In the Press
01 August 2011
Social media and the private bank
Alan Shields
Professional Planner
The world is caught up in a frenzy of social interaction. People the world over are sharing thoughts and experiences with consummate ease: with friends and strangers; with colleagues and potential employees; with siblings, parents and grandparents. The ubiquity of sites like Facebook, Twitter and YouTube in today’s world is hard to ignore, with these brands practically redefining what is meant by the term ‘household name’. Unsurprisingly, organisations such as banks often seek to monetise these massive gatherings of people — sometimes successfully, sometimes not.
If a bank is truly interested in its relationships with its clients, as any private bank must be to succeed, it must listen to its clients. Sometimes this involves going to where the clients are already speaking. This is why the question “How do we use social media?” is not the right place to begin. It’s a question which ignores the client, the private bank’s most valuable asset. The point of a private bank’s social media activity should not be to monetise the crowd, but to cater for the client.
Not all social media sites are created equal. Each has its own purpose and usefulness, so a private bank should use the site or sites that will best help it reach its goals. This may involve creating a presence on multiple sites, making best use of each site’s strength. It may involve determining whether a bank-wide presence or a relationship manager-based presence is best for each site. But it will always involve listening to clients and determining which social media solution would work best for them.
Each client’s needs are different, and so a one-size-fits-all method of social media presence is unlikely to work well. However, if a private bank is familiar with social media sites and etiquette, they can adapt to their client’s needs and enrich the private banking relationship.
It can be challenging to cut through the hype surrounding social media and see its value in clear terms. There are benefits to implementing tools which enrich interactions with clients. However, in relationship-based banking services, “Everybody else is doing it” may not be the best reason for a bank to change the way it relates to its clients. Research conducted by RFi has revealed the abilities and inabilities of social media in the private banking sphere:
What social media can do for you
1. Help relationship managers (RMs) create and maintain client networks
2. Improve responsiveness — private banks which are able to respond to their clients’ complaints and requests within minutes have a competitive advantage
3. Word-Of-Mouth 2.0: move the oldest of relational methods into the digital arena
4. Help distribute bank-wide messages quickly and easily
5. Help private bank clients keep in step with market trends and help RMs keep in step with clients
What social media can’t do for you
1. Solve all problems with client relations and bank performance
2. Act as a stand-alone relationship management tool — must be one part of an adaptive, client-centric communication strategy
3. Reach every client, since not all social media users want to use it to talk with their bank
4. Be used for all banking matters, as many matters between private banks and their clients are too confidential
5. Make messages inherently ‘genuine’ unless they are backed up by client experience
RFi research has also provided insights into the way private banking clients use social media. One interesting revelation is that private banking clients of all ages and professions use social media, though not all in the same way. For instance, YouTube is used most by younger clients, while LinkedIn is used more by older clients with more extensive executive networks. Another interesting point is that some clients who use social media don’t think the sites they use are relevant to them. These clients might not engage with these sites productively, or even frequently. RFi’s research highlights the need for private banks to listen to their clients’ preferences and to use social media as part of an adaptive strategy.
Social media is a user-centric online environment, so a private bank’s social media interactions must be client-centric. The client must be the first consideration and the driver for change, since social media is not primarily a marketing tool, but a relational tool. It will not replace traditional relationships, but it has the capability to augment and enrich them.
When well-informed about the nature, the functions, the possibilities and the restrictions of a range of social media sites, private banks can create tailored social media solutions for each client, where appropriate. Their RMs need to be well-educated in social media etiquette, in order to get their solutions right every time. And they need to be flexible, adapting to changing client needs and constantly evolving technologies.
These are not new concepts. Social media is, in many ways, just a new platform for word-of-mouth, the oldest of relationship management techniques. Relationship managers have always needed to be well-informed, flexible and client-centric. Social media looks different and innovative, but its foundations are essentially nothing new. As such, private banks can implement sensible social media strategies and seek to augment, rather than replace, the way they have managed their client relationships in the past.