Put social media into banking…or put banking into social media? October 28, 2010
Posted by nichebanking in Niche banking, Nicheruptive, Social communities, The Long Tail of Banking.trackback
With a couple notable exceptions, social media and banking have so far gone together about as well as oil and water. It turns out it’s hard to excite a lot of followers and fans with personal finance tips and announcements of shred days. Who knew? Anyway, in short, banks and credit unions have tried to build social networks around banking…and it has had only mediocre success at best. That’s because this approach is all about banking first, social second. Bad idea.
Niche banks take the opposite approach from traditional banks and credit unions: instead of trying to build a social community around a bank, niche banks will build relevant banking services into a social community.
See the difference?
Niche banks identify existing social communities in the long tail (for instance, “people who love ______”). These people are already passionate, and they’re already organized. The niche bank then participates sincerely in those communities, and adds value to the communities by providing a new perspective on content that enriches the community. Then, it makes a tailored banking experience available to the members of that community…without forcing it.
Simply put: social community first, banking second. That’s niche banking.
This begs the question: Assuming a financial institution could be successful with social media, what are the benefits or outcomes? Or, another way to put it: Why should banks care whether they are successful with social media or not?
Jeffry, thanks for the comment. To answer your question, I want to clarify: we don’t really believe very strongly in financial institutions using social media. It’s fine, but we don’t feel it will ever go very far. Instead, what we’re referring to would be better described as “a valued member of a social community who provides financial services to other members of that community.” In that sense, it’s not a bank trying to be successful with social media; it’s a community member trying to be successful with banking. Does that make sense?
So the “medium” doesn’t matter, just be “social,” right?
I don’t think the medium is important, no. In fact, maybe I should remove the word “medium” from this post’s title. We are referring to tapping into any social group, whether it’s on Facebook, Twitter or gathering in person at events. So yes, it’s the social part that’s more important than the medium part.
This approach suggests banks embrace the social media that are most likely to use some tailored financial services. So social media are not the means to add value to existing or new services but rather an additional channel to boost sales .. Right?
Could you give some examples of banks following such a policy in dealing with social media. Would like to look more closely at this practice..
Petr, thanks for your comment. We don’t believe social media are additional channels to boost sales for a traditional bank. Rather, we believe that if a bank becomes part of a long-tail community of like-minded people, then social media is simply the way that bank interacts with that community. For instance, when you’re a member of the community of rock climbers, rock climbing blogs and Facebook groups (ie social media) are a primary way you interact with the members of that group.
I realize how different and potentially confusing this can be…precisely because there are really no existing examples of this that we are aware of (to answer your second question). So it’s hard to relate to this idea because there is no point of reference for it. But to put it simply, we advocate for “making banking services available to a social community of people,” rather than “using social media to promote a bank.”
ok! In this case there are 3 basic options
1. The first is to start making tailored products to this precise community – through participating in social media you could get some tips on how to structure your products..
It seems that it would gain efficiency only if there is a contagious trait –> so financial products have to embed some network effects.
2. The second is for a bank to let the employees be involved in their preferred activities communities but as banks representatives. “Jane, you like knitting so we will give you some office space to organize hobby group.”
3. The third – for a bank to share an insight in this particular community activities – for exam. to instruct rock climbers how to efficiently use bank products (cards, checks, etc) to get to Pamir mountains.
Petr, thanks for commenting again. Of your ideas, numbers 1 and 3 resonate most strongly with us. Number 2 does not mesh with our vision for niche banking because it seems to imply that the bank is just a bank, but has a couple little areas where it tries to focus. Our vision for niche banking is more about creating organizations that are devoted first and foremost to the niche’s interests, and to banking secondly. In the example we’ve discussed, we’d be creating a rock climbing group that has banking services available to them, rather than a bank that caters to rock climbers. The difference is subtle…but we believe it’s an important one.
But yes, our vision would definitely involve tailoring financial products to this precise community, and sharing expertise with the group about how financial products could help them enjoy their passion even more.
[...] Niche banks will build relevant banking services into a social community [...]