banks-atwitter-over-communication

Banks a-twitter over communication

How the financial industry can embrace social media.

My name is Edward Russell and I'm a Twitter addict. Well, maybe not yet, but it's easy to see how one could become an addict. With events like the recent Iranian protests and the Mumbai terrorist attacks last autumn making Twitter the go-to place for immediate first-hand accounts, the site has become a household name for individuals and corporations alike.

In February alone, unique visits to the site rose astronomically -- 1,382% year-on-year, according to Nielsen Online. This came after the site posted 752% growth in traffic in 2008 compared with a year earlier.

"Twitter is the hottest communications tool we have right now," said Jay Oatway, a Hong Kong-based social media consultant and journalist (Twitter handle @JayOatway).

It's early days still. Twitter and other social media sites have established themselves as great person-to-person connectors: look at Hollywood star Ashton Kucher's (@aplusk) nearly 4 million followers. But corporate users are still discovering their potential role.

The latest of the web's never-ending communications evolutions, Twitter combines the character limit of text messaging with the speed of instant messaging but through a customisable webpage similar to Facebook or LinkedIn.

Only a few corporations really engage their customers through social media. The latest Engagementdb report, a joint effort by social media consultancy Altimeter Group and online community Wetpaint, ranks the social media engagement among companies selected by BusinessWeek as the top 100 global brands. It considers Starbucks the most engaged, with its online discussion forums, a blog, and its accounts on social sites such as Facebook, Flickr and LinkedIn, not to mention YouTube and Twitter.

The least engaged is AIG, with only a LinkedIn account. This is understandable when the only people who want to talk to you are protesting your taxpayer-funded bonus scheme, but it is also indicative of the financial industry's general lack of presence among social media.

Where's Financial Street?

A Twitter search for Citi or the Industrial and Commercial Bank of China (ICBC) produces plenty of results -- the occasional bank employee's personal feed and a slew of comments ranging from positive free press ("Finally went to Citi Field. Great ball park," tweets @KevinTracey1) to the unexplained bank bashing: "[Expletitive]! ICBC is ruining my life," as lamented by @hugoyuen. Neither bank has an official presence on the site.

Financial companies have the lowest online engagement and use the fewest channels, according to Engagementdb. Out of the 100 companies ranked, the sector's best showing was Visa at 43.

"Siloed business units, politics, and heavy compliance requirements have stifled creativity and slowed innovation at many financial institutions," wrote Jacob Jegher, senior analyst at financial industry consultant Celent (@jjegher). None of these are particularly good excuses.

The problem with not having a social media presence is that companies allow all the negative individual-driven chatter to fester unrestrained in the public domain. A company that values its brand simply cannot afford to ignore this market.

"Twitter is a dangerous mechanism," said Jegher. "All banks should be on Twitter and establish their official presence so they can show who is official and not."

Oatway referred to a Twitter presence as being in the "fishbowl 24/7...it's complete transparency and authenticity".

Not surprisingly, many institutions are not ready for 24/7 engagement. Jegher offered a basic measure for banks to determine their readiness for Twitter: "If a bank can't respond to an e-mail in less than two to three days, it's not ready."

Every financial institution needs to weigh the benefits and drawbacks of social media. To not participate allows for misrepresentation of your brand, while being present requires new levels of attention and resources many banks do not currently have. The jump into social media is a tricky one for any company but one that can pay rich dividends in terms of customer relationships, feedback and retention.

Social opportunities

"Swiftcommunity.net is a low-cost way to exchange information," said Beth Smits, Asia-Pacific head of communications at Swift, the trade messaging utility. "We get [product] ideas, partners can use it as a marketing tool and users can use it however they want."

Swiftcommunity.net is an online community created by Swift for its financial industry users. Members can join one of the 195 communities that range from the geography-specific Southeast Asia community to the product-specific Accord Securities Pre-Settlement Matching Solution community. According to Swift, the entire community had 11,130 members at the beginning of August.

Content on Swiftcommunity.net is member-driven, not Swift-driven. "The goal of Swiftcommunity.net is to facilitate conversation," said Smits. "It's already fulfilling this goal."

Here in lies social media's value proposition: engagement. The sites build relationships, provide a forum for thought leadership and are great brand promotion tools. No corporation, financial institutions included, should view social media as a revenue generator, however, the benefits are much more ambiguous.

Jegher outlines three ways a financial institution can use social media: customer service, marketing and relationship building. In addition, he cites blogs as a great way to disseminate internal expertise that customers otherwise might not know banks have.

"We have an obligation to provide thought leadership because of our position in the industry," said Eileen Zicchino, managing director and chief marketing officer at J.P. Morgan treasury services. With its treasury and securities services podcasts, the bank is one of the first using social media to broadcast its institutional knowledge.

"No one wants to hear a sales pitch," she said. "If you have the expertise, people will come to you."

The bank also has an invite-only Facebook presence for potential new hires and is currently exploring adding its presence to Twitter and LinkedIn.

Swift and J.P. Morgan are not alone. Bank of America has a popular small business online community. ICBC engages customers through various forums and video feeds on its Chinese-language website and industry third-party providers (including Celent and Fundtech), and has blogs and Twitter feeds. One notable financial industry Twitter user is Peter Aceto (@ceo_ingdirect), chief executive of ING Direct Canada, who tweets informative banking tips and news for the banks' customers.

What's next

"Today's social media is the 'wild west' in so many ways," said Zicchino. "You have to be involved in it and engaged." That sentiment is echoed by other financial industry leaders, but the 'how' of social media engagement is still being worked out.

More online engagement by Asian institutions and Western banks with their regional customers would be a good next step. Already, Swiftcommunity.net has five Asia-specific regional communities -- two for China and one each for Korea, the Middle East and Southeast Asia -- and ICBC and China Merchants Bank have their own independent online forums. But these presences pale in comparison to the level of activity by many regional US banks.

One often cited reason for the low level of social media engagement among Asian corporations is the region's culturally reinforced authority hierarchies. Contrary to social media's inherently individualistic communications model, Asian corporate culture often emphasises that only the boss is "qualified" to speak for an organisation.

The problem with this is the internet's equalising proposition -- if a Twitter user has to wait 10 hours for a CEO spokesperson to tweet back, she is likely only to get angrier, rather than feel as though the bank has engaged with her about her concern.

Not responding to negative comments already circulating in the social media sphere is just as, if not more, damaging than to engage with those users. Moreover, those who prefer to argue that Asians somehow don't fit the online pattern ignore the fact that Asia's netizens are some of the most active in the world. A typical Chinese blog will get exponentially more comments than a Western counterpart. That's why it is ironic that Asia-based banks and businesses are falling behind in their social media presence; leaving a leadership vacuum at a time when many financial institutions' brands are under fire.

The customers are already online. It's time for businesses and banks to catch up.

Follow Edward on Twitter at @airbus777.

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