Niche communities and the future of social media in financial services

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Young & Free AlbertaA few weeks ago we held a senior executive round table event in order to debate the future role of social media in financial services.

One of the key topics that we discussed was the rise of niche online communities and how this will impact financial services brands in the future.

The current situation

Over the last few years there has been a rise in financial services communities that are on the long tail. In other words, there has been an increase in online communities that focus on a very specific audience rather than appealing to a wide range of clients and consumers.

Several banks have chosen to focus their social media strategy on one section of their customer target base. Royal Bank of Scotland, one of our clients, has developed a niche online community called Keep Britain Biking to appeal to  motorcyclists in order to encourage customer interaction with their Devitt insurance brand. Barclays bank is using a niche community called 100 voices to appeal directly to students with the promise of a community that contains information “written by students, for students”.

Young & Free Alberta, an online community powered by Servus Credit Union,  also utilises the “youth” niche community idea.The site aims to give 17 to 25 year olds  a head start with their finances by providing them with useful, relevant information about their financial requirements.

Not only is the site aimed at a specific demographic; it  is also aimed at  a specific region - Alberta, Canada. And with  ‘Young and Free’ initiatives in Alabama, Mississippi, Ontario, South Carolina, St Louis, Tennessee and Texas, all powered by local banks, these niche communities clearly aim to capture people at a time when they are selecting their first bank account. By building up a relationship with a young target audience, the Young and Free communities are engaging with customers in the early stages of their financial planning with the hope of then building up a life-long commitment to their bank or institution.

The Young and Free Alberta community uses blogs, forums, YouTube, Twitter and Facebook to encourage discussion. It also contains lots of relevant information and activities – like inviting people to an open-air movie -to attract its key audience.

The site also contains an “ask the experts” section to answer the financial concerns and queries of their target market in a timely and appropriate manner. The community manager has videos, blogs, comments and a very visible presence on the site, perhaps as way of further positioning the bank as a voice of authority.

What does the future hold?

Considering the rise of the niche community in financial services, indications for the future direction of social media in this area could include:

  • An increase in targeting specific groups based on demographic. Social media could be used to uncover and engage more with micro communities, based on key demographic segmentation, that are enthusiastic, passionate and keen to become customers.
  • An increase in targeting specific regions or areas. Social media could be used more to target regional rather than global areas. Local branches of banks and other financial services institutions could use niche communities, based on location, to attract new customers by appealing to people near to, or in, their own physical space or location.
  • A decrease in corporate communities. As communities become less “corporate” in feel the will move away from using the direct branding, look and feel of the institution they represent. Instead the branding, tone and style of the community will be dictated by the needs and requirements of the people they wish to target rather than the bank or institution itself.
  • Niche communities will become more social. They will utilise more user generated content and will form the hub of all social activity, from blogging, to Facebook, to Foursquare, as well as whatever other new tools arrive on the social media landscape. Niche communities will form the permanent base for social media activity - a space which can grow and develop in line with both market changes and new developments in social media technologies.

Our next blog post will look at how social media is helping to develop customer driven markets and what this means for the future role of social media in financial services.

Accenture’s report: High performance in insurance with social media.

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Image courtesy of shutterstock

Image courtesy of shutterstock

As I have a keen interest in social media for financial services I’ve been looking at the Accenture’s paper on “Achieving high performance in insurance through social media”.

It’s a great statement of intent by one of the major international consultancies, and another example that social media is now being embraced by more traditional corporate and business markets.

Accenture’s paper examines the trends in social media and highlights that insurers seeking high performance  should consider using social media within their customer, channel and workforce strategies. The paper also describes an approach for insurers to utilise social media to input into strategies for marketing, sales, services and recruitment.

With regards to inbound marketing, the useful statistic cited is that marketers who incorporate social media into their inbound marketing mix tend to spend 60% less per lead on average compared to traditional marketing methods.

But why should insurers bother to take note of social media? Three main reasons are cited in the paper:

  1. Social media helps customers pick through the high volume of information available online because they trust “people like me”, ie, other customers, to give honest, accurate information.
  2. Social consumers use social networks as their core navigation and search tool rather than search engines or portals.
  3. Social media is being used more and more by businesses as part of their overall strategy.

As the paper points out, “social media increasingly determines who customers trust” and Accenture highlight the  importance of establishing “Listening Posts”, or what we term social media monitoring,  so that insurers are aware of the online conversations that are happening around them. The paper also discusses the best “social media management framework”, or  social media strategy, for success, which consists of process, people, policies, and metrics.

It’s a considered and articulate paper that is probably targeted at large insurance businesses that need external help to establish their social media enterprise framework. It is notably absent of case studies, and while there are some interesting statistics in this well-researched paper, I suspect that key decision-makers in this industry will continue to look for more detailed ROI data to justify their budget spend.

I also feel the paper doesn’t really address the “hub-and-spoke” social media model as a means of being proactive in social media (i.e. a central social ‘hub’ that is part of the insurers website while also engaging with the social ‘spokes’,  like Twitter forums and blogs, where the other relevant influential conversations are taking place) .

What is interesting is that Accenture’s paper is less bullish in addressing the many positive benefits of a proactive social media programme, and that is probably as it should be given that it reflects the risk-averse culture of a cautious industry that is coming to terms with open customer dialog.