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Social Media: Perhaps Retail Banks Just Don't Get It

An Ovum survey shows global retail banks are still slow to take up social media, and that they might be missing out.

Tens of thousands of customers are engaging three of the Big Four U.S. banks - Bank of America, Citi and Wells Fargo - in conversation on Twitter. Chase, which doesn't appear to be active in 140 characters or less, ran a successful charity campaign - Chase Community Giving - on Facebook.

But according to a report from Ovum, Datamonitor's technology research group, most of the world's retail banks - 60 percent of them - have no plans to use social media at all. The report further goes on to indicate a mere 14 percent of banks use social media for marketing with about 12 percent planning to use it by the end of next year.

"We feel that this attitude from retail banks towards social media is a major issue in an era of aggressive competition," said Ovum analyst Martha Bennet. "The banks without a social media strategy are being shortsighted and are placing themselves in a dangerous and vulnerable position compared to competitors who have realized that social media can and must play an intrinsic role in their business."

Ovum's are some pretty disparaging numbers. And its stance - that banks who are not participating in social media are missing out on valuable interaction and public input - meshes with what we're hearing from other industry analysts and experts within the banks themselves.

Part of this hesitation on retail banking's side might be that it's not easy to gauge in raw numbers - products sold, accounts opened - how well social media campaigns are performing.

"I think measurement on the social side is something that marketers are still trying to figure out," says Tom Triozzi, marketing director of Fort Lauderdale-based BankAtlantic. "What we’re looking at right now is brand sentiment."

The concept of measuring how well a brand is regarded by the public is not new or unfamiliar in other retail businesses. So why not banking?

Maybe it's just not seen as important.

Ovum points out that Wells Fargo, Citi and BofA are leading examples of social media use in the U.S., with Britain's First Direct and Netherlands' Rabobank shining examples of European banks engaging in social media.

"These banks have been justifiably held up as industry leaders for their use of social media, however there is not universal acceptance that social media is either important or suitable for retail banks," Bennet said. "Consumers are not averse to receiving promotional messages via social media, or using it for customer service enquiries so a massive opportunity to rebuild the confidence in the sector that is so desperately needed is being ignored."

Keep in mind the Ovum survey's sample size was 150 retail banks worldwide. An institution like BankAtlantic, a community bank serving a small region might not have necessarily made the cut. But even a small bank might be able to drive more sentiment, or at least more pageviews, by talking to its customers 140 characters at a time.

"Since we started using all the social media networks, our web numbers have continued to increase dramatically," Triozzi said.

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