Banks should be bit players in social media

Well its certainly brewing over at James' blog Bankervision and at Chris' blog at Swift Community on the topic of social media, networking and banking. I thought I'd make some comments.

James' position is as follows:

"...Why aren't we all doing social media daily? If there was a business reason to be in social media, banks would flock there pretty quickly. It took 5 or so years for the flock to get there with Internet banking, and it will probably take as along for mobile. Social media has been around for more than 5 years, and I'm not seeing much flocking. Arguments that banks "aren't innovative" or "don't get it" won't fly. The fact is, every bank has people that do get it and who are innovative. They just don't do much in the social space. ... Social media is a channel optimised for the insignificant. "

Chris' retort / position is as follows:

"There's social media - blogs, podcasts, etc - and social networking - facebook, bebo, myspace, etc. These are interesting but nothing to do with banking ... sure blogs and business networks are interesting, but it won't make any money. But social banking is the Zopa, Smartypig, Prosper and related worlds. These worlds are changing financial business models and are relevant and important. Equally, social money is PayPal, m-payments, BBVA's tu cuentas and more. These are also changing payments business models."

Another commenter, Erin, outlines these 3 uses for involvement in social media/networking:

"Simply dialoguing with customers via social media will enable bankers to a) learn about social media, b) better understand what their customers want and the services they are likely to adopt, driving prioritization of scarce resources, and c) remain relevant and top of mind as customers face intense financial anxiety."

So, we discover the word social can go in front of a lot of other words, and have different implications, but all relate to a disarmament of corporations of their control over information, choice and sales opportunities to their customers and citizens.

Lets analyse each of these Social aspects of the web and banking. First definitions from Wikipedia (if you doubt the relevance or accuracy of wikipedia definitions, you wrote them, or you can change them), some comments on how they differ from each other, and the opportunity for banks:

Social Media

Definition - "primarily Internet- and mobile-based tools for sharing and discussing information among human beings"

Comments - At the core of social media is user generated content, created by individuals, or groups of individuals (communities) to a shared space. It will be difficult for banks to really participate in this space without revealing their true intentions. Facilitating these conversations is not new to banks (Many banks like BofA create small business hubs, discussion forums, feedback forums), but participating in a conversation in an independent environment, or even an independent environment built by banks (eg the failed MyFutureBank project) will be challenging, if not dangerous. Transparency is the key here, and expect more criticism than favourable content. We are banks after all.

Position - content is built by consumers for customers, not for banks to interact with, but rather to monitor, or consult to. SM is a sacred site for customers, one of the last bastions of non-corporatism. Should we stay out of it for our brands sake? Erins 3 points above are perfect.

Social Networking

Definition - "building online communities of people who share interests and activities, or who are interested in exploring the interests and activities of others"

Comments - Creating links between people in the online world works well, as it requires no boundaries on who, where you are or what you do. Look at your LinkedIn or Facebook connections, there are people from many countries, companies, even industries. This freedom underpins the independence of these communities. Restraining this using a bank brand, or trying to tap into this very personal nature of connection will simply damage the brand.

Position - facilitating connections between customers is a natural way to go (particularly business customers) - you just need to be the first ones to do it

Social Banking or P2P banking

Definition - "an online system that allows individual members to complete financial transactions with one another by using an auction style process that lets members offer loans for a specific amount and at a specific rate"

Comment - A really interesting area, that could simply bust bank models as we know it. That is, until we hit challenging times like we have now. Only now do we understand the brand characteristics of P2P lending - they are associated with fluid cash flow, empowered consumers, and overbearing banking industry players. But its also about trust, or the lack of. And right now, banks are not trusted and yet the safest option. I dont think banks will be able to setup and own P2P lending - this simply goes against the grain of how banks CURRENTLY make revenue, and how customers CHOOSE to utilise their money. On a personal level, customers will always prefer to remove the middle man (ie your bank) but certain environmental factors will mean they both want and need to involve a bank at some point.

Position - Trying to build this and retaining true to brand (and shareholders) will be difficult - like SM this is where customers make the decisions not you. A massive threat to our business if the environment is right.

Ok so to recap: You know, at first I thought James was a bit mad. Not do social media/networking/banking? But the more you look at it, the more it seems we need to focus on what WE do for customers, not what they do for each other or how or where we have dialogue. We are not their friends, colleagues, or even their favourite brand. We're a mere service provider (essential, but still just a service provider), looking for a relationship that for the majority of the time isnt there.

Lets get our house in order before we stick our nose into the private lives (as private as can be in the online world). Having channel and product interactions that just work, that are high quality, and that are secure and efficient will generate the kind of social media you want, rather than you trying to generate it yourself.

Word of mouth is a customer thing, not a bank thing (like Viral marketing - why won't companies give up trying to create viral ...). You cant make it work for you, like your brand its determined by and belongs to your customers.