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Social Media's Value Battles Ambiguity In Financial Services

It remains difficult to quantify the effects of social media, but that hasn’t stopped the continued dedication of funds to staff and equip social initiatives.

Firms everywhere are grappling with the social media mega trend. Initially casual and familiar sites such as Twitter, Facebook, Pinterest and more have entered boardroom conversations across a variety of businesses. For those selling material products the impact of a re-posted picture with a link to a website is measurable in clicks and subsequent sales. Unfortunately for financial service, the lines connecting social media efforts and revenue are blurred, but that hasn’t stopped the continued dedication of resources to these efforts.

Interest from the C-suite has helped departments increase funds for dedicated staff and increasingly complex platforms. As social media managers work towards producing hard data on social’s ROI, the consensus today appears to be that social is an ideal means of differentiation, and a necessary expansion of traditional customer service efforts.

The Evolution: From a One Man Show to Inter-Departmental Collaboration

Sunayna Tuteja, director of online communities and social media at TD Ameritrade says part of her job is to figure out how Twitter enables clients and adds value to the way an online broker engages with employers, clients and other stakeholders.

Tuteja sleeps, dreams and lives all things social, constantly looking at where the market place is going and how communications are resonating with clients. But at the foundation, TD believes a capable social response team is critical to anything successful in the space. “Social is the new 1-800 number, and we have a team integrated within the service organization,” she explains. “It’s not about building something new, rather we are tapping into our current strength.”

TD’s dedicated team works seven days a week, twelve hours a day to engage clients and prospects on social platforms, help with questions and direct them to appropriate resources on the website. They see engagement as a critical component because social is not a monologue, and you must be there to engage in a dialog.

But when it comes to the everyday she says it has to be wider a team effort. “I’ve become great friends with the legal compliance and privacy teams,” she jokes. “Everything needs to be done within the guardrails of our industry. Teams like ours think about social, but enablement has to be a collaborative approach.”

From another angle comes Carol Kennedy, chief branding officer and VP of corporate communications at the Chicago Board Options Exchange (CBOE). From her perspective all the buzzwords around social media apply to the exchange in spades. “Our customers are data driven by nature and they want information. And they want fresh information, intra-day information, and they are very tech savvy, so they are a natural for consuming information that way.”

But as a publicly listed company and self-regulatory organization, Kennedy explains that internally CBOE is also wrestling with legal questions around what can be shared. Social is still in a development stage, leaving grey areas with the legal team around the nature of disclosures. This takes time, distracting from the instantaneous benefits of social media dialog. Surely all financial firms, large and small, buy side and sell side, can commiserate.

Building the Right Tools:

In the face of the regulatory and legal framework the right technology capabilities between departments are critical. “We want to do this in a matrix consistent with what’s expected from a critical, legal and privacy standpoint, but also making sure it’s seamless,” explains Tuteja.

When once there were a handful of vendors with similar products, today’s arena is exploding with vendors and new capabilities. In a recent study by Sprout Social, it was found the average company uses 10-12 tools to manage Twitter alone across the firm, although there is an increased effort to consolidate. Consolidating requires a platform that can cater to needs and track the various departmental goals and incorporate various, even obscure, media sites.

More importantly, the market is still in the early stages of developing metrics that can help firms to uncover the social ROI. Learning what can be measured and what those measurements mean will help to candidly balance expectations and needs. “Niche vendors are starting to emerge as these needs grow. Everything we do we want to make sure we have a view towards being analytical and measuring what we can.”

[For more about social media trends, read: 7 Financial Services Social Media Insights from Sprout Social to learn more.]

Interaction: Adding Value to the Discussion

According to Kennedy, the data CBOE gleans from social is passed along to marketing, business development, and communications teams and incorporated into the blogging team and educational arm. The results, it hopes, is to develop more topical content faster to feed the discussion.

“We look at what’s trending every day, when and where we see the most activity, and monitor what topics the market place is interested in and where its focus is in,” she explains. “We’re finding the most relevant information. We have a ton of data and content, so the challenge is curating it and pushing out at the right moment. For us it's not about the right number [of likes]. Sure, you want to grow your following, but it's about engaging, we feel the people who follow us are engaged customers and we want to stay relevant to them.”

She adds, “It started out as new tool, now we're getting more disciplined about it.”

Beyond the bigger players, social media is a networking and marketing paradise for mid and small sized financial firms. Joe Saluzzi is partner and co-founder at Themis Trading, a small independent brokerage firm specializing in equities in Chatham, New Jersey. Saluzzi is also active on Twitter, which he uses to be part of the conversation and as a surprisingly helpful trading tool.

He keeps a tweet deck up on his screen all day, alongside his Bloomberg terminal, OMS and other standard systems. On Twitter he follows a carefully curated and streamlined collection of accounts that add value to his business. “Many times I see things on Twitter before I see it on my Bloomberg Terminal and I pay over two thousand per month for that,” he explains “I definitely think there's value added there."

Saluzzi also sees wider business benefits from his involvement on Twitter, including increased views on blog posts and general publicity. "It lets us raise our profile," he says. "It has allowed potential clients to see our name, gotten us into conferences, and helped promote our book sales. Now I meet with a lot of folks in the industry and they say, ‘Hey, I follow you on Twitter.’ It can be surprising.”

To maintain his favorable Twitter reputation Saluzzi knows, like the CBOE, that he must continue to add his own value and unique content to the mix. “It is all about spreading a message,” he says. “If there's something interesting on a filing that came out, most people may not have seen it and it's important people know. And that stimulates debate, which I think is healthy."

Finding an ROI

“It's easy to make the case to increase funding for social media as a percentage of what we do here [at CBOE] in terms of marketing,” says Kennedy. “It's such an efficient way to reach people. I think we're past that stage where people ask if this is here to stay. In a dollars and cents view it's very efficient.”

Firms in the financial services space are using social media to achieve various goals in marketing and communication, but all face similar questions around the cost of engagement and the best tools to do the job. And unlike other facets of a financial institution, social media is taboo to outsource, requiring an increased dedication of in-house resources especially as volumes of engaged customers rise. Senior level managers are taking notice, asking more specific questions about what tools their companies are using, and considering the cost and resource efficiency.

The ongoing challenge remains how a firm can quantify the impact and calculate the ROI of social. Internal collaboration, standard metric and uniform platforms across the firm will be essential to achieving that goal. Becca Lipman is Senior Editor for Wall Street & Technology. She writes in-depth news articles with a focus on big data and compliance in the capital markets. She regularly meets with information technology leaders and innovators and writes about cloud computing, datacenters, ... View Full Bio

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BankTechAsia
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BankTechAsia,
User Rank: Apprentice
1/23/2014 | 12:33:20 AM
re: Social Media's Value Battles Ambiguity In Financial Services
Everyone claims to be a guru that the word has lost its meaning.
Ron Shevlin had a hilarious posting about social media in banking, you guys should check it out, it really made my day.

http://snarketing2dot0.com/201...

Back to the topic at hand, its really not that difficult to quantify ROI. If banks intend to use it as a channel for customer service they can base it around similar KPI's created for their call centers. The plus side is that they have full visibility of the dialogue.

If it's used for marketing purpose it's far easier to track digital marketing campaigns vs. traditional campaigns if you set your tracking goals via services like Google Analytics.

On a side note, you can always try something different like ICICI did. Though I'm not sure as to whether or not they're starting to see any ROI

http://www.icicibank.com/about...
Becca L
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Becca L,
User Rank: Author
1/22/2014 | 7:34:37 PM
re: Social Media's Value Battles Ambiguity In Financial Services
A local pizza joint with an app? BRILLIANT. I think of how hard it is to make banking/brokerage apps - they have to clear all sorts of regulatory and security hurdles, but I guess pizza orders require a pretty simple design without to much regulatory oversight. Soon there will be no excuse not to have one! Ah, this beautiful beautiful world
Becca L
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Becca L,
User Rank: Author
1/22/2014 | 7:32:00 PM
re: Social Media's Value Battles Ambiguity In Financial Services
I remember that JPM fiasco where they had to back out of a Q&A due to all the low blow responses. Still, it made headlines, and if anything it made the public more aware JPM was active on social media. All news is good news?
Greg MacSweeney
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Greg MacSweeney,
User Rank: Apprentice
1/22/2014 | 6:47:40 PM
re: Social Media's Value Battles Ambiguity In Financial Services
Yes, banks, and all businesses need to be accessible and responsive on social media. Even the local pizza place in my town is on twitter and facebook, and is rolling out an app for customers A bank is no different.
IvySchmerken
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IvySchmerken,
User Rank: Author
1/22/2014 | 6:31:15 PM
re: Social Media's Value Battles Ambiguity In Financial Services
Large exchanges and brokerages see value in social media and client engagement, but they are still grappling with the legal, compliance and privacy issues. Retail firms like TD Ameritrade view social as the new -1-800 number" so that is telling. But I think Themis Trading, a smaller, independent firm, has been able to develop a strong voice, build branding and debate the issues related to equity trading. To me, that's ROI.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
1/22/2014 | 5:51:55 PM
re: Social Media's Value Battles Ambiguity In Financial Services
In a way social media can be easier to track in terms of marketing ROI than traditional means. You can track how many people click on an ad, and review comments. How do you track ROI on a billboard? Or a magazine ad? It can be more precise since its digital. And the snarkiness is something that they have to respond to, because it isn't just coming from younger people. And besides those young people are going to be the next generation of banks' customers. Or they'll look elsewhere for these services.
richardgPCA42
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richardgPCA42,
User Rank: Apprentice
1/21/2014 | 3:00:51 PM
re: Social Media's Value Battles Ambiguity In Financial Services
Brilliant article Becca. Having worked in financial services for some big blue-chip companies in a number of functions (mainly marketing), for me, a huge issue which a lot of companies are going to have to tackle is compliance. Something you alluded to in your article. I don't think that there's a single platform out there right now which businesses can buy off-the-shelf, which caters for each box which needs to be ticked in financial services. That said, the single most important, non-negotiable feature within any platform should be meeting compliance requirements. These vary from market to market, so what is OK in one market, is wildly inappropriate in another, and any consolidated approach to platforms, would require a global awareness of compliance.

I liked your section on the smaller-mid sized firms seeing social media as more of an opportunity. Certainly, the ability to be dynamic within the network, is an advantage which smaller firms have, and something which allows them to build significant engagement and trust from their followers. What I have consistently seen with smaller FS firms are their ability to create original content is difficult, and their unstructured, dynamic approach, can create issues with consistent promotion. I think there is opportunity for larger firms working with smaller firms to create a mutually beneficial content strategy, in the way for example, insurers support brokers with marketing and promotion.
Byurcan
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Byurcan,
User Rank: Author
1/21/2014 | 2:36:47 PM
re: Social Media's Value Battles Ambiguity In Financial Services
It is incredibly difficult to measure ROI on social media. It's a werid paradox when it comes to social: most financial institutions feel they "have to be in social media" yet they often can't really quantify why or what they need to be doing. They know they just need a Twitter guru or Facebook guru because someone told them so. I'm convinced, just due to the level of hipster snarkiness directed towards financial services firms, it's more trouble then it's worth for them to be active in social media.
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