The report, “Social Media: Trends and Tactics in the Financial Services Industry,” indicates that 15% of the firms that Corporate Insight researched have added significant social media features to their online platforms in 2008, 70% of which have developed full-fledged online communities.

“Two years ago, very few financial services companies offered social media features,” said James McGovern, Vice President of Consulting Services at Corporate Insight. “That was before social media really exploded in popularity. Now, sites like Facebook and YouTube are some of the most recognized destinations on the Web. Financial institutions are beginning to understand that customers want the ability to share knowledge with fellow customers, especially given the challenges posed by today’s investing landscape.”

Overall, the report found that online communities are rapidly growing in popularity but companies are using them for a wide variety of reasons, from collecting customer feedback (Schwab) to educating and marketing themselves to clients and prospective customers (American Express). In addition, many self-directed brokerage firms have embraced social media, using online communities to engage clients and provide a platform for investors to communicate with each other. It is also noteworthy that none of the full-service brokerage firms Corporate Insight monitors have entered the social media fray to date.

Following are some of the key findings from the report:

Brokerage Highlights
• Six of the 20 brokerage firms studied have YouTube Channels. OptionsXpress, Scottrade, Vanguard, Wells Fargo and Zecco all feature investing ideas and tools available on their website, while E*Trade simply reruns their TV commercials.

• Both TradeKing (10,700+ participants) and Zecco’s (38,000+ participants) communities feature open membership with full participation for individuals whether or not they have an account. In addition, members who hold accounts are allowed to display their portfolio performance on a percentage basis.

• Schwab and Scottrade’s online communities are for customers only. Schwab’s (approximately 4,200 members) is restricted to active traders who make more than 36 trades per year, while Scottrade’s community (approximately 8,000 members) is open to all clients.

• TD Ameritrade offers a sentiment tracking tool on its website that allows clients to vote on the daily performance of a stock and see how other traders are voting.

• Fidelity has taken a cautious approach to social media; the firm hosts a community for its WealthLab Pro users but not for its broader client base.

Banking and Credit Cards Industry Highlights
• Eight of the 20 banking and credit card firms tracked have YouTube channels. Bank of America and Citizens Bank feature content from their viral marketing campaigns and American Express devotes their channel to their philanthropy, MemberProject initiative.

• Wells Fargo was one of the earliest adopters of social media, participating in the virtual world Second Life before branching out with its own Stagecoach Island community targeting Gen Y customers.

• American Express, Bank of America and Capital One have also developed their own online communities to serve small business owners.

• Visa has launched its own Facebook application targeting small business owners, a one-of-a-kind in the industry.

Annuity Issuer Highlights
• Annuity issuers target older consumers who are the least likely to participate in social media.

• Only two firms, AXA and TIAA-CREF maintain online communities directed at retirees. New York Life lets public site users rate and bookmark pages using popular share sites like Digg. Mutual Fund Companies

• While mutual fund company executives expressed a strong desire to incorporate social media into their business models, none had any concrete plans and most say they are being held back by compliance departments. Corporate Insight also believes that a conservative approach to the Web is partially to blame for fund companies’ inactivity in the social media space.

• T. Rowe Price does utilize social media for internal training of seasonal tax representatives.

Corporate Insight’s findings suggest that while financial services companies have embraced social media and are beginning to incorporate it into their business model, most firms are still experimenting with best practices. “We’re at the beginning of a major new development that will have a significant impact on the way firms serve Generations X, Y and beyond,” said McGovern

"The beauty of it is it's individual and collective at the same time," Hastings says. "We get to listen to our customers and respond to them. And if one person has a positive interaction they can let 9,000 other people know."

When BofA launched its presence on Twitter, Hastings thought it would only be a forum for customers to look for resolution to problems - about service charges or errors for example - but soon found that customers would also proactively seek information about products and services. "What was probably most resonating was how quickly it grew into another way which people wanted to get information about the bank," Hastings says.

Putting Knapp out there as a highly visible, high-touch face of the bank is certainly an expensive way to handle customer service - what about the drive to reduce call center volume as a way of cutting costs? But BofA sees Twitter as a powerful social media tool that "lets us meet our customers where they are," Hastings says. But at this point it has to be an experiment. Knapp owns the resolution to every problem that comes his way; if Twitter continues to grow at its current pace that certainly won't be sustainable. But Hasting's isn't worried about that, she's got her eye on "the next Twitter" where the bank should be meeting its customers. "It's still to be determined," she says. "From Twitter, what are the next places to go to help proactively solve our customers problems?"

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LOS ANGELES--(Business Wire) | Passenger, a leader in private online brand communities that inspire customer engagement, advocacy and insight, today announced research data and an accompanying white paper by Sector Intelligence that analyzes how companies are currently using social media as part of their corporate marketing and product development strategies.

The white paper examines how 16 Fortune 500 food & beverage, financial services, automotive, retailers and sporting goods brands are involving customers directly in the planning and development of company products, services and marketing initiatives, as well as the corporate social media strategies themselves, via private online communities. The study found that these interactive communities provide deeper insight into customers` needs than traditional market research, have increased customer advocacy and loyalty, and can help avoid consumer backlash as companies develop their public social media presence.

The study delivers quantitative and qualitative results that demonstrate how marketers and brand managers are changing the way they interact with their customers to solicit feedback and input through private online communities, and get deeper insight into the preferences and lifestyles of their audiences.

Highlights include:

• 86 percent of respondents report that private online communities provide richer insight into customer needs

• 33 percent report that the community input alone has actually changed product designs and marketing plans

• 43 percent report they use fewer focus groups as a direct result of engaging in collaboration via the private online community while 36 percent report conducting fewer surveys

• 64 percent report that the community has improved the context for decision-making within the company

• 96 percent report that their marketing department is deriving value from collaboration with customers, 71 percent report the same for market research; 66 percent report a positive impact on product development

The rot started with Enron and WorldCom, then Arthur Anderson, and, now, those bastions of dependability (or so we thought), the banks. The economic crisis has not improved this situation.

Based on the interviews with the brand executives, Sector Intelligence drew the following conclusions:

• Word of mouth is likely to become a more central part of a company`s future marketing strategy as they learn to integrate loyal customers into the brand strategy. The intimacy created by ongoing conversations can be a powerful model for connecting with the customer base and learning how to foster loyalty

• The conversations happening in private online communities are unique from other forms of research such as focus groups. The ongoing, direct communication of this medium provides businesses with a consistent, more affordable way to instantly engage with consumers. As this becomes normative behavior, these conversations turn into more impactful relationships

• For some of the more conservative brands surveyed that have shied away from public social networks because of the risks involved, private communities facilitate innovation and direct conversations with consumers in a safer forum, while still organically encouraging customer advocacy

• Even with budget crunches, companies are investing in tools and services that will help them listen to and learn more from their customer base

• Private online communities can enhance internal collaboration within larger brands in diverse sectors. By talking to their customers directly throughout the various product development and marketing processes, the lines between various divisions are blurring - both for economic and productivity reasons

CLICK HERE to download the White Paper

The central bank sent out its "tweet" in conjunction with more traditional communication methods, such as a press release issued the same day about the rate cut. Though the tweet went out in Norwegian, Norges said in a tweet the next day that it would also publish news in English on its Twitter account.

Twitter's service has become increasingly popular with financial companies, including Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co., which generally use it to communicate with customers or promote their offerings.

© 2009 American Banker and SourceMedia, Inc. All Rights Reserved. SourceMedia is an Investcorp company. Use, duplication, or sale of this service, or data contained herein, except as described in the Subscription Agreement, is strictly prohibited.

For information regarding Reprint Services please visit:
http://www.americanbanker.com/reprint-services-rates.html