Social media 2.0 for banks

Integritie aims to break down social media stonewalls between banks and consumers

A new social media tool designed for banks and built by British technology firm Integritie aims to break through the barriers that separate customers from their bank.

The popularity of social media tools such as twitter, LinkedIn and Facebook is hardly news to most firms in financial services; these tools are already widely used at industry conferences and events. But they are seldom used to interact directly with customers, as a recent study by German IT firm GFT revealed in December.

From a bank perspective, the drawbacks of social media are substantial and stem primarily from onerous regulation. In the US, FINRA regulation states that a social media post by any employee in the company’s name is an advertisement, and as such makes the bank liable for false advertising should any employee say something that misleads a consumer.

In addition, under SEC rule 17A, a bank must obtain approval for any information it releases to the public and must keep a full record of that information. Further rules at a more granular level include Nasdaq’s rule 3.10, which states that a supervisor must approve the publication of any information and the information must be retained and stored.

The result has been that those banks that do have a social media presence tend to concentrate on one-way social marketing activities, using pre-approved authorised tweets rather than two-way interaction. In addition, with 1.5 billion social media users globally, it can be a Herculean task simply to keep up with the flow of customer information.

“Banks get as many as 10,000 customer messages a day,” said Michael Veenswyk, managing director at Integritie. “In a typical eight-hour working day, that means the bank is processing 1,250 social media messages an hour. Printing and storing that many messages is not a viable solution. There needs to be an organised, automated process to make sense of it all.”

Integritie’s tool, SMC4, is designed to pull together incoming posts into groups, based on their content, and then direct them to the right place at the bank so that they can be dealt with more quickly.  The idea is that posts concerning a change of address, for example, can be moved to one place, while a post where the customer has entered a phrase such as “I am not happy” can be directed to someone with the ability to resolve that complaint.

The system is also built to prevent the bank from suffering reputational damage through its social media presence. SMC4 hides aggressive or inappropriate messages containing bad language that might hurt the bank from the bank’s main social media page so that they won’t be seen by other customers, and routes those messages to customer service to be dealt with as soon as possible.

“Brand protection is a key point of this tool,” said Veenswyk. “Our software can help stop brand damage. This system helps you interact with the customer feedback and put it into a workflow, so there’s no need to take your Facebook page down.”

Other difficulties relate to particular social media sites. Facebook only allows one user account per page, making it impossible for a large financial institution for a bank to track exactly who may have posted in that account’s name. But SMC4 provides a unique log-on for each member of a bank, removing the problem of identifying and account for an individual’s actions.

The GFT warning about the need for banks to improve their social media output is far from the first of its kind. In November, a report by consultancy Ctrl-Shift argued that banks must learn to use information services to provide value to their customers, or face the prospect of disintermediation by newer, quicker firms.

The Ctrl-Shift report, entitled ‘What are banks for? Customer loyalty in retail banking’, suggested that the rise of social media, mobile technology and the internet will combine with the UK Payments Council’s introduction of account switching in September 2013 to force banks away from traditional ‘push’ business models towards a more customer-centric ‘pull’ model. That means using information about customers to tailor products more directly to their needs, rather than simply developing a product and hoping consumers will use it.

The prospect of disintermediation of existing financial services firms were already being widely debated at the financial services conference Sibos in Amsterdam in 2010, but the concept can be traced back much further; author, entrepreneur and financial services blogger Sean Park was commenting on the potential of newer online firms such as Amazon and eBay to disintermediate financial institutions as far back as 2006.