Banks say social media is important – but how many are engaging?

When contemplating their future, banks would be ill advised to overlook social media. As of January 2017, an estimated 2.8 billion people across the globe are active on social media, according to the Digital in 2017 Global Overview report from We Are Social and Hootsuite. This represents a 21% increase – or an additional 482 million active users – in the past 12 months.

Data from GlobalWebIndex, included in the same report, shows that the average social media user now spends two hours and 19 minutes on social platforms each day.

“While some banks are still sticking their head in the sand, many realise that social media is fundamentally changing the way we communicate,” says Amy McIlwain, global industry principal of financial services, Hootsuite, a platform for managing social media. “It is the primary conduit of information shared among consumers, investors and employees – it is how people communicate in today’s digital world. If banks aren’t on social media, then they are missing out on an incredible opportunity.”

Importance recognised

The growing importance of social media is not completely bypassing banks. A recent American Bankers Association (ABA) survey found that just over three-quarters of those polled strongly agreed or agreed that social media is important to their bank, with only 10% disagreeing or strongly disagreeing.

According to ABA’s report, The State of Social Media in Banking, published in February, almost half (46%) of respondents believe customers will use social media as their primary source of bank communication within five years.

While a mismatch remains between awareness and action, social media is moving beyond marketing activities to play a greater role in many banks’ business roadmaps. CaixaBank, for example, has embedded social media into its retail banking experience.

At the same time that its mobile-only bank for millennials, imaginBank, launched in January 2016, CaixaBank announced ‘mi imaginBank’ on Facebook – the first full-service online bank in Spain available on the social media platform. Customers can carry out everyday activities on a single page in Facebook, such as view account balance and recent transactions, as well as access customer service and bank promotions.

The Spanish bank’s strategy is to be where its clients are. Benjami Puigdevall, managing director at CaixaBank Digital Business, says: “Offering our banking service within the ecosystem where a client spends their time, without asking them to move to another site, is a powerful proposition.”

Social networks allow imaginBank to offer more personalised services adapted to customers’ needs and behaviours, and are also a tool that increases clients’ capacity to promote and support imaginBank projects, says Mr Puigdevall.

CaixaBank is planning to expand into other social media platforms, though currently some of these limit integration with third parties, such as banks. He believes this will change, adding: “Most social networks will open up to third parties providing content for customers. The social network will benefit from more content and banks will benefit from offering services through the social network. It is a clear win-win for both banks and social networks.”

Content is king

To be successful in social networks, banks should design digital content aimed at acquiring and engaging clients, communicating new products and services, and forging new relationships, says Mr Puigdevall. “Providing relevant information is key,” he adds. “Customers have many options to go elsewhere and follow other brands – so if a bank wants them to follow it, then it must offer something different.”

Deutsche Bank designed its social media strategy with this imperative in mind. The German lender launched a new storytelling format at the end of 2015 after consultation with about 700 stakeholders, including private and business clients, non-governmental organisations, analysts, bloggers and journalists. Economy topics came out on top.

“The content Deutsche Bank posts on social media needs to convey information but also be interesting and inspiring,” says Nico Reinhold, head of social media and films at the bank. “Content must be relevant for stakeholders so it is consumed and, most importantly, shared. This ensures that the content spreads independently from the bank’s websites and amplifies our digital distribution effects when vying for attention in the digital arena.”

He says that the way people stay informed and how they consume information has changed. “Visual communication has become more important, so the focus is on visual storytelling including videos, photos and infographics,” he says, adding that the selected formats and social media channels must also match the topics and stories.

Deutsche Bank’s #EconomyStories video series explores megatrends, such as globalisation, demographics, climate change and new technology, and often includes economic analysis from the bank’s experts. This has led to higher engagement whether on LinkedIn, Twitter, Facebook or YouTube. “View rates and duration for our #EconomyStories format are much higher when compared with other content. In addition, the films receive more likes, shares and comments,” Mr Reinhold says. “It proves we are doing something right by focusing on relevant topics.”

At Deutsche Bank, only authorised employees can create content for the social media channels they are responsible for. “We have a social media policy in place with clear guidelines as to how they produce, create and distribute content, as well as maintain their channels,” explains Mr Reinhold.

Employee engagement

Creating relevant content based on discussions and hot topics on social media is also a focus for Dutch bank ING, as well as engaging its customer community around product and service development. Additionally, it is cultivating a ‘conversation company’ by empowering colleagues to be active on social media and share ING content through their personal networks, according to Jeroen Baardemans, head of the Webcare team of ING in the Netherlands.

Mr Baardemans believes that employees constitute one of the most important social media channels for ING. “The value of the content enhances when our colleagues share content themselves through personal accounts because it is less commercially driven, more authentic and makes the content more valuable,” he says, while stressing that staff are not obliged to do so.

This stance marks out ING from many banks that maintain a tight rein on social media activities. More than half (58%) of respondents in the ABA survey reported that client-facing employees, such as personal bankers, loan officers and financial advisors, are not allowed to post content for business purposes on their personal social media accounts. Only 14% said their banks encourage employees to post bank-related content on their personal pages, profiles and feeds, and provide training for it.

“If social media is to email what email was to fax, then limiting employee engagement to the social media team conflicts with social media’s ability to drive trust and relationships,” says Kitty Parry, co-founder and CEO of Social Media Compliance, a financial technology (fintech) start-up. “Many challenger banks are showing how this is done by encouraging all staff to be active on social media.”

German challenger Fidor Bank uses a ‘crowdsourced’ approach to developing and delivering its banking solution and encourages employees to be as active as possible on social media, according to CEO Matthias Kröner. “Engagement is important because employees need to be aware of how customers and users talk about the Fidor experience,” he says.

The bank has created a ‘special interest’ community that is open to discuss money matters with like-minded people and extends well beyond the bank’s customer base. Mr Kröner reports that 95% of customer service-related questions are answered by the community itself in less than five minutes, effectively providing peer-to-peer support.

In addition to general employee advocacy, Hootsuite’s Ms McIlwain reports a growing number of bank executives beginning to use social media to humanise the brand. She is currently conducting research on the topic of ‘social CEOs’.

“When I look back at banks in 2010, everyone was just getting started and no one knew where to go. Here we are now in 2017, and some are still stuck, while others are crushing it on social media and thriving in the digital space,” she says. “The latter’s common denominator is social executives, whether social CEOs, CMOs [chief marketing officers] or business leaders. Their personal participation in social media is the tipping point for getting the rest of the bank on board.”

Timothy Hockey, president and CEO of TD Ameritrade, is an example of one ‘social CEO’ that Ms McIlwain has interviewed. “Tim described himself as an introvert; however, he saw social media, Twitter in particular, as an opportunity to connect at scale and manage his image, rather than having it shaped by the media and others. In addition to tweeting about leadership and company news, he tweets about road biking, part of his personal brand, which allows him to connect in a more authentic way,” she says.

Cyber defence

Despite the perceived risk of being active on social media, such activity can help banks in the battle against cybercrime, according to Ms McIlwain. Impersonation accounts are popular with cyber criminals, who could pose as the bank in general, a bank’s customer service handle or its CEO. “It is important for CEOs to claim their online identity and build out that brand before someone else does,” she says.

Fraudulent accounts across social channels increased by 100% from the third to fourth quarter of 2016, according to a threat report produced by cybersecurity firm Proofpoint. In addition, cyber criminals’ use of social media phishing attacks to gather information swelled by 500% in 2016.

Employees need to be trained on how to use social media safely, says Social Media Compliance’s Ms Parry. “Many senior executives are fearful of how social could be used, but being paralysed by fear will cause more issues. Instead, they should address it and educate staff as to best practices.”

Social Media Compliance uses engaging three-minute e-learning nuggets to educate staff. “It helps them remember not to take a photo of their screen or a document that could end up breaching regulations and, importantly, put criminal liability on a manager’s head under the senior managers regime,” she says. The fintech also provides a monitoring service for open social media platforms, which raises an alert if regulations are breached.

Zurich-based start-up Qumram is a new breed of start-up under the ‘regtech’ (regulatory technology) umbrella. It helps financial institutions comply with digital record-keeping regulations by recording user activity – mouse movements, clicks, typing, scrolling and all client interactions – across multiple social media platforms, including Facebook Messenger, LinkedIn, WhatsApp and WeChat. “We extract the information and create compliance, user experience and customer service dashboards,” says CEO Patrick Barnert.

Mr Barnert argues that it doesn’t make sense for banks to launch a LinkedIn campaign and then have customers engage with the relationship manager via email. He adds: “Blocking social media engagement may ensure the lowest risk from a regulatory standpoint, but it opens up a huge business risk. If a large incumbent bank doesn’t engage in social media then it is going to leave that channel open to challenger banks and other competitors.”

Developing trends

As the use of social media in marketing, product development and customer service matures, other use cases are coming to light. Florence Keen, research analyst at the Centre for Financial Crime and Security Studies, Royal United Services Institute, reports growing interest in using social media in due diligence. But while it has potential as an additional information source in the case of money laundering or terrorist financing, she believes it is too unreliable currently.

“Social media can help to verify what is already flagged up as suspicious,” says Ms Keen. “But it wouldn’t be used as a standalone piece of evidence because the data is unstructured and it is difficult, if not impossible, to verify that something seen on social media is accurate. There are fake accounts, individuals can have multiple accounts and accounts can be taken over, and so on.”

Steve Arnison, director at LexisNexis Risk Solutions, agrees that social media could be leveraged as one proof point alongside other identity verification methods. “In future, social media could be an additional element within multi-factor authentication,” he says.

Both Mr Barnert and Mr Puigdevall believe that combining artificial intelligence chatbot capability with social media platforms is a new trend. “Automating common conversations will be the next big shift in leveraging social media, which will help break through the compliance blockage,” says Mr Barnert.

In February, imaginBank launched Spain’s first chatbot available in Facebook Messenger to answer customers’ questions regarding account balances, statements and recent transactions, as well as promotions and offers. “The imaginBank chatbot mixes AI with simple, fun language, creating an emotional link with customers with emoticons and slang expressions,” says Mr Puigdevall, hinting that more services using AI and chatbots will be launched in both imaginBank and CaixaBank in the coming months.

Most banks plan to continue investing in social media. In the ABA survey, more than half of responding banks expect to increase spending on social media resources in 2017, while only 1% reported plans to reduce investment.