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Why Social Media in the Banking Sector?

by Kristin Moyer  |  February 6, 2009  |  11 Comments

Corporations are learning quickly that there are perils to not having a social media strategy.  The lack of a social media strategy opens the bank up to various unintended consequences, for example, Phishing of clients, security risks and brand attacks.  Johnson & Johnson learned first hand the perils of not having a social media strategy when it launched Motrin advertising aimed at mothers that carry their babies in slings, which suggested mothers do this to be fashionable. – rather than because it is healthy for their babies. Angry mothers (dubbed “Motrin Moms”) began Twittering in outrage.   It quickly became one of the most Tweeted subjects on Twitter.  A video of screen shots from blog posts was put on FaceBook.  As one Tweet put it:

“note to self … never <tick> off moms … especially twitter moms … they can be a nasty bunch ;)”

Johnson & Johnson pulled the advertisement.  One of the original bloggers that took offense to the blog later wrote:

“Did Motrin really need to take the ad down? No, I don’t think so.

Yes, I really did say that. Much has been written about how the company (and every brand and every person) ought to monitor their reputation online.”

Although Johnson & Johnson did not engage in the discussion on Twitter, McNeil did and also reached out personally to a few of the Moms who were Tweeting about the ad.  In addition, two posts were made to the Johnson & Johnson blog, http://www.jnjbtw.com, providing McNeil’s position.

Gartner has long taken the position that banks need to develop a social media strategy (New Retail Banking Vendors Bring Social Computing to the Savings Account, Virgin USA Buys CircleLending: How Should Banks Respond, Social Lending will Challenge Bank Customer Relationships, FSNs as Technology Providers, I Just Put all my Money into Prosper, Is This your Approach to P2P Lending?  Bad Idea.  In addition to the perils of not having a social media strategy, the reasons are many:

  • Threat of disintermediation by FSNs
  • Changing demographics and communication styles
  • The need to improve image and restore trust

Social media can provide many benefits in banking.  It has the potential to enable:

  • Transparency
  • Customer engagement
  • Enhanced communications (and the opportunity to rebuild trust)
  • Customer communication style preferences

We say social media “potential” to do these things because the way it is deployed has everything to do with its ability to deliver on these promises.  It is our belief that fragmented forays into the usage of social media will distract focus from the bank’s core value proposition.  Yet, this is the approach of many banks today.

Additional Resources

Category: executive-decisions  

Tags: banking-and-investment-services  fsns  motrin-moms  social-media  social-media-strategy  

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 Why Social Media in the Banking Sector?


  1. Jim Issokson - MasterCard Worldwide says:

    Kristin , I couldn’t agree more on the use of social media to highlight openness and transparency, especially as the banking sector recovers and begins to build new programs to restore trust among its customers and shareholders. This is an area at MasterCard where we see a great opportunity for increased engagement. The lessons on the importance of social media issues and reputation management were amplified this weekend when Comcast faced the prospect of instantly defending itself from an unfortunate interruption in the Super Bowl. Their use of Twitter played a major role in not only alerting them to the problem, but managing and responding as well.

  2. Marc Monseau says:

    I just wanted to clear up a few things. Though we didn’t engage in the discussion on Twitter, the folks at McNeil did, in fact, reach out personally to a few of the moms who were tweeting about the Motrin ad. In addition, two posts were made to the Johnson & Johnson blog, http://www.jnjbtw.com, providing McNeil’s position.

  3. Kristin Moyer says:

    Jim, thanks for reading and thanks for your comment. Since the Green Bay Packers weren’t playing in the Super Bowl, I spent more time talking to friends that were over than watching the game. I missed the outage and Twitter response, thanks for pointing out.

    Interest in social media seems to be on quite an upward trajectory at the moment. We have had a record number of hits with our posts yesterday and today.

  4. Kristin Moyer says:

    Marc, thanks for pointing that out. I will update this post to reflect. We’ll be publishing a research note in this area as well, so I will be sure to include this in the note as well. Nice blog by the way.

  5. Marc,

    Your comment just shows how totally unconnected J&J is. The only bloggers you “reach out” to are the ones bought and paid for by Walmart (hmmm… vendor?). It took 2 weeks for anyone to respond to me and I was one of the first ones to use your email form.

    It’s fair for a company to say that they aren’t interested in social media.

    It’s insulting to pretend like you are interested, and then behave in an antisocial manner. The attempt to rewrite history is silly AND if you understood netiquette you’d know better than to leave your URL in the comment body.

    So, yeah, I’m still bugged with y’all.

    Jessica

  6. Gerardo Dada says:

    Kristin, I could not agree more.

    Chicken and Egg – Does a social media strategy enable transparency or is transparency a prerequisite for a successful social media strategy? Hiring someone to start a blog and participate on twitter is not a social media strategy, but it can help as a forcing function to have the conversation. IMHO, a social media strategy requires at least an acknowledgment of the need to shift the culture towards transparency, participation and listening. I also think the organization needs to build the processes to listen and act on the feedback from the community.

    Often this has to come from the top. When I was responsible for the BCC (Broad Customer Community) efforts at Microsoft, the entire executive team embraced these concepts. A great example is Soma’s blog post about transparency (he runs the developer division) http://blogs.msdn.com/somasegar/archive/2004/11/11/256210.aspx . Community participation became part of the culture, part of the DNA that defined how the organization worked and how success was measured.

  7. Dan Thornton says:

    The best example I can see for banks actively helping their customers communicate with them effectively is the immense popularity of the moneysavingexpert forums, and the fact that the person behind it is on every TV and Radio show as the expert on finances.

    He’s providing a hugely valuable service, but it’s frustrating that banks don’t see it as a negative that many people would rather go to him for advice than their bank manager – in fact I get the feeling many banks see it as a cost saving on staff resources in line with restricted opening hours and closing branches.

    It’s only the fact more people don’t change banks more often which keeps this state of affairs going – certainly it’s got to the point now where I’m willing to go through changing banks to ensure I get good customer service as a priority, having been disappointed and annoyed at various points in the past.

    I think it will be a while yet, but more and more alternatives to traditional banks and lending are appearing, and some are already surviving the existing financial restrictions…and with the banks still monumentally failing their customers, I can see more and more attempts to break through the red tape to offer better services…

  8. Kristin Moyer says:

    Gerardo, you make some excellent points. I totally agree with you that the corporate culture needs to shift towards one of transparency, participation and listening.

    I think that’s part of what will make this hard for banks. These are not intuitive things for most banks to do. Most banks have had an “across the counter” type attitude towards customers. This is anything but inclusive/participatory.

    Transparency has also been difficult for banks. One of my colleagues, Alistair Newton, just posted a blog on why transparency, in all aspects of the word, needs to change quickly. He believes that by 2012, 25% of bank customers will know the monetary value of their bank relationships, and 10% will negotiate with their banks on product and service prices. This takes transparency to a whole new level.

  9. Kristin Moyer says:

    Dan, like you we are concerned that more banks are not leveraging new technologies and approaches (like social media) to connect with customers. Clearly, banks are in crisis and trying to remain liquid. But their customers are in crisis as well. If there was ever a time to offer better services and truly meet customer needs, it’s now, when customers really need help.

  10. Dee Burke says:

    Hi Kristin, great convo going on here – I see yourself & Gartner are covering social media adoption and strategy very well from the Bank/consumers’ side, but what are your thoughts on B2B and vendors’ SM strategies? Any plans to blog on this hot issue? Social media platforms are a great way to reach consumers, do you see a place for the vendor community to communicate with C-level/end users etc?

  11. Kristin Moyer says:

    Hi Dee, thanks for reading and thanks for your comment. We see a future where financial social networks will be most successful in working with banks as technology vendors. A couple examples…

    Blog: https://blogs.gartner.com/kristin_moyer/2009/01/13/fsns-as-technology-vendors/.

    Written research (available on gartner.com): New Retail Banking Vendors Bring Social Computing to the Savings Account (G00160826).

    In terms of the vendor community using social media to interact with C-level and end-user clients within banks, I absolutely agree. Check out some of the work that Anthony Bradley and others have done in this area.

    Hope you find this helpful.



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