Banking in the Crowd

Moroku stems from the Maori word for gathering, “puroku”, twisting it in the realisation that today the tribe connects via mobile. With only China and India having more social members than Facebook and the majority of our interactions now occurring on mobile, few will argue that the age of the mobile gathering is not upon us.

Yet banks continue to be very poor adopters of this new and dominating engagement platform; struggling to embrace the new world of transparency in communications and dialogue and engaging in remarkably limited experimentation with the open API opportunities for identity and community.  This lack of deep engagement with social media is all the more surprising against the back drop of a great intent to create and build relationships with customers and to build digital channels to serve customers better. It’s surprising because in the digital channel, it is social media that creates, manages and shapes relationships. This lack of exploitation with social media by the banking industry must be due to a lack of understanding as to the why and the how, so let’s have a look.

The business of banking is built upon large numbers of customers buying and using transactional products on a daily basis.  This is no niche service. It’s a scale game. Getting customers to buy is premised firstly on the customer knowing why to use the product and then having the trust to use them; trust that the bank will do the right things with your money and help you win. Whilst the system has trust engineered into it at a systemic level, much of this trust has been put under pressure of late, starting with the financial crisis and continuing with the Greek crisis as the ECB and the IMF embarked upon a very public debate as to the best way forward and leaving many wondering who was in charge and whether they had the skills to be in charge.

Back in the days of the fabulous TV show “Mad Men”, retailers could be fairly confident about creating customers by controlling the message from the top down, building campaigns with lots of colour, light and sound to build the funnel. During the early days of the Internet this advertising model prevailed as the banner ad leapt to the fore. Today with customer distrust and our ability to filter out ads at an all-time high, the power of the Mad Men has been significantly eroded.  Today people do more research than ever before on products; comparing features, price and service online with a large amount of this done on social media, as customers ask the crowd what they think.

There are some folk lore examples of banks getting taken to the cleaners on Social Media. Two of the best involve Westpac and Bank of America both of whom got hammered for cranking up interest rates and then not managing the social media onslaught that ensued. Both banks failed to take the Social Media revolution seriously and took a bath on credibility. Customers took to Social Media complaining and when this wasn’t dealt with openly and transparently the traditional media, always keen to back the wee guy and beat up the abusive bully, got stuck in. All that money spent crafting messages from the top down, burnt in an instant of absence.

Conversely the ROI of getting right is very measurable; Research from Bain shows that customers who engage with companies over social media spend 30% more than those who don’t and demonstrate a deeper emotional commitment, granting them a 33% higher Net Promoter Score. Social media engaged customers buy more.

As well as top line improvements there are also significant bottom line enhancements. Constant margin pressure ensures that there is no abatement in the search for new ways to tear into the cost to serve in banking. When the founders of Moroku first built Internet Banking in the late 90s we knew we could get the cost of serve from the branch to the web down from $1 to $0.10 and we did. Today that’s transitioned to mobile with digital channels now serving more customers than the old world of man to man marking in the branch and call centre. With efficiency improvements attained, there has been a renewed attention on sprucing the digital channels to also drive sales and take on the workload of the top line. Digital clearly presents us with plenty of opportunity for effectiveness (selling) and efficiency (cost improvements) which collectively build the compete muscle of the bank and maybe helps put some money back into the pocket of the customer. Social media has a massive roll to play on both accounts as it picks up service work loads, with customers helping each other through forums and communities.

With the why becoming increasingly obvious the challenge becomes the how. The first answer is clearly to lean in; build the social presence and allow customers to engage in an open dialogue with you on Facebook, Twitter, and LinkedIn. The latter is often forgotten but is critical for building engagement with the profession and institutional customers. Be authentic, don’t use it as a marketing channel. Use it to keep your customers engaged, up to date and winning. Do not delay, ask for help, spend millions and create teams who give the bank a strong social media muscle. If you’re having trouble getting the boss to commit, get help, forward this blog and print it out on dinosaur paper if necessary.

Creating and monitoring a social presence is Social Banking 101 and should be regarded as hygiene factor for any bank. It is also a necessary achievement before levelling up to 201. 201 is where we move off the Facebook page and embed crowd consciousness into the fabric of our products.

In our drive to build banking businesses, we often lose sight of the fact that money plays an enormous part in the way life works. There is little apart from sun, air, water and money that seep into every crevice of life. They are incredibly powerful elements as they give us the foundations to move. The other notion that is helpful to remember is that before individual pursuit comes belonging and our need for connection, as Maslow was at pains to point out. Indeed it is this hunger for connection that has made social media so popular. In a digital world that appears to have lost the ability to have conversations, the planet is connecting with more tentacles than it ever has. Realising the power of money to move communities through a social media fabric is incredibly powerful and defines Social Banking 201.

It starts with our ability to harness the identity platform offered by social to connect concepts of customer and account. There’s clearly a KYC gap between what Facebook or LinkedIn need from a customer and that of a bank. However when you get smart and link the two then you really plug in and can begin intelligently routing and connecting social engagement to revenue and banking activity. Many telcos and other providers conduct significant customer checks and where they do they can be leveraged to drive compliance and knowingness. Such approaches also demonstrate that you “Get Social”.  Engage customers in pre-sales activities like doing research with limited identity and then move up the scale of knowingness:– “Want a quote? Sure, Sign in With Facebook and you can come back and get your quote any time without having to remember that silly quote number”

With the identity component locked we can now move to the real fun in 201 – crowd banking. This is where we integrate the community into the heart of banking. It’s where we flip the user experience model around, so that instead of the customer logging into Social to do their banking, they log into banking to do their Social. This is possible because of the water like nature of money – remember its ability to get in and move things? There are actually very few things we do alone. Almost everything most of us do involve others and money: Housing, eating, health, illness and travel are real examples and give us the opportunity to present banking contextually. There’s lots of talk of P2P, digital currencies, mobile money and cross border remittances combining at the moment. This is because there are just so many inefficiencies in the current models. Social within these systems will elevate the acceleration of their adoption by placing open identity architectures at their heart.

There are so many activities that we do together and which have a financial component to them. Banking with the Crowd is coming out of the lab and into reality, binding people together around their life pursuits in a valuable way and allowing customers to win. It’s happening across the board in retail and business banking as we remove physical barriers and allow netizens to come together and collaborate in very enterprising ways.

There are lots of reasons to be excited

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Digital is rapidly commoditising banking around the world, forcing participants to compete on margin erosion and funding. In the new engagement economy, there is an alternative: Harness the power of game to build digital experiences that deepen customer relationships, provide value and are relevant by supporting customers to thrive with their money.