Why don't banks embrace social media? What are they afraid of?

The other day I went on Facebook to try and find the fan page for a very well known bank, which I won’t identify.

I found it odd that the bank wasn't on Facebook. There were a few community pages dedicated to the bank, though they offered very little information.

I then decided to scour the internet for a blog written on behalf of the bank. I had no luck, other than finding a blog written by an angry customer.  What an opportunity missed here!

I began to scratch my head, as I have become so accustomed to big B2C companies using social media platforms, that I just assumed my bank would be using one as well. My assumption felt as safe as a sunrise.

Just for fun, I decided to search for Facebook pages for several other large financial institutions. Out of the four additional banks I looked up, only ONE had a Facebook page, and it was the smallest bank of the four.  My subsequent search on Twitter was only a little more fruitful, as I located two of the banks I was researching.

According to a recent article in Bank Technology News, "New research from Ovum finds that only six percent of the 150 global banks surveyed use social media to answer customer inquiries, with only one percent planning to do so within the next year."  The article goes on to say, "Twitter and Facebook are only marginally more popular as venues for marketing, with about 14 respondents using the channels for this purpose, and 12 percent planning to make a move in the next 12 months."

I can appreciate why a bank would approach the use of social media very cautiously. It provides a global platform for criticism. And let's be honest, financial institutions aren't on many Christmas card lists these days.  To be fair, as one of the comments below so eloquently points out, there are also several regulatory issues that banks must address if they use social media. Though obviously some banks have overcome those barriers, so I'm willing to bet that concern over negative feedback is at least part of the equation.

The primary strengths of social media from a business’ perspective are consumer engagement and community building. Yes, corporate blogs and Facebook pages may invite negative commentary, but they also give a company the opportunity to address consumer concerns, offer factual data that may change negative perceptions, and improve the quality of customer care. In the banking world, social media can provide a measure of transparency where many consumers believe none exists.

Unfortunately, a myopic view of social media is not limited to the financial services industry.  Many large and small businesses haven't yet figured out the strength of social media and the competitive advantage it can provide in a rapidly expanding global economy.  Some businesses simply don't have the resources to dedicate to social media (which is a discussion for another day), but others have simply made the strategic decision not to adopt it as a communication and customer service platform. 

It's time for businesses to recognize that they can't live in protective bubbles anymore.  The world is watching and talking about them whether they like it or not.  Therefore, they might as well be a part of the conversation.

Socially Responsible Banking: Are you buying it?

The Washington Business Journal reported this morning that a new Spanish bank with a social mission is coming to DC.

Caja Navarra’s business model stresses transparency and social investment. The bank publicly reports its profits and then invites its constituents to donate 30% of those profits back to a list of approved charities.

While big businesses have been practicing corporate social responsibility for years, this unique model allows the bank’s customers to determine the focus of the bank's philanthropic investments. Plus, those investments have the potential to be MASSIVE!

Caja Navarra, or CAN, chose the DC area for its U.S. launch due to the large number of nonprofits in the region. The bank expects to open its first U.S. affiliate early next year.

What a great business model! During a time when big banks are being bailed out by taxpayers, and consumer trust in banks is waning, here comes a new bank that is not only going to invest heavily in social causes, but is going to allow its customers to determine those causes.

As a marketer, I would love to market the CAN model!

This reminds me of the days when Muhammad Yunas first introduced the idea of micro finance, and people from all over the world were intrigued by it, but didn't know if would work. Well, we know the answer to that question now!

However, it will be interesting to see if this social mission will be enough to entice investors to move their money to CAN.

While I think that this model will be attractive to the philanthropic minded; I still believe that we live in a cynical society that has become more and more protective of its assets and investments. The question that CAN will probably hear most often is, “What's in it for me?” Will CAN offer free or interest bearing checking accounts, overdraft protection, low or no ATM fees, access to loans, etc?

However, all things being equal, this socially responsible business model could tip the scales in favor of CAN, especially in a city like DC with more than 30,000 NGOs.

I’m intrigued! What do you think?