Report: Social Media. Catching up with the banks. 2011

Social MediaCatching up with the Banks

The use of social media is a relatively new concept for banks, and one that poses numerous challenges. The banking sector is more heavily regulated than many other industries, and whilst technology is a key driver for banks to ensure competitiveness, orchestrating a strategic approach towards social media has been pushed back for a number of years. As a result the banking industry has fallen behind in its approach to this new form of media, but there are now a range of successful examples of how banks can benefit from carefully planned social media engagement programmes. These can range from improving corporate reputation to creating a better customer experience to using platforms as easily accesible news distribution channels. At the same time social media has become so common that it is now by definition mainstream, and the line between traditional and digital media has undoubtedly blurred at the edges.

Against this background, MHP Communications conducted a survey amongst heads of communications and PR managers at global banks, asking them for insight into their use of social media, what the most relevant platforms are and how they create content for social media purposes. This report summarises the key findings, which include the following:

• Banks and financial institutions are behind the curve when it comes to using social media as a communications tool. They are catching up, but there is still a high level of uncertainty regarding how to best utilise it.

• When it comes to external communications, the banking industry is characterised by confusion over regulatory responsibilities as well as concerns about the loss of control when interacting with social media platforms.

• Twitter is identified as the key social media platform for the banking industry, and the challenge is how to make better use of its potential.

• Print publications and traditional outlets such as newswires are still seen by banks as the most important and valuable way of communicating with clients, investors and other stakeholders.

• As expected, there are differences between retail and investment banks regarding appetite for interacting with social media and its relevance to the business.

This research also shows that the banking industry has acknowledged the potential of social media, and banks are increasingly stepping up their social media activity. What is important now is the correct guidance and an expert understanding of how to navigate a complex social media landscape, what rules to follow and where to prioritise time and resources.

We hope you find this report interesting and stimulating, and as the UK’s leading digital PR agency for 2011 (New Media Age) with extensive expertise in the banking and capital markets sector, we look forward to your feedback.

Andrew Nicolls

Managing Director, MHP [email protected]

2 MHPCommunications SocialMedia-CatchingupwiththeBanks Autumn2011

Foreword

How banks use social media

In August 2011, MHP Communications conducted a survey amongst the heads of communications and public relations specialists at more than 35 global banks to gain an understanding into social media habits across the banking industry. In broad terms, use of social media is high with the majority of respondents (53%), using social media both in a private and a business capacity. 30% use social media outside of a work context and 3% for business purposes only. 15% of all respondents do not use social media at all, which is a high percentage given that social media generally sits under the communications department’s remit. Whilst social media has become a mainstream activity, it is notable that more respondents use social media for personal means than in a business context.

When looking at the purpose of social media, it is widely seen as a good source of information on what is happening in the media (75% of respondents). Interestingly it is less seen as a direct route to the customer, but more to communicate broadly and advertise products and solutions: More than two thirds say they use social media for communications and public relations purposes, whereas 42% use it for marketing and sales activities. Customer service is a key purpose for 25% only.

In the retail banking sector social media has a more established footprint than in the investment banking world. This follows the logical conclusion that for customer service and customer engagement purposes the mass consumer market is appreciative of being able to communicate with banks through these new, yet very much established platforms. And banks are increasingly keen to appear more customer-friendly whilst tackling the image the sector has as consisting of traditional and staid organisations.

In the investment banking world social media takes on a different purpose, and has even become a platform to be feared and avoided. It is also not seen as a traditional direct route to clients. This is changing however, and one senior PR manager commented that the bank’s trading desk recently received a client request for traders to be given access to Twitter to monitor and engage with client comments throughout the trading day.

MHPCommunications SocialMedia-CatchingupwiththeBanks Autumn2011 3

The use of social media within the internal communications function is relevant for around one third of respondents (36%) – which represents a vast untapped potential given the range of opportunities to share knowledge and information internally that social media creates. Free tools such as Yammer, Twitter with protected tweets or Google+ with individual circles make information available only to a selection of people, so they can be used to streamline internal communication processes. However, and this is a key problem for a heavily regulated industry such as the banking sector, social media platforms are provided by external third parties. Any shared data which is of a sensitive or confidential nature will in many cases be stored on the provider’s servers which may not provide sufficient protection or peace of mind for the banking sector.

Most providers are based in the US where legislation may, under certain circumstances, require them to reveal their clients’ identities or other data. Also, social media platform providers are commercial operations and there is the risk that data is misused, misplaced or falsely allocated. Many banks feel that sensitive data should only be stored and transmitted on their own infrastructure to ensure full compliance. At the same time, regulatory bodies such as the Financial Services Authority (FSA) in the UK aim to make social media more widely user-friendly for banks by publishing guidelines and recommendations. As a consequence there is a high level of insecurity as to what can and cannot be done.

Despite these issues, social media is now seen as forming a strategic part of a communications programme rather than representing solely a tactical activity, with 84% of banks now having a specific social media strategy. Nearly one third has started to execute a strategy, and 15% have a fully developed strategy in place. More than 40% are currently in the process of creating a strategy, and only 16% have not started thinking about or have decided not to have a social media strategy in place.

A number of banks do have a social media strategy, but no defined goals for the strategy: 27% responded that they have not established specific goals for their social media strategy. Measuring the success of a social media programme is perceived to be more complicated than for traditional PR which may explain why metrics and, in effect, goals remain vague.


Why banks use social media

For the majority of banks, social media is about building awareness with customers (63%) and creating visibility with partners and investors (55%). Nearly 50% see social media as an extended PR tool or one that should help strengthen relations with the (traditional) media. This shows a sound understanding of the influence social media has in a communications environment. There are now thousands of journalists in the UK using Twitter and Facebook, and both have recently launched official guides for journalists. It has become increasingly common over recent years for traditional media such as print publications, TV and radio stations to mention blogs and bloggers, or to quote tweets. In addition, Twitter, Facebook and Google+ are additional channels to engage in a direct dialogue with journalists. This enables banks to interact and offer spokespeople for commentary and background information, invite journalists to events and retweet or “like” their status, thus building on existing personal relationships.

For 46% of banks, social media is about attracting talent. Many employers now seek their employees purely on platforms offering direct contact, such as LinkedIn, where potential candidates can be easily identified and filtered. 45% want to use social media to raise their profile across the board, and 36% aim to generate direct sales. Success stories such as Dell’s increase in sales through Twitter - which was tracked by directing users to specific URLs - may not be easily replicable in the banking industry. But they demonstrate how a well planned and executed strategy can have a measurable positive impact.

Around one third of bank respondents agreed that social media would help them with, and pre-empt their need for, crisis management activity. This seems a fairly low figure given the high level of uncertainty in the industry and the real-time impact that a statement on Twitter could have in stopping the rumour mill grinding and contributing to a downward impact on share prices, for example. Whilst it may not replace traditional routes of communication, social media can certainly supplement them. Any direct engagement can be beneficial in a crisis situation, and those banks already doing so have taken an important first step which they can use to improve their crisis management strategies and processes.

Nearly all banks think that social media gives their corporation a competitive edge. 55% said they can respond more quickly to enquiries and market rumours, and 48% said they can engage with journalists and traditional media more easily. 41% think social media is an effective way to deal with sceptical customers. For one respondent, social media is a good way to deal with happy clients, therefore creating an additional channel to strengthen the customer relationship rather than a route only to be used in times of crisis.

However, a quarter of respondents think that the impact of social media is limited, and several also cited loss of control as an issue. As one respondent put it, “social media are much less scrupulous about the truth, hence [it is] much more difficult for PRs dealing with unsecured rumours that crop up on blogs”.


Loss of control and regulation as barriers

“The Wikipedia information is definitely reliable because I wrote it”

When it comes to perceived barriers to banks further engaging with social media outlets, 52% mention regulatory issues, whereas 40% cite time and budget constraints as the main obstacles. 36% say that social media does not naturally fit in their current organisation structure and requires additional resources to create and curate content. 12% said they do not know how to identify “real” customers within social media platforms so they cannot properly engage with them.

The loss of control over the message and story however is the main concern for communications professionals at banks (56%). Another 20% said that their greatest fear is social media platforms taking content out of context. This brings to light a dilemma for communications professionals. Most of the time a press release is re-written by a journalist working for a traditional publication as they add their own take on the story, and a live TV interview may lead to unexpected questions from the interviewer. In other words, there is no full control over the message in the traditional communications business, and this is similar to social media activity. Most bloggers adhere to journalistic conventions, and the ones that do not and take stories out of context are usually regarded to be irrelevant. Bloggers need to work according to journalistic standards if they want to build a trustworthy reputation. This in turn is necessary if they intend to monetise their work. In most cases the loss of control in social media seems to be a perception rather than a fact based on personal experience.

Loss of control can also be caused by unclear messaging guidelines or employees breaching security policies. Strict guidelines regarding the use of social media are common in banks, and social media is generally banned from desktops completely: “Not everyone in the organisation has access to social media, it is granted only to those whose job requires it.” This may however stifle innovation and prevent banks from adopting new technology. According to recent research by internet security company Clearswift, 18% of employees would be de-motivated by a stricter policy on social networking introduced by their employers, and 19% would try to work around the rules. 4% would even consider leaving, indicating that many employees have now become fully accustomed to using


social media as a means of sharing information and data, and feel entitled to access it.

The vast majority of banks (73%) think that compared with other industries they are behind but catching up in their social media engagement and activity. 13% of banks think this is the case because social media is not relevant to their business, and 13% think their social media engagement is not really different to other industries. No bank thinks they are doing a better job than most, reflecting the cautious attitude and insecurity towards social media that is deep-seated within the industry. Asked for the reasons why banks have

fallen behind, one communications expert said that the US is ahead of the curve as there are whole teams handling interaction with social media, but it’s less relevant in Europe. According to another PR specialist, “we have regulatory restraints other industries do not have. We’re behind mainly because of regulation.”

These concerns are not necessarily perceived as insurmountable obstacles: “We’re less advanced because social media policy is generally driven by a very risk averse compliance structure and culture”, said one senior head of communications. Actually, 50% of banks are either fully aware or have at least a basic understanding of regulatory requirements, whereas 27% said they are aware that there is regulation but they are not sure what it looks like and how it affects them.

Against this background it is surprising that 35% think that the industry is under-regulated. Regulation is already seen as a barrier as it requires additional resources to understand the different requirements, track frequent developments and to make sure everyone in the organisation uses social media in compliance with the relevant rules. The demand for more regulation shows that existing guidelines do not sufficiently clarify what can or cannot be done in the social media sphere, and that there is a need for action. It also means that banks are prepared to invest more in additional resources if this ensures they are compliant. Only 23% think the level of industry regulation is well balanced, and for 8% the industry is over-regulated.


Keeping an eye on digital conversations

Nearly one third of banks (31%) say that there is little conversation about them or issues of relevance to their organisation taking place on social media sites. This is a surprisingly high figure, and either indicates that the visibility of banking brands across social media outlets is low, or that banks fail to fully engage with their stakeholders. In addition, 27% said that there are ongoing digital conversations about them, but that they are not actively involved in engaging in these conversations. 15% said that they are well discussed and referenced in ongoing social media conversations. A very active 4% said that they drive most of the social media conversations about their brand themselves – which requires a social media strategy including tactics, metrics for evaluation as well as monitoring infrastructure.

When asked how they monitor online conversations, 39% of respondents referenced Google alerts, which is a surprisingly low figure. Google is apparently not seen as an appropriate tool to efficiently monitor online conversations, but rather as one to get an overview

of a brand’s online mentions. Given the free and real-time nature of Google alerts this is one avenue that the banking sector should investigate as an easy method of monitoring online mentions. 27% use free tools such as Social Mention, feed readers or Twitter’s search function, and 11% and 12% respectively use paid-for tools such as Radian6 or proprietary in-house technology. 23% have outsourced the monitoring of online conversations to their PR agency, whereas 15% do not currently monitor conversations in the digital space at all. Also, nearly one fifth (19%) do not know whether and how their corporation monitors conversations. This is a very high figure given that the communications function needs to be up to speed on where their brand is mentioned so they can react and influence messages.

A combination of free, paid-for and proprietary technology can help to provide a detailed insight into online mentions which can be

aggregated and displayed in the most effective way. 79% use their own brand and/or company name(s) for online monitoring, and 73% track mentions of the issues related to their companies. 59% search for names of their own key staff and 56% for their competitors. Only 8% monitor names of key staff at competitors. Respondents also mentioned they search for key deals, key journalists, products and services offered by their company and industry-relevant keywords.


The importance of media outlets

“Our job is about making everything we communicate as accurate as possible and the way we want to get our message out is therefore via respected journalists and publications.”

When asked which platform has the most impact on their brand, the results are clearly the ‘traditional’ media. Mentions in traditional media are - still - seen amongst the banking community as more important than digital coverage or online conversations. For the majority of respondents, print coverage in national newspapers such as the FT has the highest impact on their reputation and brand. For one senior communications manager, “a printed article in the FT is more important than anything else – this is different for other audiences though.” A broadcast mention in a TV or radio show has the second highest rating. Print coverage in relevant industry trade publications comes third, followed by a mention on an influential blog. Twitter mentions and retweets (that can generate web traffic) are seen as having a lower impact than blog mentions, but are valued as having a higher impact than wall posts, viral videos and other social media “buzz”.

Looking into this in more detail, three different trust categories have emerged: LinkedIn and Wikipedia are seen as being very reliable resources; Twitter, Facebook and YouTube tend to be seen as more unreliable; and Quora and FourSquare are too unknown to be significant. 64% think LinkedIn is a trustworthy source. Equally 64% of respondents say that Wikipedia is very reliable or reliable. One senior respondent commented: “Inaccuracy is the biggest headache and Twitter is much more based on rumour than fact. I am more likely to trust Wikipedia as a factual source of information.” However, given the nature of Wikipedia to be edited by anyone this can be a dangerous approach. Wikipedia entries are in a constant state of change which requires constant monitoring and, when necessary, editing to restore facts and delete rumours or inaccuracies. 25% of banks think Twitter is reliable, for Facebook the value is 17% and YouTube is being seen as reliable by only 9%. One third said that information on Facebook is unreliable or even very unreliable, whereas 42% think that Twitter’s value varies greatly. For YouTube this figure is 30% and for Facebook 29%. Newer platforms such as Foursquare (83%) and Quora (91%) are unknown or not used by the majority of banking communications professionals, so most respondents are unsure about their significance.

When it comes to assessing the importance of the various platforms over the next 12 months, Twitter is the clear winner. 50% of


banks think the platform will become more important, and another 8% think it will become much more important. 48% think LinkedIn will become much more or more important, whereas – despite its lack in trustworthiness – the value for YouTube is 43%. Over a third (36%) said that Facebook’s importance will grow in the next year, however 4% also thought its importance would reduce. In general however these responses show that the vast majority of respondents think that most social media platforms will become more important in the future. Very few communications experts think that social media will become less relevant. However, one respondent clarified that these platforms are probably more important in the retail banking world. As highlighted earlier, it is important to engage the target audience in the most appropriate way.

How content is created

Typically, the responsibility for creating and publicising content on official social media platforms lies with the communications/PR department (61%). 48% said it falls to their sales and marketing departments, whereas 30% have a dedicated digital/social media team. Senior management involvement is very low, with just 4% of bank CEOs creating content. In addition, 4% and 9% respectively said that their IT department and other individual employees look after social media execution. Another 9% have outsourced this to their PR agency, and there are a few banks which employ specific research teams for this task. 17%, a relatively high number of respondents, do not know who is responsible for creating content – “we haven’t defined it yet”, says one senior communications officer. Another respondent pointed out that responsibility for content varies by media platform, suggesting there is a range of people involved in the process which may make it more difficult to control messages and timing – especially across multiple jurisdictions.

In this respect, language is a widely discussed issue. A large number of journalists globally speak English to a certain degree which allows them to understand and reproduce a press release or commentary. However content in a local language generates far more coverage than content produced in English for a global audience, and most banks have their local operations create local press material. This does not automatically transfer into the social media sphere, where journalists are just one stakeholder: 40% of banks undertake all social media activity in English only to reach the widest possible audience – including media, customers, partners and employees. However, a significant 35% translate and localise all content – “every community has its own language”, said one PR manager. A further 30% translates selected content into local languages.


Conclusion

Social media remains a controversial topic for communications experts in the banking industry. Whilst the usefulness and growing importance of digital platforms have been widely acknowledged, banks are now faced with the challenge of how to best execute social media strategies. This research highlights how thinking and knowledge across the industry globally is more advanced than commonly assumed, which can only be a good thing. The level of engagement with social media platforms is for individual institutions to determine based on their needs, priorities and perceived threats. However, all communications professionals in the banking sector must at a minimum have a fine-tuned understanding of the social media landscape to allow them to identify the correct level of engagement and deal with negative online activity in the most effective manner. Social media empowers users in a new, exciting and sometimes threatening way, but its presence and growing importance is ignored at your peril.


MHP Communications60 Great Portland StreetLondon W1W 7RT020 3128 8100www.mhpc.com

Business & brand reputation experts @