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Banks and Social Networking

Banks and Social Networking

Either JPMorgan Chase is on the verge of something quite impressive or it’s just gambled what little credibility it has left. One of the nation’s largest banks has teamed with Twitter with a contest that will provide a whopping $1 million credit limit for advertising on the popular social networking site Twitter. But are there any ulterior motives? More importantly, what’s in the terms and conditions?

All told, four million small business owners that do business with the banking conglomerate will earn a handsome payday – even if it’s not cash money. What is not being reported is the $1 million award will actually be broken down into $100 increments. Oh, and you have to be a small business owner that conducts its business with Chase. This very narrowly limits those who could benefit from the advertising opportunities.

The interesting dynamic is the news that fewer of us who are past a certain age want to mingle on any kind of social level – virtual or otherwise – with our banks. In fact, many are wondering just how long a bank can keep its presence on any social networking site. Fewer customers are engaging with their banks these days, and that’s just the way they like it. Tech vendor Wipro has also conducted new research. Its goal was to examine how much or how little technology affects us. It that the proliferation of banking channels has already begun to shift the way younger consumers use their banks and financial services and in fact, will continue to do so “at a breakneck pace”. This, says the survey, will force these financial institutions to ensure their marketing efforts evolve as well. This should include both broad brand-based and branch-focused campaigns.

Banks and Transitions

When you stop and think about it, the less obvious question is why haven’t the banks already made more of a transition? For many, it reeks of suspicion. Just slightly more than 10 percent of banks in the country actually maximize their efforts via social networking sites. In some ways, it’s a catch-22. Consumers have lost faith in their banks and when those consumers feel as though they’re being used as pawns, they feel slighted. That is not conducive for gaining Twitter followers, Facebook likes or LinkedIn leads.

That doesn’t seem to stop the efforts as the web continues to evolve,

Banks everywhere are putting online and mobile banking at- or near the top of their agendas,

says Rajan Kohli, Vice President, Banking and Financial Services at Wipro.

There is still a high degree of uncertainty because banks are still learning, and the digital environment is constantly changing.

Could it be, too, that younger consumers are blazing the trails for those near their parents’ age who will also finally give in and go social?

Old Habits

That could be a bit of a stretch because first, it’s difficult to break habits, especially when every financial expert tells us to keep our digital lives separate from our “real” lives out of fear of identity thieves and other types of fraud. This might also provide a bit of an explanation as to why JPM opted for free advertising versus other prizes. Most small business owners are of a certain age – and it’s not one that includes a recent stroll down the aisle to receive their high school diplomas.

Most efforts by banks and credit card companies, up until now, has been limited. Open ended questions in order to get customers to like a post or retweet a quote is about as far as it’s gone thus far. This so-called “digital engagement” isn’t crucial at this point and the budgets are proof: not a single bank has spent more than $500,000 in their efforts (and as we know, half a million is nothing to these entities). Ah but then we get to the long term prospects. An impressive 91 percent of those surveyed said they hope their social networking efforts will become the “primary channel for transactions”.

Segmenting the Population

As the survey also reveals, for some banks and credit card companies, it’s all about segmenting the customers. Some of those banks are following the leads of their own customers. Small business owners have mastered segmenting their customer bases. A full 90 percent of bank executives say they either are currently or will soon incorporate customer segmenting strategies. Again, this sheds even more light on the Twitter promo with the nation’s biggest bank.

Naturally, the “dream” societal segment that these companies hope to lure include the affluent, followed by (surprisingly) the college student, then teens, followed by immigrants.

Why Twitter?

And here’s another fact: the survey shows that 84 percent of banks in the U.S. use and prefer Facebook. Twitter comes in second, but it’s not close at all; in fact, Twitter is used by only 63 percent of these financial bodies. So why use Twitter if most consumers are still focused on Facebook? It’s easier to monitor, respond, advise and create a community on Facebook than Twitter. Rajan Kohli, Vice President of Banking and Financial Services at Wipro says,

Social media introduces lots of new issues for banks in their digital marketing activities…Most banks have some form of presence on social media but how far should they develop transactional capability, and how deep should they make customer engagement?

Imperfect Efforts

The smaller the marketing campaign, the more difficult it is to track in hindsight. There’s no way at all – on any social networking site – to accurately track in real time. Instead, the survey revealed that most banks are going for what they call “low hanging fruit” so that they don’t have to exert as many resources or manpower to conduct the surveys.

What are your thoughts? Are you being wooed by banks and credit card companies via social networking? If so, share your stories with us and let us know how well their efforts are.

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