Banking + social media: 4 business examples

Banks are conflicted.

Almost all of them block employee access to LinkedIn, Facebook, and Twitter. Yet the individual businesses within the banks all want to use those channels.

Beyond just advertising, those banking businesses recognize that they can engage people in new, more commercially effective ways.

Here are 4 examples.


This is the most obvious example. If you want to inform people, it makes sense to use the same channels they use. To go where they go. Online, for graduates, that tends to be Facebook. And for professionals, it’s LinkedIn.

Of the banks, Deutsche Bank has some of the best material on Facebook and LinkedIn. (I particularly liked their tongue-in-cheek video : “The unofficial guide to investment banking.”)

These channels complement their company portal which has additional material and links to application processes. Being social, they make it easier for candidates to share that content with their networks (broadening the company’s reach) and to ask questions (increasing engagement).

Supporting retail customers

Another common example is providing customer service, particularly via Twitter. Bank of America, Citibank, and Wells Fargo all do this well.

It’s hard to measure how effective this is. But it’s easy to see that doing nothing while customers trash your brand in public is a bad thing. Here’s a typical exchange on Twitter that turns a negative experience into a positive one – one that’s shared with the customer’s entire network.

@KUSH_MULLA: “#ShoutOut To Bank of America for letting my ATM card expire without sending me a new one in advance still waiting”

@BofA_Help: “I work for Bank of America. Did you call to check the status of your card? Anything I can do to help?”

@KUSH_MULLA: “They need to give you a raise. This is what I call outstanding customer service”

@KUSH_MULLA: “@BofA_Help yeah, I called they said my card should be here within 7 to 10 business day thanks a lot”

Generating leads for brokers

This is where it gets tricky. Having HR and customer service use social media is relatively benign. But when it comes to talking about financial products, there are significant restrictions on who can say what. Anything that seems like an advertisement or recommendation has to be approved by compliance beforehand.

The legal risk is real, and so most firms have shied away from it altogether.

So, Morgan Stanley created a bit of a stir when they announced their brokers would start using LinkedIn (and soon Facebook). In their own words:

“Many of our clients have been demanding social media,” said Andy Saperstein, head of wealth management for Morgan Stanley Smith Barney. “Many of our advisers have been demanding it….”

“The crux of social networking is building relationships,” said Lauren Boyman, Morgan Stanley Smith Barney’s director of social media. “That’s what financial advisors do, build relationships, build trust with their clients. This is a tool for them to do that in a more effective way.”

Ms Boyman added that both young and seasoned advisors had long been asking for permission to use these tools to market themselves and get referrals: “I talked to one financial advisor who said, ‘I’m 52 years old now and I know that if I ignore this, five years from now, I’m really going to be a dinosaur.’”

Morgan Stanley is taking it slow. They’ll open up LinkedIn to only 600 of their 17,000+ brokers. Then they’ll see how it goes over a few months before proceeding. But it’s a positive step that other firms are sure to emulate.

Recommending funds

Even if banks have difficulty recommending specific products, it’s easy for customers do so. As for many retail products, consumers face a dizzying array of choices when it comes to asset management funds. And so referrals from friends are a particularly powerful way to cut through the noise:

“Nearly 70 percent of consumers said a positive referral from a “friend” on Facebook would positively influence their purchase decision. In addition to a tool that retailers can use to promote their brand, products and services, Facebook can also serve as a peer-to-peer comparison shopping tool where consumers can seek advice from their friends and family members.”

This is why social platforms are so relevant to commerce. Increasingly, they are a channel for recommendations that lead to purchases. Whether you’re a shoe company or a bank, you’ll have to use those channels to remain competitive.

“Willful ignorance” is not an option

With all these examples, blocking access or preventing businesses from engaging on-line is no longer a viable strategy. Even the regulators don’t recommend it.

Why? Because their own studies show that individuals at firms are already circumventing official policies to use the public social media channels. And the regulators want actual enforcement that works.

Pretending it’s not happening is not enough. So it’s time to work through the difficulties and the rules. To find ways to use the public channels in compliant ways.

It’s better policy. And it’s better business.


About John Stepper

Driving adoption of collaboration and social media platforms at Deutsche Bank. (Opinions here are my own.)
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13 Responses to Banking + social media: 4 business examples

  1. To accelerate these efforts and eliminate the barriers to adoption it sounds like there first needs be a level of internal collaboration among the key stakeholders that make up an organization; compliance, IT and the specific business lines that can benefit from social media.

    It would be great to know the specifics of organizations like BofA or Wells Fargo regarding the elimination to these barriers while gaining enough traction to leverage social media tools.

  2. business social media use at banks and brokers is limited only by legal departments. the business can easily make the case and say they want it done. legal will articulate the risks and the do’s and don’ts. employees will follow them or lose their jobs. simple.
    however, the legal department sees the risks and asks for the business case for business social media. that case must articulate the value to go up against these barriers:
    – for banks, fdic rules regarding advertising and requirements around it, and consumer protection laws such as truth-in-lending/truth-in-savings,
    – for brokers, there are the finra rules ( and all communication must be supervised and archived (this is a business opportunity for a social media entrepreneur)
    – for all, ftc rules on advertising, the children’s online privacy protection act, securities laws on disclosure/misstatements/forward looking statements, reputation risk, disclosure of trade secrets and defamation/libel

    • John Stepper says:

      This is exactly right. Too often, social media projects within the enterprise forget the basics. Somehow, ROI shouldn’t apply to them. (“What’s the ROI of a phone call?” they ask, incredulously.) It’s silly.

      You can’t skip the ROI, be ignorant of the rules, or not mitigate the risks.

      The governance functions are there to serve. If you have a rigorous business case (and a sponsor with political clout), a good knowledge of the rules, and clear policies and controls, you make it easier for legal, compliance and the other functions to say “yes.”

  3. John,
    Great post – thanks. I love the phrase “Banks are conflicted.”

    Unfortunately there is a regulatory problem here. Banks are required to keep copies of all electronic communications – and posts on Facebook etc. could fall under that.

    Allowing employees access could – in theory – mean that you have to capture everything your employee posts while on FB, store that data for 7 years, and scan it to make sure that it does not breach the many regulations around solicitation and advice. If those posts are also full of non-work related items that costs the banks a good deal of money.

    An alternative that would remove the burden on individual companies would be to give regulatory bodies the ability to access Facebook/LinkedIn data centrally – but then you have privacy concerns. Should the SEC really have access to your Facebook stream?

    For this to really work in banking there needs to be a relaxation of rules. Let’s face it – people are circumventing them already using their personal smart phones so I wonder whether the rules do anything today other than impose an expensive burden on the banks.

    The upside could be significant. In addition to the items you mentioned the ability to peek into a person’s stream could be a great sales tool. If someone has a child just about to go off to college it might be great time to reach out with a loan opportunity. Or how about someone who just had twins? Sounds like a mortgage could be in their future.

    The upside is enormous but regulations need to change first. And after the past few years I don’t think the public is looking for less regulation around banks.

    • John Stepper says:

      Thanks, Barry. You raise a lot of good issues and you’re right about the rules. Yet I find it’s uncertainty that’s more of a barrier than the actual rules. “I’m not sure we can. So we’d better not.”

      “We can’t because we’re regulated” is becoming less and less of an excuse. There are more industry examples like the ones in this post. And there’s increasingly sophisticated software that helps enforce policy while supporting moderation and capture.

      So, instead of waiting for regulations to change, I’m advocating just the opposite. Learn the current rules, investigate the benchmarks, research the current software controls….and *do* something. Your competitors certainly will.

      • John,

        I completely agree. I have managed a few small wins here with getting a number of technical forums opened up to enable people to solve problems.

        Some companies are more risk averse, and my company takes fewer risks than most. But without risk there is little reward.

        To quote Russell Ackoff “The more lawyers an organization employs, the less innovation it tolerates.” Let’s keep innovating!

    • this is why i think there’s a business opportunity for a service that archives and provides ediscovery for social media (and for that matter, mobile social including email) *at work* — defined as something performed *from* my business persona as well as something performed *at* my business location. chat/im was the same way, it had a business case and it became allowed and has been for years.

  4. paulina says:

    I don’t want them to push their products on me through my “friends” networks.

    • A good point – a lot of people would feel that way. But with new media such as Google+ giving much more control over how you share (or even if you share) the choice should always remain yours.

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