Social Media-Based Brand Ambassadors - Part 1

INTRODUCTION

[This post is part 1 in a series of posts related to Social Media-Based Brand Ambassadors.  This post introduces the concept of social media-enabled brand ambassadors and sets the tone for the series of posts that will follow.]

We’ve heard ithundreds, maybe thousands of times – “Our employees are our greatestasset.”  When it comes to business-speak,this phrase has become one of the most overused expressions in the trade.  From annual reports to media interviews to companyrah-rah events, these words always find a way to make themselves at home.  Yet no matter how trite we believe the phraseto be, it is true.  There is no denyingthat in business there is little that can be done without human capital.  That’s because regardless of technologicaladvancements or an organization’s name, size, products, or services, people buy from people!  This point is especially critical in the post-OccupyWall Street era where humanity, honesty, and transparency havebecome the new expectation for business.

Many organizationshave known for a long time of the value that is created by employees thatevangelize on behalf of the organization. These employees are commonly referred to as brand ambassadors.  Research and surveys have repeatedly found thatbrand ambassadors boost an organization’s reputation resulting in improved profitability.  As a result of their excitement, knowledge, loyalty,and commitment to the organization and its products and services, brandambassadors create excitement and loyalty among customers.  As such, brand ambassadors act as incrediblyeffective influencers.  More effectivethan the best advertising. 

An excellent representationof the ideal brand ambassador is “Flo,” the customer service representative inProgressive Insurance commercials. Flo is so effective that current commercials portray her luring toProgressive Insurance executives from a competing insurance company.  This is the employee brand ambassador conceptat its best.  According to a BusinessCourier article by Ric Sweeney (“Brand Ambassadors’ Give Your Business A Boost”) “All employees, regardless offunction or title, are key ambassadors for your company’s products andservices.  Once motivated by seniormanagement to believe in the company and its products/services, employees can utilizetheir network of friends and colleagues to grow the company’s circle ofinfluence.”

Author Ronald J.Alsop tells a story in his book, “The 18 Immutable Laws of Corporate Reputation,” (Free Press,2004) about Larry Fish, former Chairmanand CEO of Citizens Financial Group. Alsop says “Larry Fish is rare among CEOs in that he recognizes thevalue of employees to corporate reputation and makes them his goodwillambassadors.  It’s the employees who areon the front lines working with customers, suppliers, shareholders, governmentofficials, and other audiences.  Theymust be your loyal allies because their effect on your reputation isimmense.  They can be your biggest fansor your worst enemies.”

While thecharacteristics (excited, loyal, and knowledgeable) of the brand ambassadorsnoted in Alsop’s 2004 book are the very same characteristics that embodytoday’s brand ambassadors, the manner in which they influence has evolved.  Historically, brand ambassadors conductedtheir influencing activities primarily through face-to-face interactions.  These interactions took place at theiroffices, civic meetings, places of worship, and anywhere else someone waswilling to listen to them.  Brandambassadors are successful influencers not because they are great salespeoplebut because they love what they do and who they do it for.  Their ability to influence is the result oftheir passion – as well as the positive reputation of the organization,product, or service.

While today’sbrand ambassadors still possess excitement, loyalty, and knowledge, they are nolonger confined to face-to-face activities. Through social media tools such as Facebook, Twitter, and LinkedIn,today’s brand ambassadors can influence a much broader audience.  Social media enables brand ambassadors toinfluence not only their neighbors across the street but also those livingacross the country and across the world.

Facebook, the 800-poundsocial media gorilla, boasts over 800 million active users.  Active users maintain an average of 130“friends” on their Facebook social network. Twitter, another dominant social network, maintains over 100 millionactive users.  LinkedIn, the socialnetwork of choice for business professionals, maintains over 135 million activeusers.  And these numbers do not reflectthe millions of users that belong to other social networks such as YouTube,Google+, Foursquare, MySpace, and hundredsof others.  A cadre of socialmedia-enabled brand ambassadors can produce results significantly better thanwas possible just a few years ago.

According Inc.Magazine blogger Eric Markowitz  (“How To Find The Right Employees To Be Your Brand Ambassadors”), “In order to fullyrealize – and leverage – an employee’s full value, a successful company needsto find creative ways to tap into its employees’ networks (both online andoffline).  Brand ambassadors, or employeeevangelists, are becoming an increasingly common way for brands to leveragetheir biggest asset – their workforce, of course – to reach new markets,generate buzz, and put a real face on the company.”  Schwartz Communications blogger Allison VanNest states on the Schwartz Crossroads blog (“Must Love Snacking: Empowering BrandAmbassadors Through Social Media”) that “Employees are becoming moreengaged as company influencers.”

Regardless of the demonstratedvalue that comes from an excited, loyal, and knowledgeable cadre of employees, thereis often a discrepancy between the message delivered by the organizationthrough its marketing efforts and the message delivered by its employees.  This discrepancy is the result of the organization’sfailure to formally train and deploy its employees as part of the organization’soverall branding strategy.  This failureon the part of the organization denies the customer, employee, and organizationan opportunity to maximize the benefit received.  The customer misses an opportunity to receivethe best possible attention.  Theemployee misses the opportunity to play a larger role in the success of theorganization.  And the organizationmisses an opportunity to develop a deeper and more valuable relationship withthe customer.  The organization’s failurealso ensures that employees lack the excitement, loyalty, and knowledgenecessary to become effective influencers. The negative impact of this failure is compounded when the organizationdoes not make use of the leverage provided by social media platforms.

Logical Stringblogger Mayank Krishna concludes (“Employees As Brand Ambassadors”) that this failure causes customersand potential customers to question whether “The brand is true to what it isprojecting or are there things deeper than what meets the eye?”  Krishna attributes the lack of employee influence-abilityto the fact that “In a majority of organizations, brand and branding is adomain that is considered the exclusivity of brand managers and marketingmanagers.  For an average employee, brandmanagement doesn’t seem relevant and he/she is hardly aware of the nitty-grittyof the brands and brand management philosophies of his/her organization.”

As such, unlessorganizations create a formal Social Media-Based Employee Brand AmbassadorProgram to ensure that employees are well-trained brand evangelists,organizations will lose out on the potential benefit that comes from employeesthat decide to make it their mission to act as influencers for theorganization.  A further risk is thecompetition.  To the extent thatcompetitors develop their employees first, the organization puts its businessat risk.

Digital identification and mobile payments

The fundamental problem with all payment systems is to accurately verify the identification of the buyer. If one can be hundred percent sure that the identification of the buyer is absolutely accurate, one can be hundred percent sure that the payment is not fraudulent. In the physical world this is achieved by verifying physical documentation (for instance ID documents, fingerprints etc.). The problem is of course much more difficult in the digital world.

That is why solving digital identification is almost the same as building a fraud-proof digital payment system. This is emphasised by a recent announcement from Paypal (Read here). In this announcement, Paypal aims to become the custodian for their clients' digital ID's. Similarly, deploying well-designed mobile payment solutions in emerging markets is similar to rolling out robust identification systems. One should consider combining both problems: rolling our national ID systems at the same time as deploying mobile payment systems.

Hong Kong Investment Banking Salaries Overtake London

Average base pay for investment banking and hedge fund staff in Hong Kong has shot up by 15 per cent this year overtaking salary hikes in London

Such generous rises highlight the two-speed global economy in 2011 as Asia powered ahead while Europe and the US teetered close to recession.

Analysts in Hong Kong have seen 20 per cent base pay increases while those at “managing director” level have

Very positive surveys for Mobile Banking

It is all good and well to talk about a trend based on trivial observations or individual war stories, but trends get substantiated by rigorous research only. That is why one can now confidently proclaim that there is a spectacular growth in the adoption and potential for mobile banking. This is true on the basis of a number of research reports released in the past few months that all corroborate this trend.

Some of the more interesting reports that I have seen are:

• Javeline Strategy and Research reporting a jump of almost 60% in mobile banking take-up, concluding that mobile banking has now moved from a "nice-to-have" to a "must-have". (Read here)
• A McKinsey research poll of major European banks report a jump of more than 50% in banks that are planning to launch some mobile banking application (Read here).
• A Comscore research reports a jump of 45% on a year to year basis of consumers using mobile banking. This now represent about 14% of all mobile users in the US (Read here).
• Both Starbucks (reporting 20 million mobile transactions) and Paypal (expecting $3.5 billion of mobile transactions in 2011) reporting strong growth in their mobile banking initiatives (Read here)

Good news for the industry.

2011 Top Ten Financial Markets

Want to work in one of the world's top ten financial markets? You may want to check out this news in yesterday's China Daily: HK most developed market

Hong Kong overtakes US, UK and Singapore to take top spot.

Hong Kong has overtaken the US, the UK and Singapore to top the world's most developed financial markets, the first time an Asian financial center has achieved this rank, according to the

Look Who's Talking: Facebook Engagement

Facebook recently began disclosing several key metrics on Facebook Pages to assist Page owners at-a-glance in assessing the success of their Facebook efforts and to assist visitors to the Page in determining how useful others have found the site in the past week.  These metrics are disclosed along the left side of the Page (they, along with other metrics, are also found on the Insights page).

The first metric indicates how many users Like the page.  Traditional Facebook marketing theory states that the bigger this number, the better.  That is why so many social media consultants go on about tactics to increase "Likes" as if he with the most Likes wins.  While I agree that all things being equal, more Likes is better than less Likes, I also believe that it's not the quantity of the Likes but rather the quality of the likes that will make a Facebook effort successful.

Social media is about social engagement.  Social engagement does not occur unless the Facebook effort provides value.  As such, it does not matter how many Likes a page has if the content is not engaging.  Without valuable content the community will ignore the page resulting in a wasted effort to attract the community.  In other words, a Page with 100,000 Likes that was created through some effective marketing effort will not help the bank if none of the 100,000 users visit the Page on a regular basis.

In order to evaluate the effectiveness of a Page's community, Facebook provides the number of users that have "talked about" the Page in the past seven days.  This "talking about" statistic is fairly meaningful as it states the number of users that have engaged with the Page (e.g., brand) in some form.  Activity that is included in the Talking About statistic includes users that:

• "Liked" the page
• "Liked," commented on, or shared a Page post
• Answered a Question on the Page
• Responded to an Event 
• Mentioned the Page
• Tagged the Page in a photo
• Checked in or recommended the Page location

In the examples below you see two sets of data taken from two banks - one small bank and one mid-size bank.

The bank on the left has only 409 Likes and the bank on the right has over 2,500% more at 10,850 Likes.  A natural conclusion based on the Like data may be that the mid-size bank has created a more valuable Facebook asset.  However, a review of the "talking about this" number suggests that while the mid-size bank has more likes, the absolute number of users that have engaged with the bank is identical.  As such, either the mid-size bank has a bunch of uninterested followers or the small bank has an active bunch of followers.

So why is having as many users talking about the bank so critical? Well, it is the active and engaged users that are most likely to support and evangelize for the bank.  These active users will tap into their social networks and inform their friends and acquaintances of the reasons why they should support the bank.  In addition,  new visitors to a Facebook page can look at these two metrics to understand how popular, active and engaging the Page is and as a result, whether it is one that they wish to follow.  Losing out on an opportunity to engage new users results in a loss of not only that user but of that user's social network.

While banks should seek as many Likes as possible, they should also examine the number and percentage of followers that are engaging with the bank.  If too few are engaging then the bank is not providing adequate content.  This may result from too infrequent posts, too many "salesy" posts, too frequent posts, uninteresting posts, etc.  It should be the job of the Facebook admin(s) to analyze the data to figure out how to best convert the nonengaged users into engaged users.  Once users become engaged then their networks may also become engaged, and at that point the Facebook page may provide significant value.  However, until engagement occurs, the Facebook page becomes that question about whether a tree falling in the woods makes any noise:  if a Facebook page with tons of users creates no engagement does it provide value?  Very little.

What To Do With Those Repos? Facebook Them!

During these tough economic times it is not uncommon for consumer banks that originate auto loans - particularly used auto loans - to have to pick up a repossession or two. In many cases banks will dispose of the autos through wholesale auctions or wholesale transactions with used auto dealers. Depending on the car and the outstanding balance, sales through auctions or directly to dealers will result in marginal to significant write offs, as the banks are forced to accept deep discounts.

Fortunately, with the purchase of a fairly low cost video camera and video editing software, banks can now create and distribute videos through social networks in an effort to connect directly with consumers and obtain retail sales prices on their repossessed autos - and possibly provide the financing to qualified borrowers.

After exploring its options, Pan American Bank (my employer) in Los Angeles initiated a social media-based program that distributes videos on YouTube, Facebook and other platforms to publicize its repossessed used autos.  Through the use of in-house videos, Pan American Bank is able to achieve several goals:

1. Publicize the sale of its repossessed autos directly to retail buyers, reducing/eliminating the losses  experienced from wholesale transactions.
2. Create a following among consumers seeking quality used autos.
3. Increase the Bank's visibility. 

As the cost of  video equipment and video editing software has fallen sharply (most cell phones provide video capability), many individuals have become pro-am videographers.  If your organization has little to no budget, a great place to begin a search for a video expert is within your organization.  A simple e-mail blast to employees asking for experienced videographers may result in one or more in-house resources.  This will reduce costs and increase flexibility.  If an in-house resource is not available, inquire with students at local high schools and colleges. Finally, call on video services.  If budget is not a problem you may want to seek a professional right away.  However, you may be pleasantly surprised at the quality of employees.

Social Media's Tortoise and the Hare

We've all heard the Aesop fable of the Tortoise and the Hare.  In the story, the hare, speedy and full of bravado, fails to win the race against the slower tortoise.

The financial services industry is undergoing its own version of the fable with respect to social media.  On the one hand you have firms such as Chase, giving away $1 million dollars through Facebook.  On the other hand you have firms such as Morgan Stanley, reluctantly entering the world of social media by getting every tweet, LinkedIn post and other social media comments pre-approved by "corporate" before making the messages public.

While it is important for every firm to understand the influence of social media, it is just as important for every firm to do it in a manner that is consistent with the culture and governance style of the firm.  Some firms, such as Chase, are very comfortable jumping into social media with both feet.  We'll call them the hare.   This is a function of the culture at Chase.  Some firms, such as Morgan Stanley, are more comfortable taking calculated steps.  This too is a result of the corporate culture.  We'll call them the tortoise.

Unlike the fable, this is a race where there is likely no loser.  What is important here is that organizations move into social media at a pace at which they are comfortable.  As stated on this blog many times; most important is for firms to actively "listen" to social media to determine what is being said so that appropriate responses can be provided.  Beyond listening (which IS mandatory for all), every firm should move at a speed at which they are comfortable.

Some firms will train and trust their employees as brand ambassadors and unleash them to do their thing on social media.  These firms will have no problem sleeping at night.  Other firms will limit employee access to social media and will screen and pre-approve all messaging.  For these firms, this is the only way they can sleep at night.  While social media proponents will push for the former, the reality is that either approach will work.  What is important is that the firms implement something in order to remain visible and competitive.

The Age of the Thick Skinned Banker

Amplicate, a social media analytics company, released a report that suggests that banks need to develop thick skin, really thick skin, in the new world dominated by social media.

The Amplicate study revealed that 83% of opinions about major banks in the US and Europe were negative over the past 12 months.  The study focused on large money center banks and not on the smaller community banks.  While community banks would have likely performed better due to their reputation as being more consumer-friendly, the lesson is the same: bankers need to learn to deal with and manage criticism like never before.


Social media makes it easier than ever for consumers to make their complaints public.  Look at Bank of America's recent social media troubles related to its $5 debit card fee.  The public outcry resulted in a complete about face by Bank of America and created significant damage to the Bank of America brand that will take some time to repair.

Banks' knee jerk reaction may be to avoid social media altogether in an effort to avoid the criticism.  However, as has been repeated many times on this blog, the criticism will occur regardless of a bank's stance on social media.  A better approach is to play offense and implement a social media monitoring system that tracks what is being said about the bank and responds in a transparent and honest manner in a effort to prevent the criticism from snowballing in a manner similar to that experienced by Bank of America.

Bottle Service with that Social Media

One of my favorite social media videos remains this one by Socialnomics.  I must admit that I get quite pumped up after watching and listening to this video by Erik Qualman.  Erik put together one of the best business-related videos ever!  This explains why this video has gone viral and has provided such a tremendous boost to Erik's company.

I've attended and participated in more social media events than I can recall.  In so many of these I hear talk about going "viral."  For social media marketers, including those that represent banks, this represents the holy grail.  The reality is that very (very) few initiatives will ever reach "viral" status.

I like to use this video as example of what it takes to get an initiative to go viral.  The visuals of this video along with the beats made for an emotionally-charged video that encouraged not only sharing, but repeated viewing.  The combination of music and visuals created an emotional charge among viewers, almost turning viewers into Viral Zombies.  Viewers have no choice but to share this video (I'm sharing, aren't I!).

I don't mean to discourage organizations from seeking the holy grail of social media sharing.  I just want to make sure that it is understood that social media is about being "social."  And before anything is shared - especially at the "viral" level - it must appeal to the social side of our existence.  In this case, viewers of the video get their blood pumping, head moving, feet tapping.  Watching people watching this video is almost like watching Will Ferrell and Chris Kattan in A Night at the Roxbury.

So before launching the next "big" social media initiative ask yourself how it will make people feel.  If it makes them feel significantly happy, sad, proud, etc., then it has a chance at spreading.  If it doesn't then don't expect much from it because no one will care.

Hello, Mr. Watson, Can You Hear Me?

On November 12, 2011, the Customer Contact Association released an advisory (Social Media Revolution Rewrites Customer Service Rules) that made the following observations:

• Companies must review which channels they use to monitor customer feedback as there is a mismatch between customers’ preferred channels and the ones companies monitor most frequently.More than 70% of the online population now regularly uses Facebook and Twitter.
• Forty-six percent of consumers believe that social media can hold brands and companies accountable.
• Businesses must reinvent their customer service models to respond to a growing breed of ‘connected customers’ who use social media to comment on service.
• Businesses need new multi-channel strategies to tackle ‘disconnect’ with customers.
• Forty-four percent of consumers believe companies do not care what they think.

While the data is helpful, I don't think anyone is surprised by the outcome - especially in the post-Occupy Wall Street world.  What is most useful is the conclusion that companies (banks included) are not listening in the right places.  Traditionally banks have used paper surveys, face-to-face interaction and other old school methods to obtain customer feedback.  Today, while these methods still apply, there is more and more feedback being provided through social media channels (Facebook, Twitter, blogs, etc.).  As such, it is important that banks "listen" to all applicable channels - not just those they are traditionally programmed to monitor.  At a minimum, banks should make use of Google Alerts and SocialMention.com to listen to the feedback/comments being placed out on the Internet.  Of course, larger organizations may opt for more robust (and expensive) solutions such as Radian6 and others.

Social Media Crisis Training - Mandatory For All Bank Employees?

On October 7, 2011, the Occupy Santa Cruz movement made life much more difficult for banks - large and small.  On the third day of an Occupy event in the small coastal town, an event took place that has likely turned upside down the life of a Bank of America branch manager.  This same event should have the Bank of America training department scrambling to address an important issue: how to handle confrontations with customers and protesters to avoid public relations disasters.

The October 7th incident involved several woman seeking to close a Bank of America account.  The women entered the branch with protest signs and a video camera.  The branch manager upon noticing the women immediately acted by politely asking the women to leave the branch.  The entire exchange was captured on camera and subsequently released on YouTube.  The video has been broadly distributed, resulting in hundreds of thousands of views, causing continued damage to the Bank of America brand as well as likely affected the branch manager.

A few thoughts came to mind as I watched the video.  First was whether Bank of America senior management had provided its branches with guidance regarding how to handle protesters.  In this case, while the protesters were carrying signs and a camera, they appeared quite passive.  This was clearly a set up and the branch manager played directly into their hands when she indicated that they could not be both a customer and a protester and kicked them out.  As a former branch employee, I appreciate the feelings that overcome someone when things go sideways in the branch.  And as such, it is hard for me to be too critical of the employee for reacting as she did.  However, perhaps banks should roll out training that requires employees to first evaluate the scene - especially if cameras have been used.  And while hindsight is 20/20, in this case, having an employee calmly close the account would have been the best option for diffusing the incident.  Perhaps some vignettes would help get the point across.  Because, while the Occupy movement may or may not die out soon, similar approaches are likely to continue in the age of YouTube.

Another thought is having banks establish a clear policy regarding the use of video cameras within the branches.  Many gyms post policies regarding the use of cameras in their facilities.  Banks should determine their own.  And while they need not post the policies, managers should know the policy and be able to calmly describe and provide a copy of the policy to individuals in a manner that will not make for a good smear video.

Times have changed.  Bankers hope only temporarily.  But they have changed.  Every bank employee must recognize that he/she is an ambassador of the organization.  Everything they do may be used positively or negatively in social media.  The more aware employees are of their role as brand ambassadors the better off everyone will be.

Social Media and the American Autumn: The Social Media Effect

On Friday, October 28, 2011, Bank of America officially raised the white flag when it announced that it would exempt certain customers from its previously announced five dollar debit card fee. After severe criticism in the traditional media and especially social media, Bank of America announced that customers with direct deposit or Bank of America credit cards would not be assessed the five dollar fee. It is quite a win for consumers and a major setback for Bank of America's retail strategy team.

Just a month ago all the major banks were talking about recouping revenue through some form of fee on rank-and-file customers. However, in the wake of the severe backlash not only has Bank of America changed its tune but so have Wells Fargo Bank and JP Morgan Chase.

This American Autumn that was initially sparked with the birth of Occupy Wall Street, has taken to social media and has broadened its breadth and scope, resulting in an initial win with the withdrawal of Bank of America's debit card fee strategy.

Such an attempt 10 years ago would not have resulted in such an outcome. However, with social media's immediate and widespread impact, banks must now consider The Social Media Effect when devising corporate strategies. This is something that Bank of America failed to do. And it was evident on their own Facebook page, where complaints went unanswered by Bank of America.

As a long time banker I have always included "reputation risk" as one of the risks evaluated from time-to-time. However, as most bankers will tell you, this was always one of the lesser risks. As bankers we focused most of our energies on credit risk, interest rate risk, market risk and compliance risk. Now we must elevate reputation risk to the top tier thanks to social media.

The smaller the bank the less likely the bank is to register on the radar. Regardless, a community bank's reputation can be easily and quickly tarnished if "conversations" are not monitored and if banks fail to consider the Social Media Effect within the context of reputation risk.

So my advice to bankers in light of Bank of America's recent debacle is:

1) Utilize a form of social media monitoring. Whether it is something as simple as Google Alerts or SocialMention. And ensure that individuals within the organization are tasked with responding to comments in order to attempt to prevent a snowball effect that may create significant harm.

2) When developing strategies, do not fail to consider The Social Media Effect. A poorly thought out strategy can lead to severely adverse outcomes resulting in a loss of reputation and customers.

3) Include The Social Media Effect within the organizations crisis response plan.

While I do not believe that the "mob effect" will dominate all of the conversations within the banking industry, or any industry, for that matter.  I do believe that we have reached the point where The Social Media Effect must be taken seriously.

Regulatory Concerns and Loss of Control Slow Banks' Adoption Of Social Media

An October 23, 2011 Holmes Report blog posting identified the two major fears that banks have relative to social media implementation: regulatory implications and loss of control.

According to The Holmes Report, 73 percent of banks believe that they are behind but catching up in their social media activity. But the sector realizes that social media will not disappear: 16 percent have a social media strategy in place, 28 percent are in the early stages of implementation, and 41 percent are in the process of creating a social media strategy. This compares with 3 percent who have decided against a social media strategy and 13 percent who haven’t started thinking about it.

The Holmes Report cites brand awareness as the most popular reason for social media usage. According tot the report, banks find Twitter as the most useful social media platform followed by LinkedIn.

Addressing the regulatory implications is simple (easy for me to say).  Any social media implementation should be preceded by a careful analysis.  I recommend David Kreiman's recent presentation (Social Media at Community Banks) at the ABA National Convention as a starting point.

Next, I would recommend a review of Creating an Ironclad Social Media Policy.  This document provides the policy guidance necessary to satisfy examiners, auditors and executive management.

Finally, I would highly recommend that a copy of the Human Resources Guide to Social Media Risks be given to each member of senior and executive management.  This book will provide a very good assessment of the risks that exist as a result of social media use.

These three guides should provide the tools necessary to put any organization's fears into perspective.  At the end of the process the conclusion should be, whether or not social media is for our organization, it is not going anywhere anytime soon and at a minimum, the organization better be listening to what other are saying in order to adequately manage reputation risk.

Not Your Average Hedge Fund Resume

The unfortunate truth is there are more people looking for hedge fund jobs than there are jobs available, so hedge funds have their pick of the litter. This article is intended to show you how the search process works, and what the average hedge fund resume looks like. If you want to stand out from the crowd, take notes and do something different, or risk getting lost in the crowd.
It is very

Social Media at ABA 2011

I got back from the 2011 American Bankers Association National Convention about 10 hours ago and I'm now starting to begin the process of digesting the many messages knocking around in my head.  Before I go into the social media messages I'm currently digesting, let me say this - the ABA scored a perfect 10 on locale for this year's event.  The weather along the San Antonio River Walk could not have been better.  It was tragic to have to be indoors during the event.

So, this year's annual convention would not be complete without at least one segment on social media use.  In fact, we had two.  One segment was a vendor-produced breakfast presentation and the second was one that featured the ABA's Denyette DePierro, Glenview State Bank's David M. Kreiman and yours truly.  In addition, at least one other presentation brought up the issue of social and its importance to the banking industry - particularly the community bank segment.


The slide below, from Cornerstone Advisors, pretty much tells gives the gist of the messages: it's the number of users, stupid!

The message being delivered across the board was that social media is too popular among all demographic groups to be ignored.  Banks, at a minimum, should attempt a low-risk approach to social media.  Banks were advised to wet their toes by launching a simple yet well thought out campaign to live the social media experience and make an educated assessment.

While disagreement may result regarding the appropriate uses of social media (e.g., sales tool? marketing tool?  community outreach tool?), everyone agreed on its usefulness.


Perhaps the most useful bit of advice was provided at a presentation by Beyond the Arc.  According to Beyond the Arc's Steve Ramirez, a bank should have some idea what it wants to accomplish with social media before embarking on the task.  Is it increased deposits, increased brand awareness/goodwill, increased loan production, etc.  Without an end in mind it will be impossible to determine the utility of social media.


Regardless of the exact expectation, banks should consider utilizing social media since social media use among consumers has become ubiquitous as has consumers' expectation that banks and other businesses also utilize social media.


Tell you what I would like to see next year from the consultants...case studies on social media usage and ROI for small community banks under $500MM.  We get lots of stats on the big guys.  BofA, Chase, American Express, etc.  They have budgets to implement the cool (and pricey) campaigns and measurement systems.  But I'm more interested in First Bank of Main Street, One Percent Bank and their peers.


All in, the message at ABA 2011 was what I expected.  "If you're not on social media, get it on it!"  And I believe that's the right message.

Pacific Inclusion Programme; doing excellent work to bring financial services to the poor

Mobile payments enable the provision of financial services to the poor. It is one of the key building blocks to bring sophisticated financial services to communities that were previously excluded. The low cost of delivery, flexibility and ease of use makes this an ideal platform to deliver these services. As such, we are frequently introduced to amazing organisations working in this industry, making big inroads, often with very little resources.

One such an initiative is the Pacific Inclusion Program (PFIP), an initiative supported by the United Nations Development Fund. It is an organisation working in the Pacific region with the aim to increase access to quality financial services to the people of the region. (Read more here). A very qualified and capable team is working on diverse projects ranging from branchless banking to financial literacy. The team is working closely with central banks and contribute towards ensuring more friendly regulations to facilitate the delivery of financial services to the dis-enfranchised.

It is people like these that are the unsung heroes; working to bring quality financial services to more people and making the world a better place for more.

The source of funds dictate the use of mobile wallets

What is of critical importance in making mobile wallets work in emerging markets is making sure that the wallets are properly funded. Getting money into these wallets is a big challenge, especially considering the predominantly cash economies. The boundary between cash and digital currency is often difficult to navigate.

Cash-in strategies at agents, retailers and bank branches (a kind of cash deposit feature) are the most frequently used approach to get money into wallets. Some solutions utilising scratch cards and/or "top-up PIN's" have been implemented with limited success.

Other mechanisms to fund wallets are providing tools to pay salaries or wages directly into the wallets and the distribution of aid or grants. Using wallets to perform these functions are not only cost effective, but also provides the basis to drive secondary transactions. Another source of funds (of course) is remittance flows. While it is often customary to accept remittances as cash payments, it is far better, more secure and cost effective to fund nominated wallets with the remittance amount. This then also could lead to secondary transactions.

It is often those operators that deploy the most effective funding strategies that show the biggest usage.

Different classes of retailers in emerging markets, requires fresh merchant thinking.

Merchants are clearly defined in card payment terminology. A merchant is someone that accepts a card from a client and then initiate a payment request/authorisation. A merchant usually have a relationship with a specific bank (called an acquiring bank) and should have secure infrastructure (terminals) that can accept a card and initiate the authorisation transaction. This model is proven and tested and works well in many markets. Trillions of dollars are processed in this way and these merchants form the foundation of retail economies of the world.

However, in many emerging markets, large volumes of transactions are processed (usually in cash) by retailers looking very different and operating within a very different economic model. These traders often do not do business in permanent structures and work irregular hours and with much more flexible business models. These merchants generally cannot afford terminals, do not have connectivity, nor have reliable electricity available. The needs for reconciliation and cashier management are also significantly different for these retailers.

It is inconceivable that these merchants be served in a model that does not consist of the four parties (as is the case with interoperable, open card payment models). However, digital payment models for this sector (most likely based on mobile phones), will have to be designed with very different liability structures, different fees and less overhead. At the same time, these solutions would also offer less utility and features compared to the established schemes.

The time is ripe for the development and prototyping of these type of payment solutions.

Mastercard making mobile payment waves

It is clear that MasterCard have taken mobile payments seriously, if the number of initiatives announced during the past period is an indication. As one of the big card payment providers and a major player in payments in mature economies, this is further ratification of the importance of this industry for emerging markets.

Some of the announcements that I picked up on lately are the following:

• Launching NFC based payments in conjunction with RIM's Blackberry and Etisalat in the UAE (Read here)
• Utilising Intel two-factor authentication in conjunction with Symantec to bring more secure mobile payments to market (Read here)
• Talks about launching a MasterCard mobile payment gateway in Indonesia (Read here)
• Making key appointments in Nigeria (some with prior mobile telecommunications experience (Read here)
• Launching a online payment model utilising mobile phones in conjunction with Airtel and Standard Chartered (Read here)
• Application to link a MasterCard number to a mobile phone to perform mCommerce transactions in Hungary with a number of telco's (Read here)

Bill payment integrations to mobile wallets in Africa

Mobile payment solutions cover Africa with basic services including domestic remittances, person to person payments and airtime top-up capabilities. All of these are only possible because of "cash-in" and "cash-out" features installed at agents. Even these are amazing on their own, but these solutions are not constrained by these basic features.

Many examples of integrating mobile wallets with bill payment applications can be found. This is an area that shows a lot of growth. Either deployed by mainstream brands or also by small entrepreneurs, this is an area that requires further investigation. Some examples are the following:

• Celpay (one of the pioneers of mobile banking in Africa) provides payment solutions for multiple billers in the countries that they operate (Zambia, Zimbabwe and Tanzania) (Read here)
• MTN Mobile Money recently implemented a "bulk payment" capability that allows companies to offer new payment solutions. This application is currently utilised most for the payment of salaries (Read here)
• M-Sente (a mobile wallet provider in Uganda) recently announced the launch of MultiChoice payments. (MultiChoice is a regional payTV provider) (Read here)

The rate of innovation and launching new services on multiple live products in Africa is an indication of the health of the industry in emerging markets.

SAP Has Something to Say About Banking and Social

According to SAP blogger Michael Mischker, "strengthening customer loyalty and overall customer experience has become increasingly critical for banks because of the problems they’ve faced in recent years. A positive experience with branch offices and call centers is still essential. But social media gives banks and other financial service firms another arrow in their marketing quivers. Used strategically, it provides a powerful two-way dialogue with customers that can significantly enhance brand and revenue."

Here are some of Michael's tips:

1) Start a Dialogue:  There are many obstacles to integrating social media into a bank’s distribution channels — not the least of which is a change in financial institutions’ corporate culture which has historically emphasized monologue over dialogue. Many banks are also concerned about opening the door to negative commentary.  Standard marketing strategies will no longer win customer interest and trust. Increasingly, consumers will look to their social groups for banking recommendations and use social media to share their thoughts on particular institutions.

2) Competitive Advantage: An active social media presence can create a “sticky,” real-time relationship with potential and existing customers. Using today’s technology, the best-run banks can monitor the sentiment of and actively engage with customers, prospects, and key opinion leaders. At a time when the amount of data and information created by social networks is expanding exponentially, it’s more important than ever for banks to have robust support for listening and responding to social network commentary.

3) The Right Tools for the Job: Banks can easily leverage current technology to imbue the customer experience with a social touch. Banks can create the consistent experience across traditional and social media channels needed to strengthen their customer relationships.

Successful customer relationship strategies driven by social media rely on:

1) Responsiveness (listening carefully and replying quickly)
2) Relevance (keeping responses personal and meaningful)
3) Convenience (interacting with customers at their preferred time and channel)

Technology can put this all in place. But banks must, first, be willing to embrace the new opportunities for collaborative, two-way interactions with customers that social media outlets provide.

Core Processor Gets Into Social - Five Tips to Banks

Fiserv, Inc., one of the major core processors in the banking industry, shared Five Steps to Social Media Marketing at the 2011 BAI Retail Delivery Conference on how financial institutions can add social media to their marketing mix.

Five Steps to Social Media Marketing

1) Strategy Development: Developing a social media marketing strategy includes assessing customers' current social activities, determining goals and objectives, planning for how relationships with customers will change and deciding which social technologies to use.

2) Listening and Monitoring the Conversation: To get started, financial institutions should simply listen to what consumers are saying about their brand, their competitors and the industry. This can be done by using a listening tool, such as socialmention.com or Google alerts. Listening will reveal where customers and prospects are participating online, which may guide the decision on what sites to start with and where to focus initial efforts.

3) Laying the Internal Groundwork: Be sure to establish and share social media guidelines, which can be done in the form of a policy book, education video, fact sheet or other form of internal communication. Also be sure to establish a brand voice, whether it is professional, casual, upbeat or reserved, and create a response matrix outlining how to respond in a variety of situations. Develop a content calendar outlining future content.

4) Integrating Marketing: Promote the financial institution's social presence in other marketing materials. Adding social icons and links to websites, emails, brochures and other materials lets consumers know the bank or credit union is active in social media and makes it easy for them to connect.

5) Metrics and Reporting: The metrics measured will depend on the goals and objectives initially identified. However, when starting out, financial institutions can measure social media impact by looking at how far messages are traveling, the gain in visitors to their website, the number of engaged discussions and the number of users who return to financial institution social media sites.

Interesting mobile payment activities in South America

I have reported previously on the plans of Telefonica to deploy mobile payment solutions in South America. (Read here). With one of the fastest growing mobile subscriber bases, large un-banked populations and economies dependent on remittance flows, one would have thought that this would have been a fertile space for mobile payment successes. Yet, it seems as if activities are limited to high profile announcements.

Recently, America Movil announced a major commitment to deploying mobile payments in the region. The intention is to create a JV with Citibank called Transfer with an estimated investment of $50 million (Read here). The intention is to roll this out in Mexico first and then to replicate it into other markets in the region. The complexities in regulating a JV between a bank and a mobile operator has proved difficult in other markets, so it will be interesting to see how this pan out.

It seems as if this region may get defined by smaller players with solutions that are deployed swiftly and with a better understanding of the actual needs. Yellow Pepper (read here) is such a player with a large subscriber base in a number of countries in the area. Monique has been working on launching eZuza in Mexico for some time now and it seems as if this is imminent
(read here), whereas Tagattitude (like in many places around the globe) assisted an initiative in Nicaragua called mPeso (read here).

This region will either be defined by the mega-corporations with a lot of resources but a less clear vision or by smaller players with limited capacity but slightly more focused.

Using mobile payments for online payments

According to the International Telecommunication Union (ITU), Internet-user penetration in sub-Saharan Africa has grown from 0.5% in 2000 to 10.6% last year. The penetration in Nigeria is for instance estimated at 28% (Read here). While the Internet activity is growing at a massive rate, online shopping is curtailed by the lack of suitable electronic payment solutions.

A number of localised payment solutions can be found. These are all dependent on acquiring relevant merchants. Some examples are FloCash or options where bank branches receive online shopping payments (offline payments at GTBank). Further challenges for these digital payments are the challenges to integrate with cash, consumer education and trust, as well as a sustainable business case.

In most of these markets mobile payments are well-established, with good penetration and a motivated network of agents with cash-in and cash-out capabilities. Consumers are also often well informed of these payment mechanisms and generally have a high level of trust. It stands to reason that mobile payments will fill the gap needed for suitable payments to make online shopping work in Africa.

Current Recruiting Trends and Tips

I had a chance recently to speak with the hiring experts at Street of Walls to get a feel for current market conditions and tips on how to improve your Investment Banking Resume.

Can you discuss current hiring trends?
Hiring has been slowing at most of the large banks over the last 6 months. In fact, firings have become more of the norm. Typically during an economic expansion, investment banks

Social Media Password Policies - More Than An Ounce Of Prevention

In early September, the Bank of Melbourne had its Twitter account hijacked by someone that used it to send phishing messages to its followers, many of whom were customers. The tweets sent from the Bank of Melbourne Twitter account contained malicious links.

The likely cause for the account compromise was a weak password used by a staffer with access to Twitter.

This event should serve as a lesson to banks with a social media presence. Just as banks maintain effective password policies to access internal systems, similar policies should be required for external systems.  Employees should be made aware of the damage that can result from lax/poor controls over passwords.  The lack of effective controls can result in reputational harm, regulatory criticism and legal action.

Social Media is Social Business

Boxley Llewellyn and Chitra Dorai from IBM came up with these four ways that social media is transforming the banking industry.  They provided their analysis in a

1) Social business is critical for forging new connections, as well as elevating the brand.
Banks that can use it wisely can generate immediate, impactful results on increasingly social customers, many of whom use social media as an underlying "operating system" for their work and social lives.

2) Social business is a pivotal outlet for building communities.
Selling banking products and services can be understandably complex. However, building communities around products and services opens up a new way for consumers to inquire, engage and share material. Focusing on customer service and adopting the personalities of the people they serve, banks can bring new meaning to customer centricity.

3) Social business can be an invaluable tool for product research and education.
Whether you're crowd-sourcing to find out what customers think of your services, or using social media to encourage customers to develop new products, the social network provides a channel to solicit ideas and input. In fact, social customers expect to be able to input ideas, rate experiences and debate ideas. Banks are redesigning their websites to include new features to gather ideas and feedback. They deliver videos on product information via YouTube and ask customers to rate the site and suggest new products.

4) Social business can provide deeper insights into bank customers.
All of the information that is generated on social media sites is valuable data that can be analyzed and mined. New patterns can be uncovered and valuable insight gleaned -- from gauging what customers like and dislike, to understanding what products they respond to and assessing areas of improvement for customer service. Banks are just starting to use more advanced analytics to tap into this data and develop more customized services and offerings for customers to ultimately drive more business. They can deliver more tailored marketing and sales campaigns to generate more targeted results.

Rodney Dangerfield - The Father of Social Media Sentiment Analysis

When I was an undergrad at UCLA I had a horrible habit of staying up all night with friends, drinking Schaefer beer and eating Domino's while watching movies such as Caddyshack.  I gotta admit those were some of the best times. Cheap beer, good food and great friends. Of course, never did I think that anything other than bad hangovers would result from the experience.

I guess that's why I'm just a blogger and not a multi-gazillionaire.  You see, if I were paying better attention I would have noticed the wisdom in the words of the late Rodney Dangerfield.

That clip above wasn't the wisdom I was talking about. That was just funny.

Somewhere in the movie Rodney says "they're all buying, then sell, sell, sell!" It seems that the folks at Barchart.com, Inc. were also avid fans of Caddyshack. How else would they have come up with the idea of tracking company sentiment on social media as a means of determining which stock to buy and which to sell.

According to a Barchart press release, "researchers from Indiana University and the University of Manchester recently published findings that social media can have up to an 86.7% accuracy rate at predicting the market."  The Barchart product analyzes thousands of social media messages every second, compiling data that can be used for research, system development and real-time stock, futures and forex signal creation. The software instantly evaluates and generates trading signals based on the sentiment of investors using social media tools.

This product and the research behind it may be useful to banks relative to decisions and transaction that involve stock price such as merger and acquisition transactions.

Another example of the usefulness of social media.  But does it look good on you?