Banks and Social Media: The Customer’s View

What do real customers say about what they expect from their bank on Facebook or other social media sites?

We simply asked them. 

The quotes you’ll find throughout this article are from a series of “man on the street” style marketing research videos recorded by StrategyCorps in Nashville, Tennessee. The people who participated in this research were asked questions about how banking fits in with their lifestyles, one prominent topic being social media. 

The answers can help shape not only your social media strategy but your bank’s entire customer connection strategy. 

What customers have to say

If I’ve gotten really good service from somebody, I’m going to actually care about going to their Facebook page.

Facebook is simply an extension of your bank’s customer service personality. That’s why companies that are best at customer service are also naturally best at Facebook. They’ve given customers a reason to care about them.

By making customers fall in love with your service, they’ll fall in love with your bank. That’s where social media connections start, word of mouth takes off and loyalty to you beats out other competition.

I don’t look for my bank on Facebook ever, and I don’t associate those two things.

Think about the people you follow on your personal Facebook account. You have an interest in those people and what they’re up to. You care about what they care about. 

It’s the same for a customer choosing to interact with you on Facebook. What has your bank done to make that customer have an interest in you? How have you added some type of value to their lives? How are you connecting with other things they like?

By providing services that are appealing to their current behaviors, your bank becomes more and more relevant in their everyday lives.

If there was a clear deal or a clear bonus to giving them my attention or time, then yeah I’ll do it.


If it’s an advertisement, I don’t ever really pay attention to those.

Customers say that to connect with you on Facebook, they want to see what you can offer them, but they also say it’s equally important to not be bombarded with only promotional and advertising content. Some customers won’t look at it at all.

Smart retailers know that using social media to promote products is a necessary outlet today, but where banks have an advantage over the average retailer is with their opportunity to use non-promotional content, the type of content that simply celebrates people.

This is where you can share real stories of the relationships you have with your customers. Good customer service stories on social media can be infectious, and you can use them to prove that you really do put customers first.

They’re out supporting this artist, or they’re out supporting this event… I don’t mind seeing success, like if they’re doing something great.

Customers like to see when banks connect with other things they care about.

Use Facebook to let them know what you’re doing in the community. Help spread the word about a local business or charity. Brag about the positive things happening in your area and the people that make it great.

Share customer stories, like how your loan helped the young family buy a first home or how you helped someone set a goal and save money. You’re still advertising your products here but doing it in a much more personal way.

Spotlight your employees and share a story of what someone did recently to take care of a customer. Despite all the investments we make in technology, lots of customers still define their relationship with you based on the people they interact with in the branches. Let your employees’ stories be the voice of your bank in social media too.

Some people may not check anything from their bank regularly, but people are on social media all the time.

Facebook is now one of the key ways to communicate with customers, but getting them to make the first connection starts with teaching them to care about you.

Provide exceptional customer service to make people want to see you on Facebook. Continue to promote your products, but post non-promotional stories even more. Remember to talk to your customers regularly to learn what they enjoy hearing from you on social media.

For more topics in this customer research series, including mobile banking habits, trust in banks, digital vs. branch interaction and more, visit

What Can Banks Learn From Call of Duty?

1-22-14-sutherland.pngAs banks begin to look outside their industry for innovation, the gaming industry has interesting ideas that could apply to banking. For both industries, it’s important to create a personalized experience where customers can help themselves. The gaming industry, specifically Activision Publishing Inc.’s Black Ops/Call of Duty, continues to expand on its use of digital and social media communication. Call of Duty/Black Ops uses social media in a holistic way through teasers, communications, monitoring, responding, and even mobile advertising with viral sharing. It has paid off for Activision. In November 2012, Activision’s Black Ops II set an all-time gaming record of $500 million in sales in one day. The success has been partially attributed to an ad with partners MEC and Millennial Media, which enabled the use of a mobile device’s built-in camera along with social media access. The “Call of Duty: Enlist” ad asked gamers to become a black ops agent with Millennial Media’s photo shoot media feature embedded in the ad.  Viewers of the ad could simply take a photograph of themselves using their phone, click a button to insert their face inside a Black Ops character, and share the photo on Facebook with all of their friends. 

This approach is fun, encourages interaction, makes it personal and inspires viral sharing on social media. Follow this link to see how easy it is.

You may think: So what? The average gamer is a 16-year-old kid, right? Wrong! According to the Entertainment Software Association (esa):

  • 51 percent of households own a dedicated game console
  • The average game player is 30 years old with 36 percent of gamers being older than 36
  • Women 18 years and older represent 31 percent of the gaming market
  • 50 percent have full-time jobs
  • 12 percent work or study part-time
  • 7 percent are homemakers

Not only does the gaming industry use social media for effective communication, gaming is a social environment with many gamers interacting in online communities. The gaming industry is growing rapidly on mobile devices and through social media sites such as Facebook. The banking industry can learn from Activision and accelerate its usage of social media.

Social Media is a Channel that Demands More Focus in Banking

There is an enormous perception gap between what consumers rank as their reasons for following companies on social media and why businesses believe consumers follow them, according to an IBM Study, From Social Media to Social CRM. Create messages that resonate with the hierarchy of why consumers are following you.

Consumers number one reason to follow a company is obtaining discounts closely followed by making purchases —tailor your messages with this in mind.

Businesses think consumers “want to learn about new products” but they are wrong—reduce the focus in social media on product knowledge.

Seventeen percent of consumers researching financial services in social media convert to making a purchase, more than any other source of information gathering, according to a Gallup Financial Industry report. Developing a strong social media strategy will accelerate growth.

What Makes a Truly Effective Social Media Model?

According to a Sutherland Global Services white paper, Thinking Social Insights, companies need social outreach specialists that will respond beyond the organization’s owned and controlled forums. They need social media analytics for brand tracking and sentiment analysis, to hear the voice of the customer, for feedback management, for comparison with competitors and for reputation management. Companies should have social media support fully integrated into a customer relationship management program. They should have automated distribution of all social media and drive customer service to social media outlets.

Tim Rondeau, the senior director of customer care at Activision, was quoted on the web site for Salesforce, the data marketing company, explaining that Activision can interact with customers in ways that work for them. “… In addition to taking phone calls, it’s important to expand our communication with our gamers on Facebook and Twitter.” It sounds like a quote for any and every bank; simply swap the word customers with gamers.

Managing Social Media Risk: New Guidance From Regulators

2-20-13_Bryan_Cave.pngSocial media has become ubiquitous and many banks are wondering if they can survive without a trendy presence on Facebook, LinkedIn, Twitter, YouTube, and in the “blogosphere.” It is a bit of the Wild West out there though, with few rules in place to protect your message. Instead of yelling at the TV at home, a person can post a negative comment about your business for the world to see and, even if unfair and baseless, there may be little you can do about it. 

Financial institutions use social media in a variety of ways, including marketing, promotions, account applications, consumer feedback and communicating with new and existing customers. Since these communications occur in an informal and largely unsecured environment, it introduces new risks. If your bank is active in social media, or simply advertises consumer banking or other products through social media, new proposed guidance from the Federal Financial Institutions Examination Council (FFIEC) instructs your bank to adopt compliance policies and procedures governing these activities. Even if your financial institution is not active in social media, you need a process for responding to negative comments or complaints that surface through social media platforms.

This article briefly summarizes the proposed FFIEC guidance.

We encourage all interested banks to submit comments on this guidance by the deadline of March 25, 2013.

What are the compliance expectations for banks using social media?

On January 23, 2013, the FFIEC issued a request for comment on a proposed “Social Media: Consumer Compliance Risk Management Guidance.” The intent of the guidance is to help banks, thrifts and non-banks under the supervision of the Consumer Financial Protection Bureau identify, address, oversee and control risk from social media within their overall risk management program. 

What forms of social media are within the scope of the guidance?

The FFIEC considers social media to include forms of interactive online communication in which users generate and share content through the use of text, images, audio and/or video, including:

  • Micro-blogging sites (Facebook, Google Plus, MySpace and Twitter);
  • Forums, blogs, customer review web sites and bulletin boards (Yelp);
  • Photo and video sites (Flicker and YouTube);
  • Professional networking sites (LinkedIn)
  • Virtual worlds (Second Life); and
  • Social games (FarmVille and CityVille).

What should your social media compliance program include?

A financial institution should have a risk management program that allows it to identify, measure, monitor and control risks related to social media. The size of the program should relate to how active the bank is on social media. 

  • Governance structure: Should enable senior management to direct the use of social media to contribute to its strategic goals;
  • Policies and procedures: To monitor social media use and compliance within all applicable laws, including methodologies to manage risks from online activities such as postings, edits, replies and retention;
  • Due diligence process: For managing applicable third party vendor relationships;
  • Employee training: Program that incorporates policies for official, work-related use of social media, and potentially for other uses of social media, including listing prohibited activities;
  • Oversight process: For monitoring data posted to third party social media sites;
  • Audit and compliance: To ensure ongoing compliance; and
  • Reporting parameters: To evaluate the effectiveness of social media against defined goals.

What are the key areas of concern?

  • Compliance and legal risks: Banking and consumer laws must be followed, even in the social media space
    • Deposit/lending products
      1.  A lending advertisement mentioning APY or bonus has certain requirements under the Truth in Lending Act. A link to the full disclosures can be provided in social media.
      2.  A creditor must preserve prescreened solicitations made through social media, as required by the Equal Credit Opportunity Act Regulation B.
    • Bank Secrecy Act/Anti-Money Laundering
      An e-banking product offered or conducted through social media is subject to the BSA/AML policies that apply to all customers, products and services.
    • Payment systems
      If social media is used to facilitate a consumer’s payment transactions all laws, regulations and industry rules apply such as the Electronic Fund Transfer Act/Regulation E, UCC, the Expedidted Funds Availability Act Regulation CC and PCI DSS. 
    • Community Reinvestment Act (CRA
      If a depository institution is subject to the CRA and must maintain specific items in a public file, its policies and procedures should include monitoring social media sites.
    • Privacy
      1.  If social media is part of your customers’ online account opening or use experience, Title V of the Gramm-Leach Bliley Act will apply, which restricts use of personal information shared with third parties, and gives customers the option to opt out of the sharing of such information.
      2.  If a financial institution sends unsolicitied communications to consumers through social media (e.g., spam or SMS text message) the CAN-SPAM Act and the Telephone Consumer Protection Act may govern. 
  • Reputational risk
    • Fraud and brand identity
    • Privacy concerns: Policies and procedures must address risks from receipt, use and sharing of consumer information on a social media.
    • Consumer complaints and inquiries: The inherent nature of social media exposes a bank to reputation risks when users post critical or inaccurate statements.
    • Employee use of social media sites: An employee’s use of social media, even through a personal account, may appear to a customer as reflecting the bank’s official policies.
  • Operational risk
    • Use of information technology, including social media, requires identification, monitoring and management of risk of loss from inadequate or failed processes, people or systems.
    • The incident response protocol for a data breach or account takeover needs to address social media risk.

Breaking Barriers: A Global Information Security Study

barriers-wp.pngWith increasing business demands and evolving regulatory frameworks, information security is a top priority for financial services industry (FSI) organizations. This year’s security survey study conducted by Deloitte finds that many FSI organizations have become more proactive in implementing innovative security measures and creating greater awareness of information security within their businesses. However, most organizations in the survey are challenged with balancing the cost of information security initiatives with the perceived risks of sophisticated threats and emerging technologies.

The following summary highlights the responses from over 250 financial services organizations from 39 countries:

Stronger Together: Silos and Barriers Retreat

  • Almost two-thirds of respondents believed that their information security function and business are engaged.
  • Over 50 percent of respondents indicated that they have a strong working relationship with operational risk management. Close to half of respondents indicated that they have strong relationships and coordinated activities with enterprise risk management.
  • Information security governance; identity and access management; and information security strategy and roadmap are cited to be the top security initiatives for this year.

Adapting to New Technologies: Security Innovation

  • As the use of social media increases, 37 percent of respondents are revising organizational policies; and 33 percent are educating users on social networking to address the security risks.
  • Many surveyed organizations have explored cloud computing options. However, 40 percent of the respondents indicated they still do not use cloud computing. The reasons cited include technology prematurity, security risks, and adoption capabilities of the organization.
  • As a part of their mobility program, many organizations have already deployed, or plan to deploy, mobile VPN, central device management, and mobile device management software. However, more than 50 percent of respondents have not yet planned for deployment of anti-phishing software, employee and customer-facing applications, and data loss prevention for mobile devices.

Policing Cyber Threats: Safeguarding Data Assets

  • Three out of four respondents have dedicated privacy resources; organizations are increasingly focusing on protecting their sensitive information and formalizing the privacy function.
  • Forty-nine percent of surveyed organizations claim to actively manage vulnerabilities, 82 percent of which are also actively researching new threats to proactively protect their environment from emerging threats.
  • Most surveyed organizations use the Security Operation Center (SOC) to monitor traffic and data and actively respond to incidents and breaches.
  • More than half of the respondents indicated that their organizations manage the SOC internally to get a better understanding of information security issues and gain more control over their operations.
  • Consistent with prior years, respondents cited a lack of sufficient budget (44 percent) and the increasing sophistication of threats (28 percent) as the primary barriers to implementing an effective information security program.

Sector Highlights: Banking

As banks adapt to increased financial regulatory pressure and adopt new technologies to stay competitive, they are challenged with managing myriad vulnerabilities and business expectations.

The following highlights the responses from 158 banking organizations, making up 62 percent of respondents:

Maturity Paradox: How To Keep The Information Security (IS) Program Effective

  • With increasing regulatory pressure, banking respondents continue to enhance their security programs. Close to 80 percent of respondents believe that their information security programs have reached a Level 3 (set of defined and document standard processes with degree of improvement over time) maturity or higher.
  • Even as security practices mature and advance, nearly 25 percent of the banking respondents indicated they experienced security breaches in the past 12 months.
  • Excessive access rights, security policies and standards that have not been operationalized, and lack of sufficient segregation of duties are cited as the top three external audit findings by banking respondents.

Balancing Act: Security and Cost Containment

  • Even though more than 70 percent of banking respondents dedicate at least 1 to 3 percent of their IT budget to information security, lack of sufficient budget and/or resources is cited as the top barrier for an effective information security program.
  • Nearly half of banking respondents have already implemented or purchased cloud computing services. Of those who have not implemented cloud computing services, close to 90 percent of the respondents believe the benefits outweigh the security risks.
  • Vulnerability scanning and penetration testing (72 percent) is the top information security function that is outsourced to a third-party. This is followed by threat management and monitoring services, at 24 percent.

Security Innovation: New Technologies and Their Risks Have Arrived

  • Nearly 75 percent of the banking respondents are making use of social media; 20 percent of the banking respondents have deployed technical controls to block or limit organizational usage.
  • When it comes to adoption of mobile devices, banking respondents indicated that the top three security controls are enhancing the consumer acceptable use policy, integrating consumer device security into awareness campaigns and enforcing complex passwords.

To view more results, please download the full study.

Demystifying Social Media

foggy-walk.jpgIn a recent McKinsey & Co. article “Demystifying Social Media,” Roxane Divol, David Edelman, and Hugo Sarrazin explain how senior leaders can break down social media into its four primary functions when developing social media campaigns and assessing the financial impact of their social media presence. 

1. Monitor

 Such brand monitoring—simply knowing what’s said online about your products and services—should be a default social-media function, taking place constantly.

2. Respond

Valuable though it is to learn how you are doing and what to improve, broad and passive monitoring is only a start. Pinpointing conversations for responding at a personal level is another form of social-media engagement. This kind of response can certainly be positive if it’s done to provide customer service or to uncover sales leads. Most often, though, responding is a part of crisis management.

3. Amplify

“Amplification” involves designing your marketing activities to have an inherently social motivator that spurs broader engagement and sharing.

4. Lead

Social media can be used most proactively to lead consumers toward long-term behavioral changes. In the early stages of the consumer decision journey, this may involve boosting brand awareness by driving Web traffic to content about existing products and services.

To read the full article at, click here.

10 Ways Banks Can Grow in 2012

water-grass.jpgIt’s old news that banks are operating with fewer avenues for growth than in years past,  and it’s no surprise that bankers are scrambling for new ways to make up for this lost growth. In doing so, however, bankers need a smart and focused strategy to make the most out of the opportunities available. In a recent report,  “Top 10 Ways Banks Can Grow in 2012,” Grant Thornton LLP comes up with a priority list for growth in the current financial environment.

1. Focus Strategic Plan on Growth

Strategic plans should not be viewed as simply a regulatory requirement, but as a valuable instrument in the assessment, and often continual reassessment, of goals. Grant Thornton writes, “Now that many companies are shifting from survival mode to seizing opportunities in an improving economy, banks should develop and modify their 2012 strategic plans with a renewed focus on growth objectives.” This includes examining whether you are properly incentivizing your growth goals with employees, taking a new look at where you should and shouldn’t be cutting expenditures in your marketing, and rethinking previous decisions about which products are most relevant to today’s market.

2. Examine an Acquisition

While there are many current roadblocks to a successful M&A transaction, ranging from new regulations to uncertainty about future pricing, M&A is still considered a popular avenue for growth. Before incorporating an acquisition into the growth plan, however, banks need to consider post-acquisition issues.

 Aside from preparing for the complex accounting and financial aspects of an acquisition, directors need to be prepared for potential cultural conflicts. “Communication and leadership are probably the most important prerequisites for a successful integration. It’s critical that there be transparent communication between the acquirer and the acquired entity, so that important cultural issues, such the composition of the combined institution’s senior leadership team, are handled in a timely manner,” says Grant Thornton.

3. Implement Smart Tax Strategies and Structures

Banks need to ensure their tax strategies are taking advantage of all new federal benefits, as well as being up-to-date with state and local rules that cover their operating area. “Incentive credits that apply to banks should be implemented in all applicable jurisdictions. Federal benefits from credits (e.g. new market tax credits, energy credits, low-income housing tax credits) and bonus depreciation should be analyzed,” says Grant Thornton.

4. Develop New Service Offerings

Banks should consider adding new services to their existing line-up, as well as maximizing the potential of the services they already have. In terms of maximizing current potential, bankers should increase cross-selling to their established clients and determine which services need a renewed focus after being pushed aside during the downturn. 

For new areas of growth, bankers should consider teaming up with other entities that can help them expand services such as brokerage and financial planning. At the same time, they should consider participating in quality loans that are recently becoming available through other institutions trying to increase capital ratios.

5. Make Technology Work for You and Your Customers

Putting money into new technology expenditures may be hard to stomach for banks during a downturn, but it also may be necessary if their competitors are making those same investments. Grant Thornton suggests supplying tablets or iPads to your field staff which can be used to personalize customer marketing materials and complete loan applications remotely.  Grant Thornton also recommends considering a switch to cloud computing services—after first evaluating the inherent risks—if you haven’t already. “Cloud computing offers a number of distinct advantages over its predecessors, including a more efficient and cost effective use of internal resources, greater speed to deployment, lower operating and capital costs, and higher performance,” says the report. 

6. Send the Right Message with Social Media

Larger financial institutions, and even many smaller ones, are interacting with their customers in new and creative ways across a wide spectrum of social media platforms. Whether it is to bolster public image or to spread information about new products and services, social media offers an inexpensive way to communicate directly with clients.

“Social media provides the opportunity for banks to demonstrate their commitment to corporate social responsibility and help regain confidence from their customers and the public after being largely maligned during the recession,” says Grant Thornton. 

Banks should be cautious, however, as such open communication is a two-way street, and it can be difficult to control negative feedback. In addition, social media provides an avenue for both fraud and privacy breaches, and this risk should be examined as part of any social media plan. 

7. Ready Your Bank for Risk

All banks prepare for risk, but banks should take the extra step of incorporating an enterprise risk management (ERM) approach that fits each organization’s individual needs and objectives. “(ERM) is an approach to assessing and addressing the full risk profile of the bank, including strategic risks such as operational, financial, regulatory, credit and market risks. The assessment process allows all parties to fully understand the impact of major new initiatives across the bank, and enables clear, strategic decision-making,” says Grant Thornton.

8. Understand Regulations

Keeping up and complying with new regulations can be a difficult task given the recent influx of rules stemming from the Dodd-Frank Act and the formation of the Consumer Financial Protection Bureau, but no bank wants to find themselves in noncompliance. Fortunately, as long as the bank’s overall risk management approach is sound and the most potentially costly regulations are given special attention (i.e. the Fair Lending Act, the Unfair or Deceptive Acts or Practices program, and the Bank Secrecy Act) then banks can still see growth while staying compliant. 

9. Plan for the Worst-Case Scenario: Stress Testing

While recently made mandatory for some of the nation’s top banks, stress testing can be a valuable tool to any bank wanting to fully understand potential risks and prepare its growth plans accordingly. “Continual stress testing should be relevant to the bank’s specific portfolios, balance sheet and customer base. Stress testing should cover: asset concentration and credit quality; contagion risk, such as exposure to European debt; and capital structure and availability,” says Grant Thornton. By understanding possible future risks and building contingency plans, banks can more confidently and strategically take advantage of growth opportunities.  

10. Build a Stronger Foundation for Mortgage Lending

Despite potential roadblocks stemming from recent mortgage reform, banks should still consider growing mortgage banking efforts in areas where there is still a large or expanding market. 

“The recent improvement in housing starts and sales of existing homes indicate that there is still a large market for home mortgages.  If properly managed, a new or expanded mortgage banking effort could be very profitable,” says the report.  

Aside from home mortgages, banks should also take a look at new growth sectors in commercial real estate such as apartments, which look promising due to a high number of rental customers and a relatively low number of new apartments being built in the past few years. 

The full article can be accessed on Grant Thornton’s web site.

New Media Compliance Issues: Is Social Media Right for Your Institution?

socialmedia.jpgAt the heart of social media – blogs, social networks and other multimedia endeavors –  is a real-time, open and public dialogue accessible by anyone with Internet access. By the time your legal and compliance department has vetted a 140-character tweet, the conversation has changed. The reality of instantaneous engaged marketing with your customers can excite production staff and perplex compliance personnel. It doesn’t help that many of the rules that apply to the use of social media were created long before blogs and social networking consumed our lives. Perhaps this is one reason why the banking industry has lagged behind in the social media movement. But in the new reality, to ignore the movement is to be left behind. That is why financial institutions, regulators and attorneys are starting to get on board. The landscape may be unsettled, but it’s not entirely unmanageable.

Businesses, including financial institutions, are starting to see the vast potential for social media use.  Companies are connecting with their customers almost instantaneously and are receiving the kind of immediate feedback that once would have been obtainable only via costly and time-consuming surveys. Many companies are using social media as a customer service platform to create an online community of connected customers. The bottom line is maximization of advertising dollars. Businesses can reach any number of plugged-in consumers through the click of a button. Unlike television or radio ads, an online advertisement can be accessed any time, day or night, and gives the business the ability to change the course of the marketing communication mid-stream to create a fluid message in tune with current trends.  With all of these benefits, why has the financial industry been so slow to adopt social media?  Blame it on the disconnect between static regulations and innovative technology.

Compliance Issues In Social Media

The rules of compliance haven’t directly changed due to the advent of social media. However, the facts have changed, impacting the application of the rules. The underlying risk to your institution stems from the nature of how social media impacts the delivery and retention of information in addition to the ever-present privacy concerns.

Information Delivery

Deceptive Advertisements: The Federal Trade Commission (FTC) has long been the guardian of the consumer in the advertising arena. The rules are seemingly simple – advertisements have to be truthful and not deceptive. Easy enough, right? What if I told you that an employee blog that you may or may not know about could be considered an endorsement under the FTC Act if the employee is touting one of your institution’s products or services? In this instance, the blog post in question would have to be entirely truthful and the employee would be required to disclose his or her relationship with your institution regardless of whether your institution is aware of, or has authorized the message. (See the FTC’s Revised Guidelines concerning the use of endorsements and testimonials in advertising. This is just one among countless examples of these types of rules, present at the state and federal level.

Advertising Disclosures: What about microblogging ( i.e., the 140 character tweet)? If an interest rate for a consumer loan product is quoted, how can all of the accompanying disclosures required under state and federal law possibly fit? Crafting the message in light of the limitations of the medium is a critical factor in an institution’s ability to comply with the rules. 

Federal Securities Laws and Blue-Sky Laws: For publicly-traded companies, regulators have begun to address social media in the context of securities laws. Forward-looking statements regarding company performance are a delicate issue, even after thorough vetting by legal counsel. Employers will be liable for the statements of their employees, authorized or not.

Information Retention

Your institution already employs some level of technology to assist you in the collection and retention of certain types of information. This may be in the context of advertising retention rules per state law or e-discovery rules under the Federal Rules of Civil Procedure. Additional retention and reporting requirements come into play under the Sarbanes-Oxley Act, USA PATRIOT Act and other related laws. By its nature, social media is harder to capture and catalogue for later recall. However, technology providers have emerged that focus specifically on this type of media. 

Privacy and Security

Some companies use social media sites for customer support. This use requires special attention, especially in an industry as heavily regulated as banking. Institutions must ensure that any use of social media avoids conflict with existing privacy laws and internal security policies. In addition, regulators are growing increasingly concerned about information technology risks and have adopted compliance guidance.

Suggestions for Conquering Your Institution’s Social Media Fears

Demonstrating that you are cognizant of the risks associated with social media and addressing those risks with thoughtful and effective policies and procedures is just as important as the end-result. Here are a few suggestions:

Dedicate significant time and resources to developing current policies and procedures regarding social media. A number of stakeholders will be critical to this process and they should start by analyzing known risks. The results are highly dependent on your institutions risk profile and the process should be thoroughly documented. Show your work. Regulators will want to know that you take these policies seriously and have acted with a sufficient amount of diligence and caution. Make sure your social media policies and procedures are effectively communicated to your employees. Address violations of social media policy swiftly and decisively.

Monitor for compliance and protect your institution’s brand. The social aspect of social media creates the possibility that some users will have less than stellar things to say about your institution. Treat those situations as a customer service teaching moment and a way to gain feedback about your institution. In addition, to the extent that you have protected trademarks or servicemarks, develop guidelines for employees with communication privileges so that they can adequately protect those marks in the public arena.

Consider using third parties to assist you. There are a number of technology companies available to assist you in message search and monitoring, access management and archival solutions. Reach out to those companies. At the very least, you may get some ideas on areas of focus for your policies and procedures. At best, you’ll find a competent vendor partner to automate what would otherwise be a laborious process.

Go slow. Total institutional immersion into social media doesn’t have to happen overnight. Take the time to create a culture that embraces the effective use of social media and the related compliance components. Consider slowly adding mediums and employees into the fold after adequate training and guidance.

Vendor Management

In a recent interview with, Donald Saxinger, senior examination specialist at the FDIC, suggested that social media providers would have to be treated as vendors for purposes of the FDIC’s Guidance for Managing Third-Party Risk (FIL 44-2008). In addition, he suggested that social networking sites could be considered to be the type of vendors that banks must report to the FDIC under the Bank Service Company Act (BSCA) within 30-days after the relationship begins. (12 U.S.C. § 1867(c)).

The basic premise of the third-party risk management is that the board of directors and senior management are ultimately responsible for the activities conducted by third-parties on behalf of the bank to the same extent that they would be if the activity were handled within the institution. The majority of the guidance from the FDIC pertains to “significant third-party relationships”; however, institutions should consider following this guidance for all social media vendors. Until there is more guidance available pertaining specifically to social media vendors, those companies should be treated as any other vendor would. This means completing a risk assessment on the outsourced activity, due diligence in selecting a third-party, contract structuring and review, and continuing relationship oversight.

The BSCA requires institutions to use the FDIC form titled Notification of Performance of Bank Services to report all vendors performing “Bank Services” as defined in 12 U.S.C. § 1863. Institutions should consult with their legal counsel as to what social media vendors fall under this category for reporting purposes. This question could be difficult until further formal guidance is issued.

Two things are certain with social media – it’s inevitable and ever-changing. Some of these same discussions took place with the adoption of email usage. Just read the disclaimers at the bottom of your last email exchange. Caution and innovation don’t often mix, but your institution can make the best of both worlds with a little time and effort.

Disruptive? Mobile? Regulated? Check, check, check

It’s funny the things that cross your mind in an airport. I snapped this picture of a classic American plane docked in Chicago pre-flight to China this morning. Patiently waiting by the gate must have been 200+ people, 95% of whom appeared glued to their iPad, iPhone or Android-powered mobile device. To say I was impressed is an understatement. Users of mobile technology are known for being many things: patient is not one of them. They want new tools, new applications and they want them today. Maybe I should have photo’d the departure lounge…


From the board room to a branch office, it’s no state secret that today’s mobile banking customers expect access whenever and wherever they are. With so many banks investing in new technologies that allow customers to complete transactions, manage accounts, and perform banking research via their mobile devices, one can see why. Mobile banking services — think remote deposit capture, two-way text banking, apps for locating branches and ATMs using GPS and bill payment — have become the norm. So how to differentiate your bank from your competitors?

In my next few posts, I’ll take a look at this question.  With banks (both big and small) riding the mobile wave to strengthen relationships and add to their bottom lines, I thought to set the table with insight gleaned from our friends at PwC.  Last month, the Banking & Capital Markets group published “How Retail Banks Can Thrive in a Disruptive, Mobile, Regulated World” to assess the implications and opportunities created by mobile phones and social media.  My cliff’s notes:

  • Social media continues to provide banks with new ways to improve brand recognition, expand customer reach, enhance a customer’s experience and introduce new products (for more, see these posts we ran in January about how to benefit from social media and social networking platforms);
  •  While most large national banks have slowed their pace of retail bank acquisitions because of regulatory limits, banks with access to capital continue to view acquisitions as a growth opportunity. Such acquisitions benefit banks by enabling them to (a) reduce combined operational costs by eliminating redundant back-office functions, (b) spread technology investments and regulatory compliance costs across a larger base, (c) gain access to new markets and customers for cross-selling, (d) increase the ability to invest in state-of-the-art technologies; and
  • Leading institutions are adopting a new customer-centric model to replace outdated product- centric models.

A few big takeaways for me? Bank execs need to quickly and decisively adopt new approaches or risk being left behind. Moreover, by tailoring channels to a specific customer segment or purpose, banks are capitalizing on the distinct and complementary roles of distribution channel, all while managing costs. Yes, this is the land of opportunity, and the applications of new mobile technologies and strategies bears close watching. More to come next week.

Social Media Series: A Look Ahead

This is the fifth and final post on the value of social media for today’s financial services executive. Over the last month, we’ve looked at the fundamentals and why you need to care about newer trends and technologies, how some have successfully incorporated social media into their institutions way of doing business, the need for individuals and companies to be both authentic and transparent, and how you might personally get up and running if you’re not already. Today, we look ahead to social media in 2011.  

As this series draws to a close, cue the music*:

If this is it
Please let me know
If this ain’t love you better let me go
If this is
I want to know
If this ain’t love baby
Just say so

By now, we all know that social media marketing carries the same risks as traditional marketing. But with the continued surge in social services like those offered by Twitter, LinkedIn and Facebook, social networking platforms present powerful ways to connect with employees, consumers and shareholders of all generations.


Social media blends technology and social interaction; done right, it can be a win/win/win. Such networking co-creates value for you, your financial services company and your customers. Community building is something we all can do more of in 2011; hopefully these columns have inspired you to think about how you can get engaged and stay involved with conversations about your institution. Yes, a LOT has been written about social media, so I thought it would be interesting to share three predictions for 2011.  

Beyond the standard ‘you will train employees on the proper way to communicate with customers through social media,’ I’m excited to see the following take place:

  1. As more people take to mobile technologies (coupled with a wider adoption of tablets like the iPad), marketing efforts that incorporate online, in person and in print activities — supported by social media plans — will appreciate in value.
  2. Customer service departments take over as the main proponents of social media, with the full support of the CMO and leadership teams.
  3. Banks leverage geo-tagging applications to prepare/predict for traffic in their branches and at least one gets into social gaming in a big, big way.

Have a few predictions of your own that you’d like to share? Leave a comment for us below. While this is the last post on this particular series, our VP of Digital Strategy will be leading a panel discussion at our annual Acquire or Be Acquired conference in Scottsdale later this month. If you’re game to share your view(s) with her, I know she’d appreciate your thoughts.

*Can’t get the refrain out of your head? You have Huey Lewis & The News to thank for that.

Social Media Series: Getting Up and Running

In my last few columns, I’ve written about incorporating social media into your institution’s way of doing business. Today’s post offers advice for how you, individually, might benefit from what’s being created and shared online.

What a year we have in front of us. A number of social media technologies and platforms are maturing simultaneously, creating a wonderful shift in online social and consumer activity. Just as a number of banks turned to social media last year as a way to become more transparent to their customers, getting online allows you to build an element of trust with your customers, employees and shareholders. For example, consider the investments made by Green Bay’s Nicolet National Bank. With posts like “All I Really Need to Know About Economics I Learned From my Grandparents” and authors including their CEO and COO, this represents a nice example of social media being put to great use.


So if you’re still new to the trend, here are three recommendations to get you up and running:

  • Think about writing a blog like the guys at Nicolet do. Regardless of industry, more and more CEOs are using their own blogs to communicate with shareholders, employees, customers and the general community. Two that I follow that might inspire you are KellBlog and Ben’s Blog.  And yes, I practice what I preach, with my own site, DCSpring21, posting my own ideas since March of 2008.
  • Get a Twitter account. Even if you don’t want to tweet, following the conversations of your favorite information resources (@bankdirector, hint hint) provides for easy crowd sourcing and keeps you up-to-date with the most breaking news.
  • Update your LinkedIn profile and manage what people see about you. Step one: upload a current picture. Step two: start connecting with former colleagues and your current business partners. Step three: see that line of text under your name? It’s the first thing people see in your profile. It’s your brand, use it wisely!

Let me also suggest two behavioral changes for 2011:

  • Start commenting on blogs. Sure, it might feel intimidating to be the first to add a comment (the equivalent of being the first to raise your hand in class), but sharing your ideas and experiences contributes to the overall experience when reading stories like this one.
  • Encourage picture sharing by your employees… and start contributing to the fun. Over the weekend, I read 6 Predictions for Social Networks in 2011. What stood out? The observation that mobile photography is just beginning to blossom — and what that means to all of us smartphone wielding multi-taskers.

I hope this advice helps.  If you’re coming to our 17th annual Acquire or Be Acquired conference in Scottsdale, Arizona later this month, be sure to bring your iPad to our Tuesday morning session on using social media. Our VP of Digital Strategy will be leading one of a number of great discussions that will take place at our growth-focused conference out in the desert.