Social Media – More Proof of the Need to Transform Your Bank

190 million Tweets a day on average and growing exponentially, Facebook user groups like Bank of America Sucks,  and an untold number of blogs dedicated to destroying their brands and still Banks are hesitant to fully engage in Social Media. One example of the power of social media over banks is the 2007 boycott of HSBC student fees. After a successful Facebook campaign HSBC backed down from an increase in fees and reimbursed those that had been affected.

Risk and privacy regulations are the normal crutches that a bank leans on to explain their aversion to engaging with customers via social media. The aversion to taking on any initiative that looks remotely risky is, in my opinion, the Achilles’ Heel of the banking industry. Banks were founded on the management of risk (merchant banks insured ships and cargo, wrote letters of credit and guarantee to reduce the risk of trade and eliminating the need to carry cash or gold). At some point the MANAGEMENT of risk gave birth to a banking bureaucracy that is intent on AVOIDING risk and that aversion to risk has permeated all levels of a bank.

The use of social media, or absence of it, is proof of the lack of innovation and forward thinking in banking today. The inability of banks to get beyond risk aversion and tackle current issues with new tools and technics significantly impacts a banks ability to transform. Social Media is just another channel that banks are not leveraging to its full potential. Transformations are risky. Be it core banking, leveraging social media, or developing new revenue streams, those that will transform successfully will move beyond thinking about reasons why they can’t and do something innovative. This requires a cultural shift with a transformation of enterprise proportion.

 

2 Responses to Social Media – More Proof of the Need to Transform Your Bank

  1. Very good points, George. With a strong platform every new channel and technology becomes a potential new delivery platform; without that foundation they are challenges that can introduce fragmentation and a disconnected customer experience.

    I think many banks are viewing social media through a marketing lens only and this will evolve as social media evolves.

    Kris

  2. Great post and always like to see my page referenced. I think this bank is starting to catch on that this can be a real problem for them. i know people have been contacted by bofa regarding posts made on my Facebook page so they are definitely taking notice. the really great thing about social media is the fact that people who have all been negativity effected by this bank can share stories and experiences and a lot of the time can help each other with advice on how to deal with the bank or what better banking options are out there.

    I just wanted to say thanks for the plug and BOFA SUX!! :-)

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