The Big Bank Social Media Failure – Netflix on Steroids

With people occupying everything, everywhere in the USA right now and many others with bailout blues it is amazing to me how the major banks are arrogantly ignoring this crisis and thus missing the boat. Maybe better put, how they are firing shotgun shells through the bottom of their own boats.

It seems like every single week I am seeing stories on major news networks regarding the foreclosure boom in this country. We know we are in very difficult times due to the many failings by lenders giving inappropriate home loans, as well as consumers seeking and obtaining loans that they could not afford. However, we are where we are. The stories constantly being reported are of lenders promising loan modifications or refinances for homeowners, then dragging it out only to start the foreclosure process anyway.

If this wasn’t bad enough, Bank of America continues to blast consumers with huge new fees. Account fees and debit card fees are moving upward for B of A customers, which tend to mean that other larger banks will follow suit.

These individual stories of people dealing with these major banks are being brought to light one at a time by reporters and shed some light on a  disturbing trend in banking. Banks clearly do not understand the social climate businesses must navigate today. Due to the rise of social media (where most consumers are now) all businesses, including major banks must be engaged and effective.

The Credit Union National Association recently reported “two polls say a good portion of consumers surveyed would switch banks if they were hit with debit fees, according to a number of reports in national media“, among other alarming reports banks need to consider.

The point is this… Since social media is now integrated into every aspect of our lives as consumers, banks are in for more than a few protests if they do not heed the warnings of the marketplace. Consumers are fed up. Short term strategies of balance sheet fortification during this down time could result in these banks losing significant market and more importantly mind share. Social media is a powerful platform that can and will topple organizations that don’t use it effectively, or worse get used by it due to ignorance.

Let me stop here and clearly state something about my beliefs. I am in no way a government control proponent. I am a very strong free market guy that believes in consumer control via pocket book voting. I am also not a banking expert, but I know a thing or two about social media, its power and how to use it effectively. (back to my regularly scheduled article)

Since it appears that these brands not only don’t understand social media marketing or its power to bring them to their knees and the fact that they have created a significant PR mess that could potentially cause lasting wounds, I am going to throw in my social media two cents in an attempt to smack some sense into them. Here’s what they need to do:

1) Cut Fees – Simply put, this is a must. In the short term, B of A, Chase and the like should bite the bullet and throw the average consumer a bone. Think of the positive social media firestorm they would achieve by temporarily cutting fees to show consumers they get it and want a relationship with them over the long-term.

2) Deploy Social Media Effectively – Recognize the current anti-bank climate, coupled with the social media boom and create a strategy to get this new message out effectively. Get in front of these horrid stories and respond within the social graph to people in bad situations.

3) Help – Proactively look for opportunities within your customer base to deploy loan modifications or rate reductions. Letting a fire get out of control only to have to use a lot of resources to fight the resulting blaze is incredibly stupid. Finding those bank and home loan accounts that you can help quickly will retain customer base and offer a huge PR windfall.

4) PR – Drive the message. Social media affords an opportunity for these major banks to follow the above points and control the conversation with media and consumers. If you are proactively touting your efforts in 1-3 above with real stories of helping consumers, understanding their pain and doing something positive to help in the situation, you now control the conversation and can use it to win hearts and minds.

Word to the wise oh banking executives in the country. Failure to change your substance and message to consumers using social media will be your downfall. Hard to believe, but you are actually making Netflix recent massive failures look like a win somehow.

**Pre-Post update – I finished this post Sunday night. Monday night, as I was driving home from meetings, I heard on the news that the revolt has started and some Credit Unions are seeing 350% increases in new members.  I think we got this post right…  It appears it may be too late.


7 thoughts on “The Big Bank Social Media Failure – Netflix on Steroids

  1. This is a tough one. Agree completely in principle that banks are seeming to completely ignore social media and customer complaining. ONly question is whether in the end it will matter. A 350% increase in customers for a credit union is likely a pittance compared to the massive number of households services byu the top three banks. At one point, Bank of America processed one out of every 5 online banking transactions in America. They also process checks and manage cash of hundreds of smaller thrifts and credit unions so even make money when you go to Neighborhood Savings Co and make a deposit.

    Also most people that switch to credit unions are still keeping a primary account at BAC or other large banks to accept their direct deposits, handle some recurring payments and allow them greater flexibility when they need to transfer funds or access cash away from home.

    So the question becomes, whether the big banks are truly competing with thrifts and credit unions as much as they are comp[eting with each other. I think if Wells Fargo or Chase truly decided to “kill” Bank of America by bettrer engagement, lower fees, and enhanced use of social media, they could. If neither of the big banks make any changes, they will all continue to be weak in customer service, high on fees, and still have the vast vast vast majority of US consumers on their rolls. The airlines have proven that the only price increase that fails is the one that is not copied by your competitors. Sad, but true.

  2. I totally agree (and when do I don’t), banks need to integrate social media into their strategies. Perhaps they see themselves as too inelastic in this economy and that everyone needs them, so no matter what price they make customers pay to use their services, customers will pay.

    Sadly, with social media, it is no longer like that.

  3. Has it been your experience that banks, insurance companies and hospital networks are all lagging the adoption curve when it comes to social media? It will be the opportunistic ones, especially with banks/credit unions, that see a large increase in biz/membership by playing social media and engagement the right way.

    And that includes monitoring the backlash on banks that raise fees…and adjusting course to not do the same thing.

  4. I work in credit union land and I will say that, for the most part, banks did not jump on the SM bandwagon soon enough. That being said, they can still save face with their current customers while they still have them. It isn’t about the fees, necessarily, but about how the big banks make their consumer feel. No one likes to feel like a pin cushion. Yes they have the right to make a profit but I cannot help but think that they are going about it the wrong way.

    If one of the big banks truly understood the social world, they could make a huge difference. Citi and Frank Eliason are doing well but the issue there is you can tell there is still an old-school mentality holding him down. I would like to see some better interaction online with consumers. Us very little credit union guys can only do so much. Nice post, thanks!

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