At last month’s Financial Services Marketing Symposium, a question posted by Tim Spence of Oliver Wyman to kick off the conference reflected an issue on attendees’ minds: where does the financial services industry find revenue growth? This is top of mind in the industry, as the lower loan-loss provisions, which boosted bank profitability in 2011, are expected to tail off in 2012, so financial institutions are now looking to the revenue side of the ledger to maintain and grow profits.
According to the top 25 banks’ recent forecasts, all 25 plan to increase revenue by growing their market share – which means that some of these institutions will fail do to so.
In an environment characterized by increased competitive intensity, technological advances and renewed focus on customer relationship optimization, banks are investing in a range of new service and sales channels, with social media prominent among these emerging channels. A survey of the FSM conference audience revealed that 67% of attendees’ banks have a presence on Twitter, Facebook and LinkedIn. A recent report by FIS Global shows that many top banks have a social media presence on these three main social media platforms:
What was notable about the social media discourse at the conference is that none of the speakers explained how participation in social media channels improves revenue for their organization:
- Paul Kadin of Citibank focused on the fact that Citibank’s social media presence has helped to improve its Net Promoter Scores
- Julie Berkun Fajgenbaum of American Express OPEN discussed the organization’s social media goal: active participation by message recipients
- Tim Collins of Wells Fargo emphasized that social media is not the right channel for pushing products; rather, it is a forum for authentic, relevant messages to customers
Given the current environment, what is it about social media that allows financial institutions to justify spending resources on developing a presence in this channel? Many speakers emphasized the value of using social media in a genuine way to add value to customers’ lives; some pointed out the opportunity to make customer service more effective through social media. Perhaps the biggest opportunity of all is to differentiate a company from the pack, since no one has really figured out the “secret sauce” to financial services social media strategy – differentiation that will be crucial in the fight for market share during 2012.
For now, financial institutions see social media as an increasingly important customer service channel, and are now focusing attention on addining new social media functionality, as well as integrating social media with other channels in order to optimize relationships. Over time, as customers become more comfortable with using social media to interact with their financial institutions, opportunities to leverage social media for new customer acquisition, as well as customer cross-sell and upsell, should begin to emerge.
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