Social Media:Fear and Loathing in Banking

Adoption of Technology

• Banking is slow to adopt technology:– New is usually bad– Clients aren’t using it– Too Risky

Just too scary!

Social isn’t the first disruptive technology to scare bankers…

ABACUS

INTERNET

INTERNET BANKINGUsage - Americans adopted online investment

services before online banking, exactly the opposite of Europeans.

Risk - Most banks opted for litigation over adoption of internet banking.

Strategy - Huge problem for banks, internet payments gave credit card companies a big weapon against banks.

• Reputation Risk• Regulatory/Compliance Risk• Negates the shroud of ambiguity that

surrounds financial services

Social Media

Social Media (aka “Bob”)

Bank Reaction to Social

• Very few banks have adopted social media• Social media can adversely affect brand and

reputation. – The number of consumer-driven anti-Bank of

America blogs, for example, is a public relations disaster.

• Abdicating authority to others• Industry publication American Banker doesn’t use social

Bob and a banker

…and then there is Wells Fargo

Embracing it all

Wells is using social for:

• Client service• Marketing

– Banking best practices– Product knowledge – Lifestyle/Life-stage information

Social Media Serving the Strategy

Source 2001 Forrester Research

References • Deragon J. (December 18, 2009). How “Social” is Your Bank? Social Media Today retrieved November 1,

2010 from: http://www.socialmediatoday.com/jderagon/110884/how-%E2%80%9Csocial%E2%80%9D-your-bank

• Social Media and the Banking Industry. Social Media Today retrieved November 12, 2010 from: http://www.socialmediatoday.com/ClientFiles/2b461d74-0b05-4149-a6fd-33257181a2c7/SMbanking_v1.pdf

• (November 3, 2010 ) Why Social Media Is a Waste of Time for Most Banks & Credit Unions. Financial Brand.com retrieved November 12, 2010 from: http://thefinancialbrand.com/

• http://blog.wellsfargo.com/ retrieved November 2, 2010

• http://www.openforum.com/ retrieved November 2, 2010

• Sherwood, Catherine (March 18, 2010). Financial Services & Social Media