Synopsis

Examining the suitability of social media for financial service providers, this report:
- Provides insight into social media practices
- Details the demographics of current social media users
- Examines the potential costs, and ROI, of social media strategy
- Examines different platforms and methods of engaging with customers
- Includes case studies including American Express, Jyske Bank, Bank of America and BBVA

Summary

Social media and Web 2.0 are characterised by
- Access to direct contact with virtually anyone, person or institution, connected to the Internet
- Access to print/publication and wide potential dissemination
- Quick responses
- Permanency (all content published at any date and by any publisher can easily be found through simple research)

These factors have generated
- A new code of social interaction and communication
- By extension, because social media is becoming the predominant medium of interaction between people, new demands from customers

Scope

- A best seller from 2011, this report has been updated to take account of the frenetic activity in social media into 2012
- It examines the future use of social media in financial services, as well as prospective trends
- A wealth of data and case studies are provided
- This report examines in detail the difference between Web 2.0 and 1.0 which preceded it
- The elephant in the room is also discussed – can social media ever become profitable?

Reasons To Buy

- Be brought up to speed on the latest thinking, data and trends in this highly visible, specialist area of social media
- Social media is consumer led. Find out how consumers and financial institutions are reacting to each other
- See what direction the interaction is heading with tablets and smart phones
- Find out what the key metrics should be

Key Highlights
- In retail financial services, 24/7 information accessibility should be shifting the balance of power towards consumers and account holders, but disintermediation is not yet a major concern
- By 2015, ‘mobile’ will be the single largest interacted channel for retail banking
- Yet it is hard for financial institutions to get people to interact with their brands. They need to shape discussions more around topics of interest to their customers
- Smaller specialist providers can thrive in this atmosphere as they can develop tailored products at a lower overhead cost

Table Of Contents


Executive Summary

Table of Figures
List of Tables

1 Introduction: What is social media?
1.1 Definition
1.2 Penetration
1.3 Categories
1.3.1 Blogs / Wikis
1.3.2 Social networking
1.3.3 Case study: Facebook
1.3.4 Case study: LinkedIn
1.3.5 Case study: Twitter
1.3.6 Case study: YouTube
1.4 Is Web 2.0 a Revolution?
1.4.1 Web 1.0
1.4.2 Web 2.0
1.5 Summary
2 The risk of financial disintermediation
2.1 Arrival of newcomers - social banking
2.2 Creative start-up examples
2.2.1 Leveraging collective intelligence to provide curated financial information
2.2.2 Case study: seeking alpha
2.2.3 Ex. SumZero
2.2.4 Why contributing / sharing?
2.2.5 Proven efficiency?
2.2.6 Case study: Fool.com
2.2.7 Case study: value investors club
2.3 Direct competition with traditional institutions
2.3.1 Case study: theflyonthewall.com
2.3.2 Social money
2.3.3 Peer-to-Peer lending
2.3.4 Currency exchange P2P
2.3.5 The big players
2.4 Causes
2.4.1 Transparency
2.4.2 The customer is more knowledgeable
2.4.3 Technological progress and adoption rate
2.5 Limits of the Porter model in terms of distribution channels and the innovator’s dilemma
2.5.1 Porter model perspective
2.5.2 Innovator’s dilemma perspective
2.5.3 Characteristics
2.6 What could stop these newcomers?
2.6.1 FS regulated, risk disintermediation limited
2.6.2 Customer retention: What they say and what they do
2.7 Conclusion: how can banks face the challenges newcomers propose?
3 Estimation of ROI
3.1 Introduction
3.2 ROI measurements
3.2.1 Social ROI: measure what matters
3.2.2 Finding the right key performance indicators
3.2.3 Quantitative measurements
3.2.4 Qualitative measurement
3.2.5 Competitive measurement
3.3 Budgeting a social media project
3.3.1 Case study: social media project basic budget
3.3.2 Internal changes and ROI
3.4 Sales and ROI
3.5 Advocacy and ROI
3.6 A study of “The true value of social media”
3.7 ROI and cost savings
3.7.1 ROI and PR/advertisement
3.8 ROI and communication costs
3.9 ROI roadmap
3.9.1 Establishing a baseline
3.9.2 Create activity timelines / compare with sales revenues and number of transactions
3.9.3 Measure transactional precursors - Analyse sentiment
3.10Overlay for analysis and look for patterns
3.11 Conclusion: leveraging relationships creates ROI
4 Are social media platforms made for financial services
4.1 Is social media made for the corporate world, especially financial services?
4.2 Do customers really want a relationship?
4.3 The top 150 banks on Facebook
4.4 Financial services on Web 2.0
4.4.1 Reluctance
4.4.2 Inexperience
4.4.3 Global objectives
4.4.4 Actions taken
5 The New customer of social media
5.1 Demographics of social media users
5.1.1 Gen Y is not the largest segment
5.1.2 Social media in banking
5.1.3 Private banks lagging behind in social media
5.2 Look for Gen X, Boomers, and Seniors
5.2.1 A few key findings on social media by Nielsen, May 2011
5.2.2 The rise of women
5.3 Why are social media users drawn to financial services online?
5.3.1 Reasons to look for financial services online: information
5.3.2 Reasons to engage with companies: discounts and promotions
5.4 Gender differences
5.5 Reasons for buying online: a better price
5.6 A multichannel approach: ROPO effect
5.7 Other key facts
5.7.1 Google is the portal
5.7.2 Familiarity matters
5.7.3 Trust and customer advocacy
5.8 The social world and the reality: customer loyalty and retention
6 Uses of social media for financial services
6.1 Image
6.1.1 Live image management
6.1.2 Corporate communication
6.2 Branding
6.2.1 Case study: Smartypig.com
6.3 Smaller players fare better
6.4 Jyske Bank: Differences - how to create a strong brand identity
6.4.1 Empowered branch staff for empowered customers
6.4.2 Branch design
6.4.3 Building brand awareness - Jyske Bank
6.4.4 Jyske: A cultural overhaul
6.5 Customer engagement / advocacy
6.5.1 Advocacy
6.5.2 Case study: Facebook
6.6 Real-time market research
6.6.1 Case study: Procter and Gamble
6.6.2 Case study: Bankrate.com
6.7 Product Development
6.7.1 Case study: Priority Club rewards credit card product.
6.8 Support and customer relations
6.8.1 Complaint resolution
6.9 Community support and “crowdsourcing”
6.9.1 Case study: E*TRADE
6.9.2 Case study: American Express OPEN small business online community
6.10 Sales
6.10.1 Improvement of sales channel
6.11 Disintermediation of sales channel
6.11.1 Case study: Myrate.com
6.12 Innovation of sales channel
6.12.1 Case study: tú cuentas BBVA
6.12.2 Case study: Kasasa
6.13 Networking and Information Sharing
6.13.1 Case study: Investment banking IM / Twitter
6.13.2 Case study: Twitter and farmers
6.14 Human resources
6.14.1 Foster innovation and improvement
6.15 Recruitment
6.15.1 Case study: UPS
6.16 Conclusion
7 Difficulty of implementation of social media for financial services
7.1 Limited appeal
7.1.1 Boring content - limited audience
7.1.2 Time constraints
7.2 Poor fit with a web 2.0 environment
7.2.1 Loss of control
7.2.2 Trust
7.3 UK branches are a powerful customer-retainer for banks
7.4 Compliance limitations
7.4.1 Case study: Twitter
7.4.2 Case study: Bank of America Merrill Lynch
7.3 No vision of social media
7.3.1 Wrong perception of social media
7.3.2 Lack of consistency
7.3.3 No long term vision.
8 Social media strategy
8.1 Introduction: The range of a social media strategy
8.2 Before venturing into social media
8.2.1 Listen
8.2.2 Engage and organize conversations
8.2.3 Set up a communications policy
8.2.4 Prepare for a variety of content and an efficient handling
8.2.5 Set correct expectations on the users’ side
8.3 Optimize the communication channels
8.3.1 Blogging
8.3.2 Social networking
8.3.3 Rating and reviews
8.4 Acquire new skills
8.4.1 Accept to cede some control
8.5 Counteract the anonymity
8.5.1 Adopt a new tone
8.5.2 Case study: National Australia Bank
8.6 Propose different kinds of participation
8.6.1 Give exclusive content
8.6.2 Give entertainment and/or prizes
8.6.3 A word of caution
8.7 Projects involving entertainment should be carefully conceived
8.7.1 The right team
8.7.2 Overcome the silos
8.7.3 Protect and comply
9 Suggested Roadmap
9.1 Several levels to social media action
9.1.1 Minimum presence: public relations / CRM (basic)
9.1.2 Raise visibility and profile: become a news provider
9.1.3 Start conversations to get to know customers: business intelligence /marketing /product development
9.1.4 Immersion in social media: advanced social media use
9.2 Elements to concentrate on in developing a social media strategy
9.3 Considerations to keep in mind
10 Trends to come
10.1 Introduction: 3 phases of behavioural disruption
10.2 The move to mobile and tablets
10.2.1 Smartphones
10.2.2 Tablets
10.3 Mobile and tablet-based innovation in service
10.4 Sales and marketing merge
10.5 Values of social media


List of Tables

Table 1.1: Facebook subscriber growth between 2011 and 2012
Table 3.1: Leading banks with Facebook likes

List of Figures

Figure 1.1: Years for technology to reach mass adoption
Figure 1.2: Social Media: Technologies and Trends
Figure 1.3: Facebook/Twitter - Growth of users (In millions)
Figure 1.4: Number of visitors Facebook/MySpace/Twitter/LinkedIn
Figure 1.5: Region wise growth of Facebook over past five years (2007-2011)
Figure 1.1: Obstacles and solutions for online payment in Russia
Figure 1.2: Lending via bank or P2P
Figure 1.3: Worldwide examples of social lending - past and present
Figure 1.4: Currency Fair advertisement
Figure 1.5: Hyves Payment logo
Figure 1.6: Do you shop around for financial products? EU customers
Figure 2.1: What percentage of your financial institution's budget is allocated to online/digital marketing?
Figure 2.2: To what extent are the following business objectives of your firm's social media efforts in 2010 and 2012?
Figure 2.3: Does your strategy include business fundamentals like cost saving and revenue generation
Figure 2.4: The Social Media Measurement Compass
Figure 2.5: Methods of Measuring social Media Marketing
Figure 2.6: Social media programs and metrics can demonstrate ROI
Figure 2.7: What metrics are you using to measure the value of your social marketing activities
Figure 2.8: Example of Conversion Metrics
Figure 2.9: Return on Investment
Figure 2.10: Organize digital actions by categories
Figure 2.11: Partition of customers' actions
Figure 2.12: % of those who initiated conversations about the brand
Figure 2.13: Where people talked
Figure 2.14: How much they talked
Figure 2.15: How much they talked - Results
Figure 2.16: How they influenced purchases
Figure 2.17: The number of purchases influenced by 100 consumers
Figure 2.18: Example of cost savings through social media
Figure 2.19: Diagram of communication channels
Figure 2.20: Baseline establishment
Figure 2.21: Measure transactional precursors - 1
Figure 2.22: Measure transactional precursors - 2
Figure 2.23: Overlay all timelines
Figure 2.24: Percentage of Firms that Consider the Following to be a Strong Objective of their Social Media Efforts
Figure 3.1: How often do you tweet
Figure 3.2: When did you first sign up
Figure 3.3: How often do you log on to read tweets from those you follow
Figure 3.4: How many accounts do you follow
Figure 3.5: Wikis, forums and blogs have popular appeal
Figure 3.6: Top 25 industries on the Netprospex Social Index
Figure 3.7: Top reasons for defection from banks in 2011
Figure 3.8: The most satisfactory channel of banking
Figure 3.9: Why did you become a fan of Facebook?
Figure 3.10: Why did you become a fan of Twitter?
Figure 3.11: If your financial advisor invited you to be a friend on Facebook, how likely would you be to do so?
Figure 3.12: Top 20 jobs on the Netprospex Social Index
Figure 3.13: Which statement best describes your firm's experience regarding social media
Figure 3.14: Which statement best characterizes your financial institution's online marketing efforts
Figure 3.15: In what two areas do you believe external social networks can provide the biggest boost to your organization in the future?
Figure 3.16: Which of the following marketing tactics does your financial institution actively deploy
Figure 3.17: Web 2.0 and Social Media applications your financial institution actively deploy?
Figure 3.18: Type of industries most active on Twitter
Figure 4.1: Frequency of using social media sites - by age
Figure 4.2: Age distribution on social network sites
Figure 4.3: Social Networking Penetration among Worldwide Demographic Groups
Figure 4.4: the male and female population of social media sites
Figure 4.5: Top countries Facebook users
Figure 4.6: Top countries Linkedin users
Figure 4.7: Top 10 online categories by share of total Internet time >>Home and Work
Figure 4.8: Average Hours per Visitor on Social Networking by Region
Figure 4.9: Social Networking Engagement among Worldwide Demographic Groups
Figure 4.10: Top 10 US Social Networks and Blogs >>Unique Audience (000s), Home and Work
Figure 4.11: Top 10 US Web Brands by Total Minutes, in Billions, Home and Work
Figure 4.12: Reach of Top Categories in Europe for Web browsing
Figure 4.13: Average number of webpages visited during online research process
Figure 4.14: Number of financial search queries launched by customer on average, by product category or contract
Figure 4.15: What is the primary reason you are a Facebook fan
Figure 4.16: What is the primary reason you are a Twitter follower
Figure 4.17: Reasons for Engaging in Social Media with your Bank
Figure 4.18: Number of brands followed on Facebook
Figure 4.19: New contracts by sales channel
Figure 4.20: Share of new contracts, by sales and research channel
Figure 4.21: Online channel is of fundamental importance
Figure 4.22: Mean number of pages visited/search queries made
Figure 4.23: Share of online research processes
Figure 4.24: Share of search queries by customer with new contracts, by type of keyword used
Figure 4.25: Shares of search queries, by type of keyword and time of search process
Figure 4.26: Switching behaviour comparing data
Figure 5.1: Capture screens of negative tweets about banks
Figure 5.2: Which of the following marketing tactics does your financial institution actively deploy?
Figure 5.3: Probability of buying/recommending a brand product since becoming a fan/follower
Figure 5.4: Screenshot of BofA Twitter page
Figure 5.5: Screenshot of Citibank Twitter page
Figure 5.6: USAA screenshot
Figure 6.1: Duration of visits to financial websites
Figure 6.2: How much do you trust the following industries to do what is right?
Figure 6.3: Social Media Strategy is not Digital Marketing Strategy
Figure 7.1: First direct live screenshot
Figure 7.2: Does your organization have a formal policy regarding employee use of external social network sites such as Facebook, Twitter and LinkedIn?
Figure 7.3: Has your organization’s reputation ever been negatively affected as a result of employees’ use of social networking sites?
Figure 7.4: Social Media Strategy Model
Figure 7.5: Characteristics of linkbuilding sites
Figure 7.6: Google search for "Wainwright Bank"
Figure 7.7: NAB advertising board
Figure 7.8: Comparison of assets and mentions for financial services companies as resensed on Social Media
Figure 8.1: The Brand Reality
Figure 8.2: Forrester vision of the future of digital financial services
Figure 9.1: Behavioural disruption for banking due to new technologies
Figure 9.2: Smartphone operating systems
Figure 9.3: E-commerce and Related Services Accessed by % of Smartphone Users
Figure 9.4: Smartphone Penetration in EU5 and US by Market Reach
Figure 9.5: Number of Mobile Phone Global Users
Figure 9.6: Top Activities Performed in a Retail Store by % of Smartphone Users
Figure 9.7: Percent of Mobile Owners That Also Own Tablet in EU5
Figure 9.8: Share of Connected Device Traffic in EU5
Figure 9.9: Share of Device Page Traffic over a Day in EU5
Figure 9.10: Wells Fargo ATM finder screen capture

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