The finanical services game has changed dramatically in recent years. You'd better have a game-changing strategy. Learn more about how to build trust with today's customers - invest in a serious differentiator that can change your business

1. Game-Changing Social Strategies
for Financial Services

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contents
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21st Century Banking: Disruption, Defection, Extreme Expectations
4
Public Social Networks for FSI? Ineffective and Unpredictable
5
Own It, Don’t Outsource It
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Customer Communities are Trusted Social Hubs
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The FSI Social Advantage: Lots of Customers
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Innovation as Game-changer: Barclaycard, FICO
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21st Century
Banking: Disruption,
Defection, Extreme
Expectations
Recent fundamental changes in the financial services
increasingly taking over a larger portion of the transaction
marketplace have put the entire industry to the test. Trust
pie. This means they’re also taking over the customer
is at an all-time low, cost pressures are at an all-time high,
relationship, and with innovative experience design, radically
technology has exploded across mobile, digital, and cloud
transforming customer expectations. The bottom line: Just
apps; regulators are invasive (to say the least), and top line
as they are for just about every other industry, banking
growth is elusive at best.
customers are transacting more and more online with
disruptive brands who operate fundamentally new business
models. And they’re interacting less and less with the more
Financial Services remains the least
trusted industry globally
traditional, location-based company agents (eg: bank tellers).
Source: Edelman Trust Barometer
Importantly, because customer engagement—and
subsequently, the customer relationship— happens at the
point of transaction, financial service firms increasingly find
their influence over the customer relationship waning. Not
so long ago, all transactions happened in the branch and we
still see legacy customer engagement strategies focused on
branch activities—which is now wholly out of step with how
customers want to engage. Eighty-nine percent of customers
search the web before they buy and 67% search the web
before making a service call.
Further, more and more financial transactions now take
95%
of all customer
interactions in retail
banking will be
digital by 2020
place through disruptive competitors like Moven and PayPal,
rather than traditional banks. As they do, these disruptors are
1,000,000,000
There are now
1 billion mobile
banking users
globally
Source: CameoWorks
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What’s more, FSI customer expectations are now driven not
Yet many banks have responded to the mass migration
by branch or online experiences with competitors, but by the
to digital channels by investing in even more in branch
high standard of service and experience of the best online
transformation projects. They still believe customers value
companies. According to the Forrester Consulting Report,
in-person contact with company representatives most when
FSI—Claim the Customer Experience Advantage, 66% of
they want advice or to purchase new products and services.
consumers experiences from some companies raise their
What they have failed to understand is that like all other
expectations for experiences with all other companies. Your
purchase journeys today, the FSI buyers’ journey is not linear.
biggest competitor may very well now be Amazon.
It involves a lot of research online before ever setting foot into
There’s no more skirting the fact that the location of the
customer experience is now online, and the owner of the
relationship is now the customer. They decide when, where,
how often, how much, and what services and products they
a retail location. Today’s customers consult websites, online
communities and with their online social networks for realworld insight and advice before ever interacting with brands
they may purchase from.
want; and they now compare the relationship they experience
Forward-thinking financial services firms recognize they
with their bank to those they have with consummate
must find a way to reclaim the customer experience and own
experience leaders like Apple. The bar has been significantly
the customer relationship while still providing a personal,
raised. Consumers demonstrate every day that they aren’t
humanized connection. Increasingly, they’re turning to social
going to settle for less.
media for the type of differentiated customer experience
innovation they need.
FSI competitive set is
getting complex
transactions
relationship
data
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Public Social
Networks for FSI?
Ineffective and
Unpredictable
Though banking has certainly not led the social charge, some
Facebook and the huge growth of new sites such as
FSI firms have ventured out onto LinkedIn, Facebook, Twitter
Pinterest and SnapChat. The place to be on social media
and Google+, with the assumption that these are the best and
today almost certainly will not be the place to be tomorrow.
only places to be. Not so.
It’s essential that financial services firms not concede their
entire digital strategy to Facebook—or any other single
Just 2% of customers who like a brand on Facebook
ever return to the page
public social network.
Source: Social Media Today
While these social media giants are popular, for customer
engagement they remain ineffective. For banks that operate
within the confines of regulation, they’re also unpredictable.
42% of teens considered Facebook the
most important social network in 2012
Third-party sites like these make frequent changes to policies
33% of teens consider Facebook the
and the user experience—all of which are outside your control
most important social network in
making them risky. Third-party post regulations (with complex
2013—a decrease of 9%
adopt and entanglement issues to navigate) make the public
Source: Media Bistro
nature of mainstream social media sites thorny when it
comes to interpreting guidance. Banks rely on disclosures
on their social media profiles as a key preventative action,
but there hasn’t been enough precedent to determine if that
alone will hold up under examination.
There is also the issue of being unable to predict where
consumer attention will go next. Many forecasters once
predicted that Facebook would not only dominate all social
networks, but the entire web, eventually becoming the new
corporate web site. Indeed, that has not come to pass and
likely never will as evidenced by waning teen interest in
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Own It, Don’t
Outsource It
MyFICO community members spend
41% more on FICO products.
The Barclaycard Ring community
generates $10mm in annual benefit.
The emerging key best practice is for financial services firms is
to have an owned property at the center of their social strategy.
Yet many just fold their social initiatives in to existing business
processes as a new channel—an important and influential
new channel perhaps, but a channel nonetheless. They get a
Twitter account and a Facebook page and start tracking channel
customers, capture their social conversations, develop new
successes like fans and followers. They cheer as the channel
insights, and innovate on the social customer experience.
successes pile up, but eventually someone starts looking for the
business success. Sadly, because they’ve adopted a channelcentric view of social media, very often no one can point to a
single dollar saved or earned.
Owned properties are far easier to manage and customize.
They give you the advantage of being able to create truly unique
social experiences for your customers that they will identify
with your brand and not, well, with Facebook. You can create
Smart businesses today realize that while social media might
a unique social customer experience that gives customers a
be another channel, an owned, on-domain social hub is a
way to connect with each other—and, all within the framework
collaboration machine—a mechanism for matching talent
of FSI communication compliance. Connection is what your
and knowledge with those who need it. They create online
customers want, and it’s what you want. Because when you
customer communities that give people with problems instant
connect your customers with each other, social sharing begins
access to those with solutions. They create engaging social
and a vibrant customer community full of service, passion, and
customer experiences that motivate and reward contribution.
innovation follows.
They develop knowledge bases where service questions and
product solutions are owned, codified and easily accessed by
anyone in need. And they make and/or save multi-millions per
year in the process.
Because customers trust each other more than they trust
you, those who are passionate about your brand will generate
more positive influence for you than your PR firm ever could.
They want to create and curate content around your brand and
The simple truth is that your customers aren’t looking for
products themselves. They want access to trusted resources
you on Facebook. If they’re passionate about your brand and
(each other), and they want to hear what other customers have
passionate about your products, they want to go to a place
experienced. They want to problem solve together (which, by the
where they can find and interact with others like them. It’s your
way, means your customer service load goes down—way down).
job to create that place. Facebook and Twitter are fantastic for
When you create an authentic, transparent place for them to
reach and to broadcast messages, but your own social base
do this, you start relating to them in a way they understand and
camp is a must-have. It’s the only place you can engage your
value. It’s a win-win for all.
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Customer
Communities are
Trusted Social Hubs
If we give our customers free reign, won’t the squeaky wheels
corporate asset. A vibrant social hub filled with UGC sets
get all the attention? A common concern.
you apart as the trusted resource for your customers—and
Yes, but they are already saying bad things about you. Isn’t it
better to listen and be part of the conversation? Absolutely.
Here’s why:
1. There is no better source of feedback and ideas for
improvement than the criticism of your customers. You
should be encouraging them to tell you what they don’t
like as well as what they like.
2. When customers do have negative comments, it is
no industry needs to build that trust more than financial
services. For your brand to become the go-to place for
information, learning, and discussion, social conversations
must brought into the mix and used for problem solving,
brand evangelizing and loyalty inspiration—all the key drivers
of social engagement.
Communities are also a key element in crowdsourcing, a
prime resource for customer opinion and a place to develop
and test new products. When you own the property, populate
it with trusted content, and facilitate community engagement,
exponentially more powerful to have other customers
social customer relationships become a vital part of the
come to the defense of your brand rather than your
brand identity, not just another communication channel.
customer service team.
That’s why customer communities are the beating heart
of social strategy—they put trusted content at the core.
Trusted user-generated content (UGC) is thought leadership
by credible subject matter experts from your brand—your
customers. Because customer communities drive real
engagement, they are fast becoming the new must-have
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Do customers want to be “friends” with their bank? It’s
The key to having a community in a highly-regulated
a question many financial firms wonder as they witness
environment, where privacy must be strictly protected, is to
the popularity of other brands on social media networks.
create a place where customers own the decision to join the
“Friends” may be a bit strong, but customers absolutely do
community, as well as determine their level of engagement
want to have a trusted relationship with their bank. More
and interaction within that community. When you own your
importantly, they want access to other customers. They want
social media property, you can customize it to provide security
a place to belong, a place to interact, and they want that place
and privacy options that meet compliance while at the same
to be full of trusted information.
time respect your customers’ individuality. Creating rules
All this said, another common concern for FSI firms around
social media is the fear that consumers won’t talk about
finances in a public forum. The truth is that consumers find
FSI products complex and intimidating to purchase and use.
of engagement for interactions helps to keep community
members (and staff) mindful of how a financial services social
community differs from other social media sites, including
their own familiar usage of Facebook.
They want to be better informed—independently—so they are
more empowered before engaging with an advisor or agent,
yet they are reluctant to discuss their finances with friends
or family. Online communities are perfect places for FSI
customers to gather information from others like themselves
in an anonymous setting. In the My FICO customer
community, for instance, customers routinely share their
actual credit scores (clearly a sensitive topic) in order to gain
more insight and advice on how to boost them.
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The FSI Social
Advantage: Lots of
Customers
One of the built-in advantages financial services firms have
expectations. Forward-leaning FSI firms are responding
when it comes to social interaction is a large customer base.
to that need by creating personalized, adaptive, responsive
FSI communities can scale quickly, provide relatively high
social customer relationships. Make no mistake, this feat
interaction, and deliver “big data” insights on consumer
requires a a major mind shift such that banks must:
behavior, opinion, and needs.
An error some firms make is seeing social strategy as just
another channel. They enhance the user interface on their
current website, create a few mobile apps, Tweet promotions
or bank events and call it a social strategy. But to leverage
the full power of social and meet the extreme expectations
of today’s consumers, financial services firms need to
see social as a transformative business strategy; not just
another communication or marketing channel. Social is
the new expression of the heart and soul of business, and
must be at the center of all business functions, including
risk management, compliance, marketing, operations, and
1. create one single vision of the customer.
2. empower frontline employees with access to data
on every customer.
3. facilitate and train staffing to be responsive in real-time.
4. provide the same high-level service experience at
every touch point.
This shift creates deeper engagement with customers no
matter where they’re located. And lest you think that the
traditionally conservative financial services industry will
always be a social media laggard, the wheels are in motion.
training. In other words, social needs to become the way you
The rewards of leveraging the power of social in financial
do business and not just the way you keep in touch with
services are not temporary. This is how business of the future
social customers.
will exist—now is the time to grab the lead.
Because customers have become used to best-in-class
social brands like Amazon and Uber providing ease of use,
convenience, and connectedness, they now extend these high
expectations to their financial service providers. Customers
want the power of shared information. They want data that
makes them smarter and they look for that in customer
Consumers today basically want to engage with “The Bank of
9 out of 10 financial service companies now use social
media and their focus is shifting away from generating
awareness to community engagement.
Me”—one that precisely meets their unique set of customer
Source: PeopleLinx
communities every day.
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Innovation as
Game-changer:
Barclaycard, FICO
By now, most financial services firms have realized that
unless they innovate, they’ll die. Not only have the last several
years proven that innovation is king in business model
reinvention, but that it’s also critical in rebuilding trust among
consumers. Consumer expectations for smooth, responsive
online interactions, service, and community; the fast pace of
innovation in financial data aggregation, payment systems,
and alternative banking services—all this disruption leaves
you with little choice. Reinvent and innovate. And do it now.
Traditionally, firms have hired consultants, conducted
market research, and formed committees to determine what
customers want. Today, they can do it far faster and simpler: by
building customer communities and tapping real customers.
larger than any internal or consulting team Barclay’s could
Customer communities where customers engage, interact,
have assembled, it launched with unprecedented features.
and provide feedback help banks create products, services
The Ring card is an enormous differentiator for Barclaycard,
and modes of delivery that align with what their customers
setting it a world apart from the competition. Take a look
truly want and need. Communities are excellent at crowd-
at what Barclaycard Ring card members get. Notice how
sourcing R&D with their much larger pool of ideas, concepts
radically different it is from anything you’ve experienced from
and feedback than any outside R&D firm could possibly offer.
a credit card company in the past.
Barclaycard Ring Member Benefits:
Case in Point: Barclaycard Ring
BarclayCard tapped the power of the crowd—their card
members—to help build a better credit card experience. They
launched an online community, encouraged members to
exchange ideas and vote on product features by giving them
1. Full transparency—insight into how Barclaycard Ring
makes money, including metrics on Ring’s financial
performance.
2. Continued influence over the offering—a chance to
“credits” for participation. Today, we have Barclaycard Ring—
guide Ring’s benefits, rates, rules and penalties through
the world’s first crowdsource-designed credit card. Because
an idea submission and peer evaluation system.
the pool of ideas offered by community members was much
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3. A share of Ring profits—including options to donate
profits to community-chosen charities.
4. A robust social experience—topical forums, ask-andanswer, idea-sharing, polls, blogs, and credits earned
for community participation.
What was the first thing Barclaycard did right? They
approached social as a potential collaboration machine, not
as just another channel. This unique and innovative initiative
has delivered a 50% decrease in complaints and a 25%
increase in customer retention—an annualized benefits of
over $10MM.
The moral of the story is that social offers a good deal of tried
and true benefits, but it’s also a place where we are free to
re-think our customer relationships entirely. Barclaycard
approached their Ring customers not as sales targets, but as
potential partners in the business.
The rewards of innovation are not one-sided. Customers
engage deeper and commit to brands when they feel their
opinion matters. Passionate customers bond with other
increases in search engine optimization. Nearly eight million
customers, who in turn, bond with the brand. Innovation
posts are read per month and 39% of the search traffic to
in how firms relate to customers – beyond new products,
FICO.com consists of users landing on URLs in the MyFICO
services, and user-interfaces – transforms customer
community. The community is now a major driver of the
experiences so that they have a relationship with the brand.
top of the sales funnel activity for FICO products such as
This increases loyalty—and in a day when it’s easier than ever
credit reports and credit monitoring services. The company
to switch banks, loyalty is critical.
reports that customers in their third year after community
registration spend 41% more on FICO products than
customers who are not community members.
Case in Point: My FICO
Innovation is key to meeting customer expectations, but it’s
Not only can innovation in community drive value and loyalty,
also essential for brands to thrive. Social communities create
it can also drive business growth. Lithium worked with the
connection, conversation and most importantly, remind
Fair Isaac Corporation, the creator of the famous FICO score,
consumers and companies that at the end of the day, it’s
to build the My FICO customer community. As the volume
people and the way we relate to each other—not technology—
of trusted content and user-generated content has grown
that empowers us. Social strategy is not an add-on, but fast
to 20,000 posts, the company has experienced significant
becoming a game-changer for FSI firms who do it right.
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1.
McKinsey & Co
2.
Lithium-commissioned Forrester Report: FSI Firms—Claim the Customer Experience, Now!
3.
PeopleLinx
About Lithium Technologies: Lithium social software helps companies unlock the passion of their customers. Lithium powers amazing social customer experiences
for more than 300 iconic brands including AT&T, BT, BestBuy, Indosat, Sephora, Skype and Telstra. The 100% SaaS-based Lithium Social Customer Experience™
platform enables brands to build and engage vibrant customer communities to drive sales, reduce service costs, accelerate innovation and grow brand advocacy.
For more information, visit lithium.com,or connect with us on Twitter, Facebook and our own community–the Lithosphere. Lithium is privately held with corporate
headquarters in San Francisco and offices across Europe, Asia and Australia.
The Lithium® logo is a registered Service Mark of Lithium Technologies. All trademarks and product names are the property of their respective owners.
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