Gartner Blog Network


Defining Social Media in the Banking Sector

by Kristin Moyer  |  February 5, 2009  |  16 Comments

We’ve been writing and blogging about Web 2.0 and financial social networks (FSNs) a lot over the past 12-18 months (What Banks Can Learn from the White House, Social Lending Will Challenge Bank Customer Relationships, P2P Social Lending Networks Morph Into Investment Networks).  Gartner clients I’ve spoken with this week have asked that we take a step back and define social media in the banking industry.

Social media in the banking industry spans a range of online communications using Web 2.0 technologies, including:

  • Financial social networks (FSNs) – for example, Prosper, Virgin Money, Lending Club, Mint, Wesabe, Stockhouse
  • General social networking – for example, Facebook, MySpace, LinkedIn
  • Blogging and microblogging tools – for example, Twitter, Blogger, WordPress
  • Podcasts
  • Wikis such as SocialText
  • Mashups
  • Widgets – for example SmartyPig and iGoogle widgets

These methods enable banks to communicate in a personalized manner to an audience, and also enable “unofficial” communications (peer-to-peer rather than brand-to-consumer) that many users accept as more relevant, more authentic and more credible than the official sources (see Social Media Lessons From the U.S. Presidential Campaign).

Social media does not replace already-existing channels, for example, the Internet, branch, VRU.  Rather, a social media should complete both online and offline strategies.

Tomorrow’s blog:  why social media?

Category: executive-decisions  

Tags: banking-and-investment-services  blogger  facebook  financial-social-network  fsns  igoogle-widgets  lending-club  linkedin  mashups  mint  myspace  podcasts  prosper  smartypig  twitter  virginmoney  wesable  widgets  wikis  wordpress  

Kristin R. Moyer
Research Vice President
14 years at Gartner
more than 20 years IT industry

Kristin Moyer is a Research Vice President in Industry Advisory Services/Banking and Investment Services. She has more than 20 years of experience across the global high-technology industry in a variety of roles. Ms. Moyer's research coverage includes… Read Full Bio


Thoughts on Defining Social Media in the Banking Sector


  1. Jim Issokson - MasterCard Worldwide says:

    Kristin – looking fwd to your post. Social media is redefining communications. Financial Institutions – both large and small are starting to see the benefits. It will be interesting to see how this evolves in light of the economic issues everyone faces.

    Jim

  2. Kristin Moyer says:

    Jim, I couldn’t agree with you more. We’re working on some research about the importance of having an enterprise strategy for social media. I’ll let you know when that is complete and get you a copy of the report.

  3. […] Defining Social Media in the Banking Sector (Gartner Commentary) "These methods enable banks to communicate in a personalized manner to an audience, and also enable “unofficial” communications (peer-to-peer rather than brand-to-consumer)" (tags: social+computing financial+services banking web+2.0) […]

  4. Christian Brosstad says:

    Thanks for an interesting post :) U have listed almost every Web 2.0 technologies there are…and yes, banking and insurance sectors can use any of those channels as long it can help the organisation to build relationships…but you have missed a more important perspective: web2.0 is a way of thinking…we have started using this way of thinking when we develope new products and services…or communicate with our stakeholders and customers in our own channels…

    christian.

  5. Kristin Moyer says:

    Christian, thanks for the comment, and thanks for reading. Interesting point of view – would love to hear more.

  6. Hi Kristin,

    Thanks for your post and your definition of social media in banking.

    I have been focused on social media in financial services for a while now. In the last couple of years, we saw more and more banks trying to leverage social media such as:
    * Fortis with Join2Grow.biz (which will be offline at the end of February),
    * Advanta with ideablob.com,
    * Vancity with changeeverything.ca, and of course
    * Wells Fargo with their 5 blogs, their two user-generated video contests and their virtual world initiative “StageCoach Island” (phase 1 launched initially on Second Life back in 2005).

    Current situation:
    * Most FS Institutions have been unsuccessful in the social media space, mainly because of their lack of subject matter expertise.
    * Some have had some successes, but their effort in the space remains tactical and they lack direction.
    * Only a few are really successful, such as Advanta and Wells Fargo. Reasons behind their success: they have a proper social media strategy in place, a dedicated social media team, and a few social media champions among their Senior Management team.

    I invite you to check my directory of social media initiative in financial services: http://clanglois.blogs.com/internet_banking/banking20-socialmedia-directory.html

    Web 2.0 is about technology, Social Media is about people.
    In all my public speaking engagements, I insist on the importance of REWARDING your users for the time they spend on your platform and for taking the time to contribute. And don’t forget your employees!

    It would be a pleasure to connect on linkedin too.

    Kind regards
    Christophe
    Founder & CEO, Visible-Banking.com

  7. Kristin Moyer says:

    Hi Christophe, thanks for sharing your views. Your directory of social media initiatives is impressive – great source, thanks. Check out iThryv and Stockhouse – you might want to add them to your list. I could dig out some others as well if you’re interested.

    Great point about the “people” side of social media. I agree with you that users need to rewarded. Employees need to be given time and space as well. Gartner has a framework called “PLANT SEEDS” (Anthony Bradley) that banks can use to implement social media – and it includes issues like this.

    Thanks again for your comments.

  8. Kristin
    Very,very interesting. I run a networking company for senior executives in the financial services industry here in the UK (I’m ex VP for Merrill Lynch and GE) and I recently held a seminar with our membership.
    Not one out of the 200 attendees had heard about social media. Seriously.
    There were MD’s, CEO’s, CFO’s, CRO’s of all the major retail banks, investment banks, insurers and other mortgage lenders and not one of them had heard of social media per se, but they had heard of Twitter and Facebook but thought it was ‘just for kids!’

    Here in the UK we always seem to lag behind the States but even so, apathy certainly does rule at the moment and the 6 banks we are working with really do need to be led by the hand every single step of the way.
    Just subscribed to your RSS as well.

  9. I think social media and the banking sector we made for each other. We all remember the list of storied brands, rich with history who all collapsed by making the wrong decisions in the dark, so that when everything came to light…they had no reputational capital(brand trust) left with their consumer.

    Here is an example of how The Royal Bank of Canada understands the importance of engaging clients with transparency. http://www.rbcroyalbank.com/online/olb_w_reviews.html

    RBC -80,000 employees
    18 million personal, business, public sector and institutional clients
    Offices in Canada, the U.S. and 52 other countries
    Over 5 million clients enrolled in RBC Royal Bank Online Banking

  10. Kristin Moyer says:

    Hi Mark, thanks for reading and thanks for your comment – wow, that’s fascinating. We actually has similar experiences when financial social networks (FSNs) like Virgin Money and Prosper were first coming out. Many bank executives in the UK were not aware of this trend until it was in full swing.

    Besides using social media as a communications and customer intimacy tool, there are also opportunities like P2P payments. These occur all the time on social networks and banks are not involved yet (PayPal, Amazon and others are).

  11. Kristin Moyer says:

    Hi George, thanks for sharing the RBC link. This is the first I’ve seen it. My collegue Alistair Newton has been writing about transparency for awhile if you’re interested (most recently, “How Banks Can Work in a More Transparent Ecosystem to Win Profitable Business”).

    Rating systems have been used forever with online retailers and others. Great application of it in banking – finally. Thanks for the comment.

  12. […] BY Kristin Moyer (A member of the Gartner Blog Network) (original post – click here) […]

  13. […] Defining Social Media in the Banking Sector by Gartner Group […]



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