Revenge of the Twitterati

My previous post suggesting that Twitter is stunt for banks, has stirred up a few people. I've had quite a few private emails on the subject, some of which agree with me, and some of which don't. I've also had some pretty interesting comments here on the blog itself.

Many are horrified that an innovation person can possibly not "get" twitter and social media in general. Take this, for example, from Chris Skinner:

A man returns from holiday and sets out to pour cold water on the latest networking craze ... same man is a blogger, social media aware maverick ... he's on linkedin and stuff ... yet doesn't get Twitter.

I think I do get Twitter, at least on a conceptual level. I don't use it personally every day, though I do have a Twitter account. And when I find someone interesting who has a Twitter account, I'll at least look at their tweets.

The same can be said for virtual worlds, the previous banking fad that has faded now from memory. I played with quite a few of them, and I suppose I must have worked out early that – excepting the first players in the space who were doing real experimentation – everyone else was engaging in another stunt.

The compelling pull of "earned media" is very tempting indeed. If you are relatively early with your stunt compared to your peers, people are going to write about your bank.

Of course, if you want to get the balanced view on all this, I definitely suggest you read the whole of Chris' writings on why banks should do social media and his rebuttal of my argument that it is uneconomic.

I've said it before: if there was such a titanic business case for social media for banks, I can assure you we'd all be doing it. Most of us are not. Ergo, the business case must be faulty. It is beyond reasonable to think that every single non-social-media bank in the world doesn't "get" it.

But let me continue with the comments of Neil Robinson. Now Neil is smart, but he doesn't much like banks. So of course, when I suggest that we might not do things for economic reasons, he responds that we're missing an opportunity, one that we're too stupid and too traditional to capture:

Let's rejoice that some banks have the vision to go out into their market. It's a low cost endeavour with potential high value rewards. Why dismiss that?

Maybe you could start your own social network. "Sitter".

For bankers who aren't going anywhere and nothing to tell anyone, and don't want to listen anyway. The entire high street would sign up to that, right away.

Neil, if anyone could explain to me, in economic terms which made sense for a real numbers business case, what these potential "high value rewards" are, I'd start a Twitter programme right this second. Getting to a real money benefits case, one that I can defend internally, is the real challenge with all these things.

However, I will decline your invitation to start the new "Sitter" social network for bankers, though it is clearly a great place for people who hate bankers to rally and hang out.

My final point on this, though, comes to me courtesy of Nicholas Carr of Rough Type. He reviews the latest Nielsen figures for Twitter uptake, and finds that three of five customers bail on Twitter after a few weeks. He goes on to say that unless that trend stops, Twitter will soon run out of new users to recruit to supports its (admittedly) stunning growth. In fact, according to Nielsen, the churn rate will limit the sites growth to a 10% reach figure. Not really very significant if Twitter is to be a long term channel for banks.

I guess my question, given that, is why anyone thinks that Twitter is going to be important for banks.

However, I have been wrong before. Noone is perfect.

 

Comments

[Neil Robinson]

Thanks for the follow up James. You certainly opened up a can of worms!

But to dismiss not just Twitter but all of the social networking movement is brave and maybe a paradox, given the way we're conversing now.

Here the statement you make here that I'd like to refute:

"if there was such a titanic business case for social media for banks, I can assure you we'd all be doing it."

Wow, good job you didn't finance Henry Ford, the railways, The Wright brothers - or on-line banking!

How long after the Nottingham Building Society's online banking system in 1983 did it take the first UK high street bank to follow, despite Citibank showing the way in 1981?

Now who hasn't got such an offering?

But let's deal with tangibles. I want you to convince you you're wrong, not beat you into submission!

Let's see who's using Twitter and how it benefits them.

Let's take Bank of America. BoA use it to solve problems. For free. That's it in a nutshell. They also use it to ask for views, solutions, fixes. It's like a hotline to everyone.

http://consumerist.com/5137806/bank-of-america-on-twitter-solving-readers-problems

Thanks for the follow up James. You certainly opened up a can of worms!

But to dismiss not just Twitter but all of the social networking movement is brave and maybe a paradox, given the way we're conversing now.

Here the statement you make here that I'd like to refute:

"if there was such a titanic business case for social media for banks, I can assure you we'd all be doing it."

Wow, good job you didn't finance Henry Ford, the railways, The Wright brothers - or on-line banking!

How long after the Nottingham Building Society's online banking system in 1983 did it take the first UK high street bank to follow, despite Citibank showing the way in 1981?

Now who hasn't got such an offering?

But let's deal with tangibles. I want you to convince you you're wrong, not beat you into submission!

Let's see who's using Twitter and how it benefits them.

Let's take Bank of America. BoA use it to solve problems. For free. That's it in a nutshell. They also use it to ask for views, solutions, fixes. It's like a hotline to everyone.

http://consumerist.com/5137806/bank-of-america-on-twitter-solving-readers-problems

OK, OK, Yadda Yadda, you say. But show me it working!

OK, let's go to Australia...

http://www.news.com.au/technology/story/0,28348,25261841-5014239,00.html

There. A problem solved. Publicly, effectively. Bank reputation up ten clicks on the "I love you" scale. How much was that worth?

But, this is your blog, James, not mine. Time to close.

And no, I don't like UK high street banks. I don't like the way they're stuck like rabbits in the headlights of progress.

I don't mind them doing that, just give us back the keys to the economy first and we'll go start up something else.

Because that's where the future lies. Jumping on the bus, James?

OK, OK, Yadda Yadda, you say. But show me it working!

OK, let's go to Australia...

http://www.news.com.au/technology/story/0,28348,25261841-5014239,00.html

There. A problem solved. Publicly, effectively. Bank reputation up ten clicks on the "I love you" scale. How much was that worth?

But, this is your blog, James, not mine. Time to close.

And no, I don't like UK high street banks. I don't like the way they're stuck like rabbits in the headlights of progress.

I don't mind them doing that, just give us back the keys to the economy first and we'll go start up something else.

Because that's where the future lies. Jumping on the bus, James?

[Neil Robinson]

Ahh! Sorry James, don't know why that post went in three times. Feel free to remove the repeats. No idea what happened!

[FredericBaud]

Interesting to see that many people outside of banks say they should speak with them through Twitter and that bank innovators inside the banks have a hard time proving economic value to their hierarchy.

Just like Robert Solow said once that Information Technology shows up everywhere but in the statistics, we can say that Twitter shows up all over the place lately but in the banks' economic models.

In front of dissonance, if value does not show up in a model, it's always good to investigate if there is not something wrong with the model. Then if the model can not be fixed to incorporate the reality, maybe it's safer to just go back to the reality and do something without a model.

[Eddie]

Although I agree with your original post in full, I would also agree with neil Robinson in that the economics and financial sense come in from the "deepening customer relations" improving service and brand name and awareness etc etc.. not from monetizing your twitter feed.

That said, again, I agree with your original post. The two examples Neil posted- the BofA one is just "another channel" to get feedback:

"One reader had tried contacting Bank of America a dozen different times and three different ways, but one tweet to BofA_help got him in touch with executive customer service."

...BofA should instead look into why the other "different ways" didn't work for getting their customers a solution.... and I could easily see the converse of this situtation, in fact, the other link Neil provided illustrates this perfectly...

"One hour and 17 minutes after it went live I was contacted by someone offering help to solve my problem."

That's a single person monitoring the feed? How would that be better for banking customers than the three other channels already implemented? The subsequent line in the article Neil linked to showed that it was from the "head of the customer service team," but how are banking customers going to react to random people reaching out and saying they are a person of authority?

I think both of these situations linked the previous comment by Neil are really "coincidental" cases of being in the right place at the right time, and certainly aren't scalable to any major FIs customer base.

...which leads me to my ultimate point- that they are succeeding because they are first movers to the twitter craze. They can afford to have a customer service rep answer a question to two and grab a headline or two for innovating. And there's certainly nothing wrong with that, but I don't think it will continue to grab headlines and "be important for banks." If anything it will be a very minor alternative channel that will ultimately be dropped in favor of more "official" means.

[Eddie]

After looking over the BofA_help feeds, I notice they just* get in touch with people and then contact them directly, presumably via phone or email. There's very little problem solving going on there.

...this reinforces in my mind the scalability issue.

* I say "just," but this is really a nice touch. They are reaping the rewards of innovation and customer service...the birds in park LOVE the lady who passes out the bread crumbs... but that bread is only there for the first wave of birds.

[Eddie]

...and as a final note, the BofA article that Neil linked to, I think the comments are pretty insightful- particularly the responses to the question:
"Is there some reason that these internet / social networking based customer service people are actually very responsive while the vast majority of the rest of the company's customer service people are not? I'd really like to know why Bank of America can't implement helpful customer service people across the board when this twitter group proves that it's actually possible to be helpful."

Although I admit this somewhat contradicts my earlier statements, I agree that banks should be monitoring their "online" personas and twitter is an easy way to take a good hit in PR when a vocal user makes a complaint to his/her followers, so it's helpful to have someone show they are interested.

...but I still feel it's not a very scalable solution. Banks cant keep on refunding these overdraft fees as this channel continues to grow, and without that, it's really a one trick pony who's act gets tired after awhile:

"Bank of America sucks! they did X...."

"Oh wow, that does suck. Maybe I can help...have you tried contacting Y?...."

Which is really just another channel, no different. The more people come to this channel, the less "Y" (above) is going to be able to service them effectively enough to garner the great headlines

[Aden Davies]

Are we all to focused on the tool i.e. Twitter? The medium of SMS is a proven hit. Microblogging takes this to the next level and introduces a public posting, discovery and conversation angle. Yes using these services externally may not scale and that rediscovered personal touch may dry up but at least some banks are trying something new and isn't that what innovation is all about trying something new? I am a fan of microblogging, I think it will continue to grow and its use within an organisation could potentially be greater than outside. I am off to think of some use cases...how about a bank tweeting when it has a service fault?

[Chris Skinner]

Fair dues to you James for this blog entry asking if right or wrong.

My key observation is not so much about Twitter, Second Life and Facebook as internet crazes, which they are.

Crazes come and go, e.g. Facebook is just Friends Reunited / Friendster revinvented; Twitter is just SMS text messaging reinvented; and Second Life is just MMORPG (gaming) reinvented for commerce.

The fact is that all of these have a sound base for future commerce however, which is social communications providing an ability through new channels to create commercial opportunities.

This is why I am so adamant about this stuff - not the transient nature of a craze for Twitter, Facebook or Second Life - but the long-term nature of what these things can possibly do for us and our business / planet.

Sorry if you feel under attack for casting doubts, but I don't think people see the long-term opportunities here and, as I was one of those who thought Amazon and eBay were transients in 1997, to miss such opportunities is how businesses die.

Chris

[Neil Robinson]

...and maybe Twitter is RSS 2.0, Chris!

[Prashanth Bhat]

I agree with your point of view on Social Media and networking. I do not think today there is a business and economic sense in social media investment. What exactly is the value of feedback of a segment of customers on a banks product and services. I dont think early adoptors of a technology are equally great pioneers of the same in getting economic benefits out of them.

[Neil Robinson]

Be afraid, James, be very afraid if Prashant's view is that of your peers:

"what exactly is the value of feedback of a segment of customers on a bank's product or services?"

It's worse than I thought, and I thought it was bad anyway...

[Neil Robinson]

Oh, by the way...

Got anything like this, James?

http://network.hsbc.co.uk/index.jspa

[Eddie]

Neil (re your last post) and Aden,

I don't think if fair to cast "non-innovative" aspersions towards the author, this post is specifically pointed at "the tool" of twitter.

I personally think its rather close minded to equate innovation with twitter. It's a tool- innovation comes from how you use it. In this case, yes, the BofA is innovating, but (beating a dead horse) ultimately how long can they scale this (refunding fees)? Eventually, it becomes a stunt.

...and I think Neil posting a link to a small business community site is really a poor attempt at a "gotcha" type comment trying to call in to question the author's "innovation" credentials, which is uncalled for. My thoughts are furthered by him lumping some random commenter (Prashanth) like myself in with the author's "peers." Why not ask the author if he agrees with Prashanth's comments before assigning a "worse than I thought" label to bankers?

Yes, small biz community sites are neat and worthy of discussion, but they have nothing to do with Twitter... the focus of this article.

[Neil Robinson]

Eddie,

Much as I'm sure James appreciates your efforts, He's proved he's more than sharp enough to defend himself both eloquently and highly effectively!

Who says James is focussing on Twitter exclusively?

Doesn't James specifically include all "social media" in his case argument?

James made the point that there was no case for social media in banking. I said disagreed and illustrated my point with what HSBC had done. Don't they also have First Direct (part of HSBC) with Little Black Book?

Do you know how big HSBC's network is, or is that another assumption, who talked about scale anyway?

The HSBC inclusion was valid because it is open to everyone, even those who may bank elsewhere.

Sure, BoA could be playing by refunding a couple of fees. But how much would they earn from an account in a year, how much would they lose if the account closed. How much if other followed suit, after reading that tweet. Done the math?

Again, you seem to pick up on something I never said when I answered Prashanth. I said IF his view reflected that of James's peers he should be afraid. IF he wasn't he has no worries.

But worryingly, I see no one disassociating themselves from his anti-social (sic) comments, do you?

PS: sorry, I can't find where I even mentioned the word "innovation". Can you point it out?

[Eddie]

Innovation is a quote from the author, not you, and reference to his quote:
"Many are horrified that an innovation person can possibly not 'get' twitter "
(...I was overly liberal using my quotes, sorry)

Who says James is focusing on Twitter exclusively?...I just assumed from the title of this and the last post (which I treat as one since this is a follow-up): "For banks, Twitter is a stunt" and "Revenge of the Twitterati" that we were talking about Twitter exclusively in the context of these two posts. I think I might disagree with James on other social media/banking endeavors, but when he posts about them, I'll comment there.

Who talked about scale? James did in his orginal post on twitter: "This brings me back to my comments on the economics of Twitter, and previous comments on the economics of social media in general for banks. As I said before, content is interesting to readers when it is relevant to them. Creating relevance is a matter of being personal, of knowing unique things that are interesting to a small number of people. Creating that kind of content at scale is expensive. You can imagine rooms and rooms of people – a Twitter Centre, if you like, of people who only do this kind of work. "

...which is my point in all these posts by myself as well. Creating relevance is a matter of being personal.

It is a math game to figure out where the benefits of deepening customer relations and getting good PR/public will outweigh the refunded fees. Which- is really what I meant by the very first things I mentioned at the top of this thread (the part where I said I agree with Neil...). But surely you recognize the scale problem right? You can't just casually cast it off.

And you *are* creating a poorly linked association with Prashanth's comments and Jame's view. You first parse words by saying "if," but then immediately go back to creating relationship. I could level all sorts of ridiculous accusations at him- does he have to confirm or deny each one?

[Brennan]

Keep in mind that most people don't "get" twitter. This is understandable since it is basically millions of people yelling into a void. The "true" value of twitter is still developing and whether or not it is something that banks should pursue will come out in time whether its all about microblogging, the real-time information search or something entirely different.

It is surprising that considering your role in innovation, you mention that if there was a business case for social media, then we would all be doing it. Doesn't most innovation start of as not having a clear-cut business case - otherwise, it wouldn't be innovation?

[Prashanth Bhat]

Isnt banking a simple business as Warren Buffet says? Its the way we complicate things by investing in things we dont fully understand and value that gets us in the muck we are in. My argument is only that banks are conservative and hence can have the luxury of time when deciding to invest in something that possible brings value.

[Aden Davies]

Eddie,

I certainly was not having a go at the author for being non-innovative or in any other way. The fact James is employed by a major UK bank and is allowed to write a blog is very innovative indeed. The fact he also writes a great blog is a bonus. Twitter and microblogging are an emotive subject and products that have passionate followers and detractors are evidently important (Maybe Twitter should advertise marmite?) I think these services point to a wider change in the way humans communicate, collaborate etc. so I am all for financial institutions trying new things in the big bad world of social media.

[Tom Groenfeldt]

Gartner has done an intelligent report on social networking which points up some of the ways it could impact banking...a couple of the more interesting are in charitable giving and social values, but it could extend to P2P banking -- more on it on my blog at www.techandfinance.com

[heiki]

James, as you know, I enjoy reading your blog very much. Thanks.

Aren't we done with the business case debate yet? Of course not, but how many business cases do we need to look back at before we put less emphasis on that drill? If tempting numbers, with quick wins as a side order, are all decision makers can handle then we're stuck in continuous improvement and lean process thinking.

Whether Twitter is good, bad or the future channel choice, I don't know either. What I do believe, though, is that you need to work a little on the so-called learning curve, you need to do more than one thing, you need to interact with customers in more than one channel and so forth.

Since we won't be receiving any money for what management cannot and will not see, a little experimentation with Twitter sounds good enough to kill time with until the heavy investment business case era is over. Rather, start small and grow big, as you nicely phrase it.

:heiki