As social media usage has achieved critical mass, many businesses have begun to incorporate social media into their marketing, sales, customer service and other activities. However, many of the leading U.S. banks have yet to establish a comprehensive social media presence. This is due to a number of factors, including privacy and security concerns, as well as established organizational structures and processes that can be hostile to new ways of doing business.
A topline scan of the websites of the top 20 U.S. consumer banks (based on their consumer loan portfolios) shows that:
- Some leading banks have no discernible social media presence
- Many banks have developed Facebook and Twitter pages, but operate these in a reactive mode (i.e., do not run initiatives to drive traffic to these sites).
- Some of the banks are much more proactive, driving large volumes of traffic to the social media pages with advertising, contests, forums, etc. These typically include banks that lack any retail branch presence (e.g., American Express and Discover), or banks like Capital One whose retail presence is dwarfed by its national lending operations.
- Some of the other banks do appear to have a social media vision. For example, SunTrust has extended its “Live Solid. Bank Solid” tagline into the socialsphere. Wells Fargo has developed multiple Facebook, Twitter and Blog pages to cover different audiences or areas of interest.
For banks to fully leverage the potential of social media, they need to:
- Get top management buy-in and support
- Assign an executive to own the social media function at the bank
- Incorporate social media into marketing, sales, customer service, and HR structures, strategies and initiatives
- Gather and incorporate feedback from customers and employees into social media initiatives; track the performance of these social media initiatives
BBVA Compass recently promoted its new Visa Business Rewards credit card on its Facebook page. The card offers 5,000 points in each of the first 6 months if the new cardholder spends at least $500 on the card in that month, so a total of 30,000 points.
This is consistent with a wider trend among leading small business card issuers to offer bonuses of 10,000+ points to encourage small business cardholders in order to activate and continue to use their cards. Small business cards still have a relatively small share of small business spending, and issuers see significant growth opportunities.
Other small business cards that feature with aggressive bonus offers include:
The Minneapolis / St. Paul Business Journal reported that BMO (whose U.S. bank arm, Harris Bank was the 34th largest U.S. bank by deposits at the end of 2010) had completed its acquisition of M&I Bank (32nd largest), and immediately made a commitment to lend $5 billion to businesses.
This acquisition comes as large bank M&A deals and rumors have been on the increase:
- PNC Bank (5th largest U.S. bank by deposits) announced the acquisition of RBC Bank (44th largest)
- Capital One (10th largest) announced the acquisition of ING Direct (17th largest)
- HSBC (11th largest) has put its upstate New York branch network up for sales
- BB&T (12th largest) has made no secret of the fact that it is looking bank acquisitions
- BNP Paribas is considering selling off Bank of the West (24th largest)
There is the expectation that this bank M&A activity will continue, as some banks have emerged from the financial crisis much stronger than others. More insights into banks’ relative performance will be seen in the coming weeks, as they publish quarterly financials. In addition, some banks will use the 2Q financials conference call to clarify their position regarding acquisitions or sales. In addition, there is the sense that, given the 8,000 banks in the U.S., significant consolidation is necessary in order to create a more efficient industry.
From a marketing perspective, these acquisitions create great opportunities for the combined bank, in leveraging the relative strengths of both banks. They also, of course, create some significant challenges, in such areas as:
- Branding (including decision on whether to retain one or more brands, or to create an entirely new brand, logo, tagline and positioning for the newly-combined company. In addition, any decisions of rebranding have significant cost implications for branch signage, collateral, etc.)
- Products and pricing
- PR (in particular as these acquisitions typically result in branch closures and headcount reductions)
- Customer retention (as customers are susceptible to competitive approaches during the transition process)
- Sales and service channel and systems integration