Social media is changing how the banking business runs at all levels. Does this sound strange? When you think of social media, you may think of words like youth, fun, change, and maybe even laziness. On the other hand, banking might bring words like old, responsible, conservative, and hard-working to mind. Well, these two worlds are coming together, and you bet it affects your life!
Keep reading to find out 4 of the many things social media means to banking business. Some of this information comes from experienced executive manager and author Jesse Torres.
- Opportunity for press releases and ads to go viral.
Mass media marketing was costly. If done well, social media marketing can be free. While banking may not be the most exciting subject, well-done bank ads have gone viral before.
For example, look at Ally Bank’s “Eggs” ad, with 153,871 views on YouTube, 344 likes, and only 14 dislikes. This ad has features common to many viral ads: short overall length, a cute kid, and a funny concept.
In the commercial, a man in a grey suit sits near a basket while a little boy brings toy eggs into the basket. The man takes some of the eggs and puts them in his pockets, then starts eating the candy inside. The boy is confused. The man explains that it’s an “egg management fee.” The little boy asks “what does that even mean?!” to the man, but he won’t explain it. Then, a voiceover explains how Ally bank is different.
Press releases can also go viral if sharing the release on Facebook, Twitter, StumbleUpon, or other social sites is just a click away for customers.
- Loss of control of brand reputation.
Like most companies, banks used to have a lot more control over their brand reputation. They could control a lot of the information about them through mass media outlets, like TV and newspaper ads.
Now, as we all know, social media has changed everything. Unlike in the era of mass media, banks don’t get to choose whether they want to participate. Your bank already has an online presence even if the company hasn’t lifted a finger.
This presence can be helpful or harmful. For instance, a current trend is for angry customers to add the word “sucks” to the end of their bank name, then make a social media page or message board to complain about it. Examples include the message board “PNC Sucks,” the message board “Bank of America Sucks,” and the Facebook group “U.S. Bank Sucks.”
Chances are very high there is a webpage out there that says your bank sucks. Judging by how successful all the banks we mentioned are, they don’t really suck, but customers can sound off about what they don’t like faster than ever.
Trying to censor or control pages clearly won’t work. A better idea is to give customers a reason to say something nice about the bank. For example, a bank executive could set up a Facebook fan page for their bank, post pictures of different locations, and use updates to talk about changes that could affect customers.
- More methods for debt collection.
Social media sites make it harder for people in debt to hide from debt collectors. In this section, we’re going to define “debt collectors” as anyone collecting a debt, including banks, finance corporations, and investors. Plenty of state debt collection laws use this definition.
So, let’s say Bob owes a lot on his credit card and you need to collect it. If Bob shares his personal information on a social networking site, you might find out where he lives, where he works, which places he visits, and what he’s spending money on. You might be able to tell whether he has the ability to pay the debt, which would help you decide whether to sue him over it, if you had to.
You could also find out the names of his friends and family members. Even though the Fair Debt Collection Practices Act of 1977 obviously doesn’t talk about social networking sites, it does say it’s OK to contact family and friends for information about Bob, as long as you don’t harass them or embarrass Bob. That means not telling them that Bob’s in debt, contacting them more than once, or posting on their Facebook walls.
Still, this gives banks more power when it comes to getting their money back. This could make consumers take credit card debt and other types of debt more seriously.
- New ways to screen applicants—both customers and job seekers.
This fits nicely with the third item on our list, because it’s also about banks checking you out online.
Let’s say John is applying for a credit card loan from Friendly Bank and Sandy is applying for a job from Friendly Bank. Friendly Bank can check out John and Sandy’s profiles, and the profiles of their friends, on social networks to see if they’re worth the risk. According to finance pro Erica Sandberg, bank and credit issuers use this information to make decisions on a regular basis.
Don’t worry, Friendly Bank won’t look up the credit scores of John’s friends or slash his credit rating if they see something they don’t like. But they could, for example, double-check to see if the address John gave Friendly Bank matches what’s on his profile and check if his friends bank with Friendly Bank. If so, Friendly Bank might trust John more with a good credit card
Friendly Bank could use Sandy’s profile to get a feel for her as a future employee. For example, looking at her LinkedIn profile could show that she has good relationships with her old bosses. On the other hand, Sandy’s Twitter profile could be stuffed with Tweet-sized rants about work, or maybe even links to a “Friendly Bank Sucks” page! Hiring someone is a pretty big risk, so it’s worth it to get to know her online first.
These are just 4 of the many ways social media affects the banking business. As social media keeps growing in new ways, the banking business is sure to adapt to it.