What does it mean to the highly regulated, security obsessed banking sector when its customers are increasingly using social media to communicate, share and network? Hannah Prevett investigates

In the institutionalised world of banking, social media is something of a new phenomenon. And over the past five years, as Facebook increasingly became a place to make business connections, and Twitter the avenue through which people shared links and information (and not just about what was for lunch) the banks had other things to worry about – like keeping the wolves from the door. Now the green shoots of recovery are sprouting many financial services institutions are finding social media a useful tool to help them re-engage with the public.

Social media for banks is quite different to, say, social media for a trendy advertising agency in East London. Not only are there the sensitivities around the recent downturn to consider, but also stringent FSA regulations to adhere to. James Fabricant, CEO and founder of IdeaPlane and a former MySpace International executive, says operating in such a highly regulated industry means banks face three sets of challenges. The first, he says, is privacy controls. “The information shared is highly sensitive and users require more visibility and control over how and with whom they are sharing information.” Next is compliance, and Fabricant points to stringent regulations from FINR, FSA and SEC and others. “The third and final challenge is data security. It is important to keep sensitive information locked down and secure.”

But a myriad of regulatory requirements needn’t mean that banks can’t be a little more imaginative with the way in which they communicate with customers, says Beth Murray, public relations manager at Metro Bank. “I wanted to make sure that whatever we do on social media completely replicates the kind of customer service people have if they walk into a store,” she explains. “It’s not just about saying ‘give me your account number and I’ll look into your query’. It’s also about having conversations with people and trying to be friendly and approachable, so if they come across us online they get a flavour and a sense of our personality as a bank.”

Negative feedback

Yet it is easy to see why banks are cautious about social media, observes Dave Hazelhurst, director of search at internet marketing agency Ph.Creative. “The banking sector has come under fire over the last few years and it’s true that this has been amplified by the power of social media,” he says. He would seem to have a point. Research earlier this year showed that 44 per cent of adults now use the web to share grievances about products, services or companies.

Murray says that dealing with negative feedback is par for the course when an organisation adopts a social media strategy. “It’s very hard as a PR person to not immediately want to control everything,” she admits. “But you have to understand that you absolutely can’t do that on social media. Our customers and potential customers are completely welcome to their views. And if they’ve had a negative experience then we need to change that.”

This is one way banks can embrace technology and absorb criticism to improve their long-term business and services. First Direct has gone one step further, directly asking customers for feedback on products and services with the First Direct Lab which came online a little over a year ago. Nathalie Cowen, head of brand and communications at First Direct, says that Lab was a way of better engaging with customers who wanted to be involved with development at the bank. “We wanted to find a way of harnessing the kind of feedback we were getting from customers, but also publishing the sorts of things we were working on. It gave us an opportunity to be really transparent.”

Transparent and open communication with customers can come into play at times of crisis, too. When an IT failure at RBS, NatWest and Ulster Bank caused catastrophic problems earlier this year, the banks’ social media strategy really came into its own. “They were really open and honest,” says Cowen. “They held their hands up and said we’re really, really sorry; we know this isn’t acceptable. They didn’t try to hide behind anything.”

The social media strategy of RBS Group was a long time in the making: it didn’t just jump in head first without a long-term plan in place. “We’ve been monitoring what our customers say about our brands in social media since 2008 and we took our sponsorship of cricket and rugby social in 2009,” says Sarah Evans, head of webchat and new contact media for RBS, NatWest and the Ulster Bank. Customer service on Twitter was launched last year as well as its own forum. “We also launched our Ideas Bank – an open forum where our customers can tell us what they think we should change – we read every single comment and let customers know what we think about their ideas,” she explains.

Cowen says the decision as to which channel customers use to interact with their bank is one that should rest with the individual; if they have grievances to air on Twitter, a response should come via the micro-blogging site, insofar as is possible. “I don’t think you should treat people any differently depending on which channel they get in touch with you on – the processes may be different, but you should treat people in the same way.”

One of the biggest difficulties of this multi-channel approach is tying all of the technology together to present a single comprehensive view of the customer, says Cowen. “It is also about making it as smooth for the customer as possible so it feels natural for them,” she explains. So a conversation that began on Facebook may need to be continued on the telephone due to privacy issues around account details, for example. But the progression to a telephone call should be seamless.

“The guy on the phone really needs to be able to see the previous conversations so they don’t have to repeat the whole story all over again,” she explains. “So I think that’s a challenge for banks as well because the legacy systems that are normally in place don’t often allow for a very easy extraction of those conversations. That’s something we’re looking at: how do we really link everything together to gain a universal customer profile. This basically means just having one profile of your customer and you can see all the different points of contact that they’ve had with you.”

Getting customers onboard is one thing; obtaining board-level buy-in at a centuries-old bank that has had the same processes in place for generations is another. “Like most developments, establishing social media as a business tool won’t happen overnight,” says Hazelhurst. “Those looking to influence decision makers need to network widely and create influence across all levels, to help people understand the value of social media and create ‘buy in’.”

Metro Bank’s Murray is optimistic. “I think we’re at a big inflection point,” she says. “What always tends to be the tipping point is when the decision makers themselves begin to be involved on the social side of things on a personal level. That’s always been my experience in this business,” she continues. “People always used to laugh at Facebook. Then suddenly all the senior management are on there, and asking what the Facebook strategy is.”

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