SOCIAL MEDIA. About Infosys. The Rise of Social Media in Financial Services Balancing Risk and Reward

Transcription

1 The Rise of Social Media in Financial Services Balancing Risk and Reward SOCIAL MEDIA About Infosys Many of the world s most successful organizations rely on Infosys to deliver measurable business value. Infosys provides business consulting, technology, engineering and outsourcing services to help clients in over 30 countries build tomorrow s enterprise. For more information, contact askus@infosys.com Infosys Limited, Bangalore, India, Infosys believes the information in this publication is accurate as of its publication date; such information is subject to change without notice. Infosys acknowledges the proprietary rights of the trademarks and product names of other companies mentioned in this document.

2 Preface Welcome to the Social Media issue of FINsights! I am pleased to present the latest issue of our journal FINsights, focused on social media in financial services. Social media represents perhaps the foremost front of innovation today, with every industry trying to keep pace with the rapid changes triggered by this revolution. Despite supporting customers through joint accounts, mutual funds, and workplace insurance for many decades, the financial services industry has been a late adopter of social media. The Internet has enabled customers to take control, develop their own communities, spread the word instantly, and develop a transparency of information never seen before. This is scary for a regulated and naturally conservative industry. With continuing economic challenges straining resources of all firms, smart informed decisions are key to investing in capabilities needed to adapt and thrive in the social world. A lot is being written on this, but very few provide actionable insights. While stating that a definitive course of action is a challenge in an evolving area, our experts have strived to provide practical and actionable recommendations on various facets of social media. The customer lifecycle has changed. During consideration and evaluation of a product or brand, customers seek out opinions of others; ratings, reviews, and social media are key elements for success during the sales cycle. Post sale, it is just as important to engage consumers, to increase loyalty, and to convert customers into advocates to have them sell to other customers. There is evidence of early financial services successes on social media sites, by providing customer service, connecting consumers together, and listening for complaints or problems. It is not about having yet another channel for sales and marketing through Facebook or Twitter. It is a fundamental transformation in customer engagement. Banks have to manage a new frontier in transparency and customer dialogue while working within the constraints of regulations and customer privacy. Our experts have provided a structured approach to navigate this complex terrain. I extend my appreciation to all the contributors to this issue for bringing together their insights, which I am confident, will offer readers actionable insight. We look forward to hearing about your experiences in defining and executing social media strategies. Ashok Vemuri Member of the Board & Global Head Financial Services & Insurance Infosys Limited

3 Content Preface From the Editors Desk 01. Harnessing the Power of Social Media in Financial Services The Facebook Phenomenon: How to use existing Social Media 11 to Better Engage Consumers 03. Designing New Financial Products for the Social Banking Age Improving Customer Advocacy: How Banks should 25 use Blogs, Ratings and Reviews 05. Moving from Managing Customer Relationships 29 to increasing Customer Engagement 06. Banks: To Tweet or Not to Tweet? Overcome the Social Barriers in Retail Banks Corporate Banking and Social Media - a Paradox? Emerging opportunities in Capital Markets Supporting the Enterprise: Social Media can make the difference Developing Insights from Social Listening and Social Analysis 75

4 From the Editor s Desk This issue of FINsights will help you understand how customer and employee engagement through social media can deliver real business value. We shall discuss how customer behavior has changed and where banks should invest to maximise return. Of course, the hype is around leading social media sites such as Facebook and Twitter, but the main response from financial services beyond having a presence on these sites has been to create blogs and develop their own communities where they can retain control. Our premise is that this approach is wrong because it fails to engage consumers correctly and views social banking too narrowly. We argue that the customer lifecycle has changed and that social techniques play a key role within it. In this issue of FINsights, we shall discuss a wider view of social banking and explain where/how you might invest in social media initiatives effectively and develop a social commerce capability that has real potential to build sustainable advantage. Retail financial services are piggy-backing on the retail industry experiences. Analogous themes like aggregation services, crowd sourcing advice, and customer service have come into play. Except for a select set of early adopters, the vast majority is failing to realize the full value of social media due to fears related to transparency and unfounded concerns related to customer privacy and regulations. These banks have to realize that change has arrived. For example, just like electronic trading made physical exchanges obsolete, social media can dramatically reduce the cost or entry barriers of monetizing trading skills and market insight. Customer communities will determine the analyst or trader whose insights are most valuable. There is no hiding behind old boy networks or imposing brands. We believe that social media concepts apply even in the institutional customer segment/ capital markets space. An interesting concept of closed communities is emerging, which strikes a balance between secrecy and regulatory needs versus advantages of a community. While it is too early to see the impact of social media in the capital market space, we explore the entire Front-to-Back value chain and share our perspective. In any rapidly evolving medium, execution approaches need to respond to the changes, and readers must keep this in mind as they assess the recommendations across the articles. However, we believe that the core concepts and underlying thought will remain valid and will help the readers devise a successful course of action relevant to their context. Mahesh Makhija Vice President & Global Head-Payments & Cards Practice, Financial Services & Insurance, Infosys Limited Phil Freegard Senior Principal, Next Generation Commerce, Infosys Limited Shashidhar Bhat Senior Principal, Financial Services & Insurance, Infosys Limited

5 FINsights Editorial Board Ashok Vemuri Member of the Board & Global Head Financial Services & Insurance Infosys Limited Mohit Joshi Vice President & Head Financial Services & Insurance Europe Infosys Limited Rajesh Menon Partner Financial Services & Insurance Infosys Limited Lars Skari Partner & Practice Manager Financial Services & Insurance Infosys Limited Balagovind Kesavan Head of Marketing Financial Services & Insurance Infosys Limited Mahesh Makhija Vice President & Global Head- Payments & Cards Practice Financial Services & Insurance Infosys Limited Phil Freegard Senior Principal Next Generation Commerce Infosys Limited Shashidhar Bhat Senior Principal Financial Services & Insurance Infosys Limited Shaji Farooq, Ph.D Senior Vice President & Head Financial Services Americas Infosys Limited Jackie Korhonen Senior Vice President & Head Financial Services & Insurance Asia Pacific, Middle East & Africa Infosys Limited

6 Chapter: 01 Shanmugam Periasamy Group Project Manager Infosys Limited Harnessing the Power of Social Media in Financial Services The power of social media will have a significant impact on the way financial services conduct business; this can have a transformational impact in their corporate thinking and marketing capabilities. From connecting directly with end customers, or engaging with employees, to collaborating with partners, social media provides a significant value proposition that companies ignore at their peril. As stakeholders increasingly adopt social technologies, the potential of social media can help companies grow customer loyalty, accelerate growth, and unleash their potential. This paper provides insight into how social media technologies can be exploited effectively by financial services enterprises to build their brand, increase sales, and improve customer satisfaction. Engaging Consumers in Financial Services Young people are so convinced of the value of peer networks that they will trust the advice of a total stranger over that of a professional marketer Paul Gillin in The New Influencers Today s consumer demands exemplary service, low-cost tailored products, and a positive experience across multiple product channels. The problem for financial services is that banking products are becoming commoditized, and that the effectiveness of the traditional face-to-face channel is falling. Three key problems underlie the change. Consumers trust in what financial institutions say is at an all-time low, buying behavior has changed so that the traditional advertising product push is losing effectiveness, and finally, consumers are increasingly effective at filtering out marketing organizations now have to earn the right to get consumers attention. Social media is at the center of such change. While it is plausible for a bank to write off one disgruntled customer, it is important to address the issue if the message hits 10,000 people. The social web is abuzz with conversations about companies, their products and services, their branding, their capabilities, and their ability to meet customer expectations. Companies cannot stop or control these conversations. However, they can ensure that they become a part of these conversations, listen to consumer views, work to shape opinion, address issues, and foster customer loyalty. This paper will help you to understand how to develop a strategy to meet such challenges.

7 Components of a Social Media Strategy Fundamentally, the goal should be to engage consumers and convert them from being mere listeners who browse content, to active participators who become brand advocates. The goals have been grouped into three key scenarios: Customer Peer Support: Customer support communities enabled with relevant content and tools provide an easy way for customers to resolve issues themselves, which in turn helps in reducing customer service and support calls. Discussion forums and Ask and Answer are excellent tools where active customers can support each other, while reducing support cost to a great extent. While telecoms have adopted Customer Peer Support, it is also being used widely by Citi and Bank of America affecting the financial services space. Engaging with Target Audience: Social media creates dialogue with an audience around common interests where mutual value can be created. The key to good customer engagement is targeted communication to a specific set of like-minded people. For example, American Express has a very successful small business community; Citi has created specific investment communities for women. Idea Management: Why not ask consumers what they want from you? Idea management solutions directly invite suggestions and ideas from consumers on improving their experience or getting inputs for a new product or service. These create a sense of ownership for consumers and shows that the big bank is listening to what its customers say. All social media initiatives are about listening to and engaging with customers but, critically, they can also increase transparency and lead to greater customer advocacy. The banks with the most established social media programs tend to be those that are the most customercentric. Encouraging staff to engage with consumers through social media will enable greater exposure to customer issues. In turn, this will have a transformational effect on the organization, provided that it is an enterprise strategy and a tactical activity left to the marketing or Internet channel teams. How Should We Engage on the Social Web? Consumers are increasingly relying on social networks to research their next purchase. Although consumers are filtering out traditional marketing communications, they are increasingly interested in what others are saying about their potential purchase they research social sites before finalizing their purchase decision. Retailers and CPG companies are starting to place greater emphasis on building earned media where activities are focused on developing and fostering consumer advocates. They are reassessing whether paid media investments are delivering the best Return on Investment (ROI). Finding the balance between paid and earned media is a key question to be addressed when defining social media initiatives. Social media is also changing the purchasing process for consumers. Purchasing is becoming more of a lifecycle where consumers are engaging in social media after purchase, for example. Smart organizations have incentivized customers social contributions; the level of customer satisfaction with an organization s service is being influenced by others. Others have recognized that developing a level of trust ahead of the purchase ensures that the product stays in the set of products being considered for purchase. Most banks are well behind so where should they start? The key message is to start small and learn. Investment should be low initially and focused on listening to the social web. Key examples are below: 06

8 Brand Building: In reality, social media will not establish your brand in the market but will play a key role in communicating the brand promise, and can be an essential defensive tool when a crisis hits. More critically, direct engagement by staff with consumers every day through social media will increase understanding and transparency; the transformation it can bring about can enable banks to live up to the promise of their Helpful Bank, Simplified Banking strap lines. New Product Launch: Social media is a great platform for creating the right buzz before launching a new product or service. The marketing team can invite the Small and Medium Enterprises (SMEs) to write blogs or publish their video interviews on the products to create awareness and generate interest. Retailers have learned to target key influencers on the social web with free products often in advance of a formal launch. There is an opportunity for banks to adopt a similar approach. Marketing Campaigns: The running of periodic marketing campaigns can be planned and executed effectively through various social media avenues. Social media campaigns are different because they encourage end-user participation, which is an inclusive approach and pays bigger dividends through increased sales. Customer Service: Facebook and Twitter are being used successfully by Citi, Bank of America and USAA as customer service channels. These banks are addressing issues online taking customer-specific problems to secure channels for resolution. The advantage of solving customer service problems on the social web is that others can see the problem being resolved. Customer service is a good starting point for banks because it has a low entry cost, yet provides a way to engage directly with consumers. Young & Free Alberta is a relevant success story about how a credit union successfully connected with its young target audience of between 17 and 25 years, by creating a community and providing a platform for the young audience to connect and discuss their issues. This resulted in a US$ 4 million increase in new deposits from new accounts. However, given such successes, many financial organizations fall into the trap of trying to develop their own communities. While this will work internally and within capital markets, trying to create an owned community is often a mistake for consumer facing propositions. A faster, simpler, and cheaper starting point would be to develop value for consumers so that they volunteer their own networks to the organization. It is better for an organization to exploit the large networks such as Facebook, Twitter, and YouTube, than try to build their own. The 4C Approach to Building a Social Media Strategy Although it is advisable to start small, enterprises must, in the end, deal with a massive flow of reactions from the social web about services and products hitting with an intensity and pace that may be difficult to handle. Social media initiatives also impact many departments within a bank, from marketing to product development, from channel management to technology and, of course, the contact center. In a large organization that is traditionally conservative, it can be quite complex to change thinking and to build new capabilities. To exploit the power of the social web, companies should be prepared to execute a well-structured strategy. Here is an argument for an approach that considers four dimensions a 4C strategy Content, Communication, Community, and Collaboration. Content: The challenge is to successfully combine both user-generated content and content published by the enterprise. 07

9 The strategy needs to consider how users can be engaged to encourage them to interact. A social media strategy should consider how to empower consumers and employees to create content easily. Communication: The strategy should articulate what the enterprise wants to communicate with (not to) employees, partners, and consumers. Blogs are an effective means of communication where enterprises can have key stakeholders register their thoughts on some key issues and strategies. Direct internal and external communication of key messages by the senior management can have a significant impact on stakeholders. Community: Participants return to conversations to collaborate on common themes relating to personal finances, business initiatives, or customer service. The community establishes a sense of belonging and engenders a trust factor among members, which helps in knowledgesharing and enables co-creation. The strategy should articulate the value for all parties in the community, and consider issues such as why a consumer would return, and how the enterprise can monetize the community established. Collaboration: Tools provide a means for diverse teams to work together effectively to achieve a common goal. Wiki is a classic example of the effectiveness of collaboration where more than 3 million articles are created and updated successfully by people from all around the world. Effective utilization of collaboration tools improves team productivity and enhances output quality. What binds this strategy into an active endeavor culminating in benefits for the enterprise, is the Listen, Engage, and Act process. An ongoing process which helps enterprises reach the end goal of their social media initiative, it entails listening to stakeholders, engaging them in productive conversations, and taking visible actions on their feedback. Social Media Maturity Model To help define a roadmap to reach customer engagement goals, it is recommended that enterprises analyze where they are in the process of social media adoption. Infosys has developed a Maturity Model to help organizations understand how to assign priorities and compare their activities with those of others. Level 1 Reactive Social media use within the organization is immature or perhaps, nascent: The organization lacks an enterprisewide, consistent approach for social media initiatives Governance and processes do not exist for social media usage (its use within the organization or externally) Different technologies and solutions are used for various social media initiatives across the enterprise Absence of buy-in and support from senior management on social media adoption and roll-out No common group has been identified to anchor social media-related initiatives Level 2 Proactive The organization invests in social media initiatives, but thinking is embryonic and the benefits not widely understood: There is a social media group responsible for all initiatives, but driving adoption is still a challenge Individual groups within the organization are convinced about social media but adoption is in silos Some products and technologies are standardized, but still not consistent across the enterprise 08

10 Governance and processes exist but are still evolving; they are not adopted completely by various departments No frameworks exist for measuring the success and ROI for different initiatives Level 3 Predictive Social media is well understood and is an integral part of all customer-facing initiatives: An organizational structure for driving and managing social media programs is in place A well-defined social media strategy exists; governance and processes are defined and enforced Technology, architecture, and roadmap are in place and standardized for existing and new implementations Mechanism for measuring the ROI on various social media programs is available and used Approach for analysis of inputs and feedback from different social media programs is available and creates actionable initiatives Conclusion We are in a period of rapid game-changing transformation. Driven by the searing pace of technological advance and by the fact that there is a global consumer market for Web 2.0 technologies, enterprises are witnessing a systemic upheaval in the way they must do business. As more and more enterprises leverage the immense value proposition of social media technologies, the domain is witnessing a tremendous amount of innovation and value creation. Location-and mobile-based social media technologies are poised to provide agility and swiftness in the entire collaboration space. This is going to be a key differentiator for companies in the coming years. With social media tools and technologies still in the nascent stages of development, enterprises in the financial services space are finding themselves in an unfamiliar territory, unsure of where to take their next step. To realize the opportunities, they must take a step-by-step approach that can help them overcome the many challenges inherent in social media adoption. References 1. Infosys iengage Digital Consumer Platform ( ) 2. The New Influencers by Paul Gillin 3. Young & Free Alberta youngfreealberta.com/ 4. DOC

11 10 Notes

12 Kiran Kalmadi Lead Consultant Infosys Limited Rajat Gurnani Consultant Infosys Limited Chapter: 02 Sukhna Dang Consultant Infosys Limited The Facebook Phenomenon: How to use existing Social Media to Better Engage Consumers The financial services industry has undergone a radical change, as today s customers are online, networked, well connected and embracing Web 2.0 applications. This shift in customer behavior has forced banks to rethink their strategies, and slowly but steadily build their presence on social networks, in order to understand their customers better. The buzz around adoption of social media by the banking industry is on the rise and this trend is expected to continue. The industry focus has shifted from customer service to customer engagement and social media is the new way to engage customers. Social media helps banks to build and maintain relationships with existing and prospective customers. Usage of social media not only opens another service channel for the bank but also helps in educating them. Banks should realize that social media is here to stay and leverage it to engage their customers better. Shift in Financial Services Industry The financial services industry is experiencing a transformational change. Banks are reassessing their business models and customer preference is moving toward an interactive banking experience, restructuring the way the financial services industry operates. Growing broadband penetration, comfort with online security and new communication tools are encouraging customers to spend more time online changing the way customers connect with banking institutions. Other factors, like nonfinancial players penetrating the traditional banking model, are posing a big threat to existing players and changing the way banks deal with their customers. The major forces making this shift happen are Customers, Competition, and Communication Channels, as highlighted in Figure 1.

13 Forces Impacting the Shift in the Financial Services Industry Figure 1 Customers Evolving customer behavior - more online, well networked and connected Competition Entry of non-financial service players (retail, telecom) and other players like PFM, P2P, etc. Communication Channels IPTV, IPhone, Mobile devices, Social networking sites, etc. Evolving Customer Behavior Today s customers are spending more time online and their online needs have shifted. This increase in online usage and demand for a functionally rich, interactive experience has led to a shift in the financial services landscape. Entry of New Players Non-traditional competitors from the retail, telecom, and healthcare industries are grabbing the existing financial services market share and also expanding the marketplace with new services and offerings. Retailers such as Tesco and Wal-Mart have used their brand name and wide customer base to enter the financial services market. Telecommunication players are targeting the unbanked market share making the banking landscape more challenging. New Communication Channels Today s customer expects more customization and interactivity. Banks are embracing Web 2.0 technologies Social Applications, Podcasts, Widgets and Mashups to meet these customer demands in a better way. Web 2.0 technologies are shifting banks focus from traditional communication channels to new communication platforms. Traditionally, it was a two-way communication between the company and the customer, but these new platforms have made the communication level more interactive (i.e. customer to customer and customer to company). These three shifts in the financial services landscape are forcing banks to reassess their banking model and focus more on engaging customers. Today s customer engagement model is more social in nature as highlighted in Figure 3. The focus of banks has shifted from merely attracting customers and pushing products, Shift in Communication Figure 2 Traditional New Communication Company Customer Customer Customer Company 12

14 Shift in Customer Engagement Model Figure 3 Shift focus from Attract and engage customers Push products to customers Banks run promotions and campaigns to attract and engage customers Products/Services are pushed to customers, irrespective of the benefits for the customer The key focus of the bank is to retain the customer at a minimal cost Shift focus to Earn trust, build relationships and generate advocacy Enable transactions by empowering communities Banks are creating relevant content and services, that are beneficial to communities, which help in building trust based relationships and advocacy These communities act as forums to interact with customers/prospects, build brands and enable transactions The key focus of the bank is to empower communities that will leverage social networks for social commerce Growth of Social Media Figure Million 700 Billion 90 Million 165 Million Facebook Users Minutes Spent on Facebook Monthly Tweets per Day Twitter Users to engaging them, earning trust, building relationships, generating advocacy, and enabling transactions by empowering communities. Banks have realized that social media is an effective tool to attract and retain customers. The current generation of users has also taken social networking sites and other social media platforms at a breath-taking pace, and the number of users adopting the social platforms is growing at a rapid pace (refer to Figure 4). To take advantage of this huge potential, banks are launching their own social media initiatives, for example, having a presence on social networking sites (Facebook, You Tube, Twitter, etc.), creating community forums, etc. Today, social media initiatives have become a vital cog for banking firms to engage directly with customers of today and tomorrow. Social Media in Financial Services Industry Initially, most banks were of the view that having a Facebook or a Twitter page is what social media is all about. But as the industry s focus shifted from customer service to customer engagement, banks not only started laying down elaborate social media strategies, but also aligning them with future business plans. Banks need to identify their social media objectives and match them with the suitable delivery mechanisms. The table below gives the mapping of social media objectives to various delivery mechanisms and some specific examples. 13

15 Social Media in Financial Services Industry Figure 5 Social Media Objective Increase the brand awareness and market its products and services to existing and new customers Provide Web 2.0 as another channel of delivery which should compliment with other online and offline channels Understand the preferences and needs of customers and provide customized products based on insights Listen to customer s complaints and difficulties and respond to them effectively Delivery Mechanism Social Networks, Blogs, Micro Blogs, Online Videos, Widgets, Producasts, Financial Social Networks Examples To increase customer advocacy and brand awareness among small businesses, American Express OPEN has launched a Big Break Contest for Small Business, where participants need to fill a short questionnaire describing how they would utilize competition s winning to better their business New Zealand s ASB bank launched a virtual branch on Facebook, where customers/noncustomers can chat with the bank staff on a real-time basis. The virtual branch is expected to compliment with ASB s existing Internet banking services Danske Bank is leveraging Facebook to improve its mobile banking application, where-in they have invited users to submit ideas on features and design for the mobile banking application If customers have a question for Wells Fargo, they can use Ask_WellsFargo to get a quick response to their query Social Media and Customer Engagement Social media helps banks to build and maintain relationships with existing and prospective customers. Usage of social media not only opens another service channel for the bank, but also helps in educating them. Building and Maintaining Relationships: Retaining existing customers and acquiring new customers is becoming a big challenge for banks. Hence, banks have created forums, either on their own websites, or on third party websites, where customers can engage with each other and the bank. Customers get instant answers to their queries and also share their Customer Engagement Objectives Figure 6 The underlying objective for banks to tap social media is customer engagement. Building and Maintaining Relationships Customer Engagement Educating Customers Another Service Delivery channel 14

16 experiences about the products and services of the bank. After providing general forums, banks are now focusing on specific communities (set of people who share the same interests or who have the same objectives). Communities a) allow similar interest customers to connect with each other; b) help banks gain insights into what their existing/ prospective customers or other stakeholders are looking for; and c) assist banks to launch new products and services based on the conversation on the social networks. Constant engagement with communities will help banks to retain customers and generate newer leads. A strong community will create advocates, who in turn will influence other customers in the community, thereby creating a series of influencers. Today, Wells Fargo is considered as the leader among banks in the use of social media. The social media strategy of Wells Fargo is to communicate effectively with its customers and help them succeed financially. Wells Fargo has initiated appropriate forums (for example, blogs, micro-blogs, etc.) for its customers; it listens to the conversations happening on these forums and then directly participates in order to add value to its customers. In fact, Wells Fargo was the first bank in the US to have started a blog on its website. Today, it has a number of blogs, each meant for a particular community. For example, the Beyond Today Blog is a place that addresses retirement concerns. Individuals share their retirement goals, ask queries related to retirement, and bloggers who are industry experts share their thoughts on such topics. Source: Source: For students who need information regarding financing their education, Wells Fargo has started a conversation named The Student LoanDownSM. The blog provides information on the financial aid process, and individuals share their own experiences with respect to education financing. Other blogs include Wells Fargo Environmental Forum, AdvantageVoiceSM Blog (Investment News and Economic Insights), Guided By History Blog, Wells Fargo - Wachovia Blog, etc. Educating Customers: The banks aim to educate their customers by engaging them via Web 2.0 tools. They upload videos and publish blogs about their new products and services, interviews of key personnel on investment and economic insights, latest commercials, 15

17 recent news, etc. The customers can read and view the content and also provide their feedback and comments. vote on their favorite videos, and the winning video was aired during the 2008 Rose Bowl. For instance, within YouTube, Wells Fargo has three different channels: a) Wells Fargo YouTube channel covers the bank s history, recent TV commercials, product information, latest news, etc. b) Wells Fargo s Small Business YouTube channel features videos that share best practices and strategies to run small businesses successfully. c) Wells Fargo Commercial Channel broadcasts information on commercial and wholesale banking services. Wells Fargo is the first to have a Second Life presence. It has launched Stagecoach Island Community which is an online virtual world where users can connect with their friends, and at the same time learn to manage money. Another Service Delivery Channel: Today, banks consider social networks as another service delivery channel that provides answers to the queries of customers in real time. Instead of visiting a branch, the customers can connect with the banking personnel on microblogs. In cases where account-specific information is required, the customers are contacted privately by the bank. Wells Fargo provides real-time assistance and helpful tips to its customers on its Twitter page. Source: To engage viewers and create brand awareness, Wells Fargo had also launched a Center Stage in the Rose Parade video contest, where contestants needed to download a song provided by Wells Fargo, and create the best version of the song. People were asked to Wells Fargo has a dedicated group responsible for implementation and monitoring of its social media initiatives. The group constantly follows the comments and posts submitted by the consumers. It also measures the overall sentiment of the bank as calculated by consumer posts on various social networks. The bank s constant endeavor is to implement social media initiatives that allow it to engage not only with its existing customers, but also with its potential customers. 16

18 The table given below gives a snapshot of the social media initiatives at Wells Fargo. Social Medium Name Metrics YouTube Wells Fargo YouTube channel Channel Views: 258,616 Total Upload Views: 287,569 Wells Fargo s Small Business YouTube channel Channel Views: 10,089 Wells Fargo Commercial Channel Total Upload Views: 19,061 Twitter Facebook Blogs on Wells Fargo website Note: Metrics as of 18th April, 2011 Ask_WellsFargo Wachovia Wells Fargo Careers Wells Fargo History Museums fan page Stagecoach Island virtual community Beyond TodaySM Blog Wells Fargo Environmental Forum AdvantageVoiceSM Guided By History The Student LoanDownSM Stagecoach Island Community The Wells Fargo - Wachovia Blog Followers: 6,966 Tweets: 12,329 Followers: 8,563 Tweets: 6,373 5,613 people like this page 2,438 people like this page 607 people like this page NA What Should Banks Do? The majority of banks is enthused by the imminent potential of social media and what social media can do to attract and retain customers. To deepen their engagement with customers, banks should: Have a clear objective of what they want to achieve from their social media initiatives Create a specific group or position within the marketing function, or separately, for implementing and monitoring the social media strategy Communicate with customers in a polite, clear, and honest way. Listening to them and providing useful results via social media tools is of utmost importance Publish user guidelines for customers to make them aware of the do s and don ts while engaging on the public forums related to the bank Focus on virtual communities to build and maintain relationships. Target their social media efforts on specific market segments to offer customized products and services Invest more in social media analytics, social network analysis, social media monitoring, and social intelligence, as these applications will help banks to be proactive in understanding their customer needs and in providing needbased services to their prospective and existing customers Conclusion Banks have realized that social media is here to stay and in reality, has become an important aspect of their marketing strategy. There are no clear winners and losers in the pursuit to create a social media presence as yet, but success will be achieved by the bank that patiently listens, positively reacts and efficiently engages its customers. 17

19 18 Notes

20 Balwant C. Surti Industry Principal & Head Solutions Infosys Limited Chapter: 03 Yamini Aparna Kona Senior Consultant Infosys Limited Designing New Financial Products for the Social Banking Age The growth of social networking offers several opportunities for banks viral marketing, co-creation of products with consumers, providing self-help and co-operation through forums, and more. Social networking also offers opportunities for designing and offering new financial products and services not previously possible or feasible. With banks not having much of a choice today but to join their customers as they go forward with social networking, let us look at the potential offered by social networking, and how banks must leverage the opportunities available to design new products and services around social networking. The idea is not merely to link financial products to social networking in some way, but to really understand the potential that social networking offers and use that potential to define new products, or variants of existing products with an entirely new flavor. Designing New Financial Products for the Social Banking Age Social networking offers a unique ability for established bank brands to think fresh and redesign or enhance their offerings to attract customers across generations. While social banking may not transform customer banking habits overnight, the onslaught of social networking is redefining the customer interaction. Banks that understand the scope and potential of social banking and financial social networks, have a much better chance of adapting themselves to the demands of modern times. Once banks start involving themselves with customers they get access to: 1. a dynamic network which keeps on growing (or shrinking), 2. the ability to record, monitor, and analyse social interactions, personal preferences and behaviour, and 3. instant feedback and reaction instant communication from any device.

21 How Banks Can Leverage Social Networking to Design New Products A banking product today undergoes the following life cycle (refer to Figure 1 for Banking Product Life Cycle ). Social networks have given customers a powerful platform, enabling them to air their perspectives (positive or negative) to organizations. Banks can benefit from this medium if they can use it to cocreate harnessing the customer experience to fashion new products and services that the customer wants. Appropriately, designing a financial product for a social networking world will call for using social networking at all stages of the product life-cycle: While the use of social networking at all stages of the product development lifecycle itself is an innovation which has yet to see strong adoption amongst the financial sector, it is something that the manufacturing and retail businesses around the globe have already played around with. For example: SteelMaster - A manufacturer of prefabricated steel buildings, SteelMaster explored a completely new market by using social networking. Their Facebook page gave opportunities to customers from the untapped market such as chicken farms and woodworkers, to look at their steel solutions in a new light with fresh solutions to their problems, thereby opening doors for a completely new segment. Nokia-Maemo - Nokia promotes an independent community of over 22,000 Banking Product Life Cycle Figure 1 Test market Build a closed community for test marketing. Take feedback and continue modifying the product until necessary modifications are reduced to a bare minimum. Reward test marketers and early adopters with reward points. Product Design Though product design would ideally be driven by the customers, regulatory requirements, intellectual property infringements, and organizational boundaries are constraints that will likely drive in-house modifications. Launch Use traditional media AND social networking for the launch. Provide mechanisms to buy the product through social networking in addition to traditional channels. Make the launch an exciting event the goal should be to generate referrals even if the participant does not want to buy. Maturity Extend the life of a product to avoid a premature death and obsolescence by monitoring customer preferences. Build community support through online forums in order to take the load off the call center. Look for new ideas once again if the product is dying and can t be saved. Ideation Use the social networking to harvest ideas and for feedback on ideas. Ideation can be fun, participative, and rewarding. 20

22 developers who are constantly working on making the open source-based Maemo platform better. The community of developers works with open source tools and processes and helps develop new software for both the platform and on top of the platform. The unique thing about this initiative is that Nokia did not create a new community, but enabled an already popular community. community to get ideas from their customers and also to improve their products by conducting surveys to find out customer views about new initiatives. This allows Dell to gauge customers before they launch their products. Fiat In Brazil, Fiat called upon customers and interested fans to help them build a new car the Fiat Mio. Fiat built a web platform to gather inputs and received as many as 10,000 suggestions, around size, environmental specifications and entertainment options. Lenovo Lenovo enables their customer community to suggest changes to their existing product range, thereby helping to extend the life of a product and at the same time being more useful to their customers. Stylefactory - A furniture manufacturing company, Stylefactory allows their prospects, fans and customers to vote on their designs before they take them to production. Once enough people have promised to buy the object, it goes into production, thereby not only ensuring a customer preferred design, but also discovering committed customers before the product is launched. Dell Dell uses the Ideaforum customer Kaboodle Kaboodle is a social shopping site that enables customers to look for products that are being searched by other customers too, share their search, and co-shop with shoppers across geographies. Customers can make recommendations to each other as they discover new products and deals. Banks and Adoption of Social Networking for Customer Connect Social networking allows banks to connect with their customers, products and services being at the core of each of these initiatives. 21

23 Marketing New product announcements, press releases, events that customers need to know about Building Relationships Easiest and increasingly the preferred means to stay connected with the customers and provide personal attention Solving Customer Issues Provide means to help customers when they have issues/questions about services or products Product Innovation Seek product suggestions for better innovation Product Reviews Get a feel of product performance and comments around this Reputation & Crisis Management Engage early in the game to save reputation during crisis situations Building Products with Social Networking in the Banking Space Traditional banking players are considered intimidating institutions lacking a personal touch; this provides an edge to social bankers. Financial planning and investment advisory is another area of service that is quickly catching on in the social banking space. By the end of this decade, social banking organizations are expected to capture a sizeable market for retail lending and financial planning across the world. What follows are some innovative ways by which banks can turn the threat from non-traditional players into an opportunity and use social networking to reach out to Gen Y. An interesting observation here is that instead of attempting to copy the social banking style to the letter, banks can explore the idea of partnering with financial social networks offering services such as peer-to-peer lending, payment services from social network sites, and financial and investment advisory. Social Lending : In a social lending model, the bank merely acts as an intermediary. One customer lends to another customer. The financial institution facilitates the process of publishing the need, attracts others to lend, and aggregates the lenders. For example, Prosper.com is a site that facilitates the auction of personal loans enabling people who can afford to give loans to compete with each other to lend their money at rates they desire. People interested to borrow can put their needs on the same portal along with the rates that they can afford and the amount they are looking to borrow. This allows lenders to bid for the amount they can lend. On similar lines, Zopa provides an online money exchange service, where people who do not want to use their own money in savings accounts, can borrow loans from others who in turn bid by looking at the amount needed and the acceptable lending rates. Community Products : These products are designed to involve the community, though they are owned by individuals or a group of individuals. As an example, consider a marriage savings account where friends, relatives, and others are invited to contribute to reach a target amount so that the couple can afford a larger or more extravagant wedding. Chase uses social networking to promote its corporate philanthropy crowd-sourcing initiative, encouraged by over two million hits on its Community Giving Webpage in response to its first campaign on Facebook. The interesting point here is that Chase did not created a community, but uses 22

24 already existing social networking platforms such as Facebook to increase awareness of their service. Spend Comparison Products : Banks can take a clue from spend analysis products such as Bundle which allows customers to analyse their individual spends across shopping, household, entertainment, and fuel with people across cities and regions. While this may not be of direct interest to customers to buy products, it provides a great opportunity for banks by simply looking at the customer spend insights. They can create personas enabling them to sell new services or products to the customers, and at the same time take data to analyse the fitment of services according to the regions. A step ahead of Bundle is an offering from Mint, a personal finance manager, that pulls customer transactions from various accounts be it credit cards, checking accounts, or PayPal. Apart from regular banking transactions, Mint also supports hundreds of other accounts including the ones from Macys, and other store cards and investment accounts. Apart from showing how much you spend across various sections, it also shows you how you can save; their Ways to Save page targets affiliated advertisements from various banks. They also track customers investment and suggest changes, if any, through their own tools, empowering customers with the right mix of investment tools across banks. Banks can look at a model such as Mint to increase their revenue per customer, at the same time providing customers with the right tools to manage their finances more effectively. Split Money : Personal payments are not easy. You paid for lunch and now need to divide and recover it from your friends equally. In such circumstances, banks can step in and make it easy by reaching out to involved parties and offering a variety of payment options. Obopay, a mobile payments company, offers a solution in this space customers can split a paid bill just by sending messages to the person who took the cheque. This has also been extended to the scenarios where college students split their room rent, payment for books, etc. An extension of the above is another offering called Friendfund. Friendfund allows a user to pick a recipient from his/her Facebook or Twitter contacts, state the reason for the payment request, and, once everyone is on-boarded, the friends can be invited to make contributions to a gift pool. Community Funds : This consists of savings and investment products where individuals invest their funds, and these in turn are reinvested by the bank using community preferences rather than advice from Financial Advisors and Fund Managers. The community invests and the community decides how the funds are to be invested. The aggregate or average vote of the community on a real-time basis is used to reinvest and optimize the portfolio at periodic intervals. In short, the bank enables the community to make investment decisions and monitor the portfolio performance, while offering professional advice, sensible circuit breakers, and risk management and compliance restrictions. Challenges There are a host of other challenges, as enumerated below, which are delaying banks aggressive entry into social networking. 23