It seems banks have been a bit more reluctant than other industries (like Consumer Packaged Goods or Tech, for example) to integrate social media research into their marketing  efforts. In recent years, banks have been looking to migrate people to lower cost channels: from brick-and-mortar to the phone to the web. It’s slightly ironic that after concerted efforts to push their customers to the web for banking services and product information, all of a sudden banks are paralyzed by today’s ‘social consumer.’ These ‘social consumers’ are talking about their experiences unfiltered online, at times to the detriment of brand health. But I think the tide is slowly shifting and banks are realizing that social media matters to them too, and that ignoring ‘it’ won’t make ‘it’ go away.

In a recent article in American Banker, Sean Sposito looks at the growing trend of banks tapping social media to drive their marketing and customer service efforts. Noting that, “The practice has only recently filtered into the financial services industry, and the largest players in the past several years have just grasped the benefits it could have for business,” Sposito touches on two critical use cases deployed by some of the world’s biggest banks:

• Product Innovation: BBVA Compass is a pioneer in mining social for product and service enhancements. According to John Wessman, BBVA Compass’ executive vice president and chief marketing officer, BBVA gets “daily insights into consumer reaction to the bank and its competitors. The software we use has sped up BBVA Compass’ reaction to other trends, as well. Over the past two months, the bank has started to consider raising the cash back rewards on its credit cards because one of its larger rivals was receiving positive sentiment on its benefits.” (By the way, I couldn’t help but mention that these insights do happen to come from NM Incite.)
• Improve Marketing Efficiency by Merging Data Sources: American Express recognized the need to merge traditional market research metrics with social media research and analysis. Christopher J. Frank, Amex’s vice president of its global marketing insights group, stated that “you look at consumer confidence intervals. You look at the overall mood. And we wanted to make sure that we really understood that, and not just from the American Express point of view, but what is on the minds of our customers.” Social media provides an avenue to quickly get a deeper understanding of your consumers – really know their needs, behaviors and wants – so you can confidently develop your marketing strategy.

Kudos to banks leading the charge in social media research. In addition to product development and the ability to devise, implement and alter marketing strategies in real-time, we think there is a 3^rd opportunity for banks to leverage social. The previously (and sometimes currently) “paralyzed” bank marketer is all too familiar with “I hate Bank XYZ, F*** them, I can’t believe how terrible and impersonal their service is!” popping up on Twitter or the company’s Facebook page. Companies that aren’t geared up for effective social care – a system for companies to regularly provide customer service through social media platforms – will suffer at the hands of the angry consumer and the depth of the consumer’s social network. In fact, McKinsey research shows that one negative post on social media can counteract the effect of five positive posts – so implementing effective social care is critical to the bottom line. Just imagine a world where social media could not only help mitigate negative sentiment, but actually grow and promote positive sentiment  to enhance brand reputation, deepen customer engagement, and even lower costs.

It’s critical for Financial Services marketers to embrace social to win in an industry facing ever-changing regulation, limited product differentiation, and a weakened economic environment. These are three clear opportunities among others I’m sure. I’d love to hear about other examples of how banks can tap social to drive competitive advantage.