Opting for reassurance over marketing promotion is the right way to build their brand and drives higher engagement.
In short, financial institutions are motivated to expand their social presence and engage customers. In order to succeed, financial institutions must understand how they can effectively use social media in ways which are both compliant and engaging, while building trust with their customers.
Image courtesy of Julien Bastide (Shutterstock)