Sorry guys, I just saw Rawan posted this same article but I had already written mine up before I went to the site...here's my take on it:
Social Networking, Web 2.0, and Banking
No discussion of business today is complete without the mention of Web 2.0 or some form of social networking. Banking is not exempt from this trend.
Banks are especially eager to make a connection with young customers who may not have an existing relationship with another financial institution. Building loyalty early on is key to developing valuable lifelong customers. It is more difficult for banks to establish this “cool quotient” as a part of their brands compared to companies in other industries because banking is often perceived as boring and dull. Innovators in the industry are looking to Web 2.0 resources to change this.
Wells Fargo created Stagecoach Island. It is a virtual world where users can interact, and engage in fun activities, but also learn about money management. Royal Bank of Canada (RBC) created a special p2p forum for young people to exchange financial advice in one common area. TD Bank runs several blogs and established a Facebook profile early on.
All of these are aimed at making stronger connections with their customers. Virtual worlds have gained in popularity so Wells Fargo figured they would establish their name as a part of it. RBC knew young people already looked to their peers for financial advice so they decided to facilitate this discussion. TD sought out the ways they knew young people communicated and spent their time and looked to establish a presence in these networks. The common theme in these three initiatives was not to push specific bank products, but to just engage the customers.
Marketers understand the viral nature of the internet, or, simply how fast ideas can spread between people. This goes for good or bad opinions. While there is an amazing opportunity to reach a large audience, there is also an increased aspect of reputational risk at hand. It is critical for banks to know what the online community is saying about them. Wells Fargo VP of Social Marketing combs blogs each day to find posts on his company and often responds to any postings. The opinions voiced by bloggers and circulated through prominent networks have a large impact on how any brand or product is perceived.
Web 2.0 is a unique challenge for any business. It forces executives to adjust to a new set of expectations and deliver to consumers or face being left behind. Banks know the key to success in their business is engaging their customers as much as possible and developing long-term relationships. New media is a great opportunity to do this and you will undoubtedly see more banks embrace the methods used by those in this article soon.
http://www.banktech.com/features/showArticle.jhtml?articleID=202801088
4 comments:
Keith, I thought your article was very interesting, particularly from the marketing aspect that you discussed. It seems like technology made it much easier for people to switch from bank to bank in order to shop around, but with more and more technology being linked to someone's bank, it can actually make it harder to switch. It seems like banks are building loyalty almost by default sometimes!
Sometimes the buzz and spin around a new technology makes its success feel like a self fulfilling profecy- what do you think about this. Do you want to socially network with your bank? Why or why not?!?
I left this same posting on Rawan's site. I am curious to know if this is how you want your bank to work with you.
Keith, thank you for posting such an interesting article. I think its interesting that companies are trying to stay ahead of the curve so to speak in regards to new trends for social networking on the web. Banks investing into programs such as second life shows that they are trying to grow with their potential customers. I definitely agree with what you said in regards to building long term relationships with customers. By being apart of these trends, it gives these companies opportunities to connect with their customers on more of a personal level.
I don't feel like I need to social network with my bank. I'd be more interested in knowing there are a convenient number of ATMs nearby or I'm receiving competitive rates on my accounts. Maybe that is just because I am very conscious of my finances. There are other, more free-wheeling people who could overlook this lack of (primary) service and be swayed by these types of added features. The one thing I like that the articled mentioned though was the forum of online discussions on finance. Of course you must be critical of the sources you're receving information from, but I think anything that gets young people thinking about their financial future is generally positive.
Overall, banks adopting these types of features is just a reflection of general consumer trends. People no longer go to a butcher's shop for meat and then a bakery for bread. They want everything from one source all at once. For instance, does anyone remember cell phones that ONLY made and received phone calls? Banks know that they need to have a wide range of appeal to stay relevant to the next generation of customers.
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