Social Media Redefining Retail Financial Services Web Experience

Corporate Insight has released a new report detailing the evolution of social media - such as blogs, forums and online communities - among major financial services companies, providing a clear understanding of market trends and leading tactics. The research reveals that social media is beginning to reshape the way financial services firms communicate with their customers, as well as how investors interact with each other.

A market research and consulting firm, Corporate Insight conducted a comprehensive analysis of social media features used by nearly 70 financial institutions, including brokerage firms, banks and credit card issuers, annuity issuers and mutual fund companies.

The report, ‘Social Media: Trends and Tactics in the Financial Services Industry,’ indicates that 15 percent of the firms that Corporate Insight researched have added significant social media features to their online platforms in 2008, 70 percent of which have developed full-fledged online communities.

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“Two years ago, very few financial services companies offered social media features,” said James McGovern, vice president of Consulting Services at Corporate Insight. “That was before social media really exploded in popularity. Now, sites like Facebook and YouTube are some of the most recognised destinations on the Web. Financial institutions are beginning to understand that customers want the ability to share knowledge with fellow customers, especially given the challenges posed by today’s investing landscape.”

Overall, the report found that online communities are rapidly growing in popularity but companies are using them for a wide variety of reasons, from collecting customer feedback (Schwab) to educating and marketing themselves to clients and prospective customers (American Express). In addition, many self-directed brokerage firms have embraced social media, using online communities to engage clients and provide a platform for investors to communicate with each other. It is also noteworthy that none of the full-service brokerage firms Corporate Insight monitors have entered the social media fray to date.

Corporate Insight’s findings suggest that while financial services companies have embraced social media and are beginning to incorporate it into their business model, most firms are still experimenting with best practices. “We’re at the beginning of a major new development that will have a significant impact on the way firms serve Generations X, Y and beyond,” said McGovern.