Why Banks Will Require a More Sophisticated Practice of Social Analytics

"A good analytical tool first runs a sensing phase where relevant material from the social web is identified, an extraction phase in which data is fetched from various Social Media channels and stored in a central repository"

Social Analytics in 2014

- Financial institutions will require tools to analyze social media data

- Banks need social media center of excellence for enduring engagement

- Tracking sentiments of customers will be overriding for banks

- Innovative ideas to improve customer experience will be the need of hour

The banking environment has undergone a sea change after recent regulatory reforms introduced by legislations such as FATCA, Dodd-Frank, and Basel III. These legislations require banks to support business decisions with actionable insights gained from data discovery and analysis. To meet this requirement, banks need new and improved ways to analyze social data. Additionally, The CARD Act and Durbin Amendment require banks to understand the behavioral economics of each customer so that the profitable customers can be attracted with more personalized offerings. Tracking such specific banking behaviors is possible only through focused and segmented customer analytics. Making the scene more complicated is the challenge of improving operational efficiency by meeting the right prospect at the right time and at the right place which again canbe best achieved with targeted social media analytics.

To take on these challenges banks first need to re-evaluate their social media capabilities, better understand their social media customers, and actively develop customer profiles for segmentation. Based on these they need to frame a social media strategy with well-defined metrics.

The major challenges faced by banks in implementing an effective social strategy include identifying and integrating the right analytics tools with legacy CRM systems, overcoming shortcomings in organizational structures and deciding on the right analytics to track i.e. volume, buzz or "sentiment."

‘Responsive Operations' arrest customer churn

When it comes to choosing social media analytics tools, enterprises should not look beyond simplicity and effectiveness. Understanding key metrics at the basic level matter more than an advanced level of sophistication, because a basic level allows better trend-spotting. A large State bank in the US, for instance has leveraged the basic level understanding to gauge customer reactions to a recent update to the bank's checking products. When a leading Canadian bank first launched its checking product, it offered 20 checks in the first check booklet. After customer disapproval poured in through social media, it changed the product to provide 50 checks and arrest the discontent. ‘Responsive Operations' can not only arrest customer churn but also increase brand value, helping new customer acquisition. Though financial institutions may start with a single tool they may eventually require a set of tools to analyze social media data. The Canadian bank, for instance, started with one tool to analyze social media activity, but today leverages several platforms, to assess social media interactions.

Analytical tool enhance personalized services

A good analytical tool first runs a sensing phase where relevant material from the vast social web is identified, an extraction phase in which data is fetched from various Social Media channels and stored in a central, usually a Hadoop based, repository. Data refinement and enrichment is the next phase. Finally, an extract is designed specifically for meeting the analytics needs of the client. Once setup, the extraction, transformation and loading phases run continuously (generally realtime), giving enterprises access to business insights from social media data. Single View of Customer (Customer Master) is enhanced upon by Social Segments and individual preferences for campaign launches and personalized services for business growth and operational efficiency & effectiveness.

Implementation of a sound strategy is largely dependent on a strong organizational structure. Effective organizational structures involve creating a social media center of excellence to ensure enduring social media engagement with dedicated resources and controls. The setup has to actively involve the participation of the senior leadership.

Tracking count of followers, level of engagement help gauze performance

The impact of social media strategy can best be understood by tracking analytics. Banks need to track social media conversations for brand mentions, tag-line mentions, and discussions to determine the kind of impact of the marketing activities. This can be done by tracking volumes or count of followers, measuring level of engagement and mining sentiments. Understanding these metrics and identifying one which is in line with the bank's goal is key to analyzing social media data. One of the largest US banks, for instance, measures it in terms of Facebook "likes", but another Canadian large bank scours the social media platform for negative comments. However, social experts value "engagement" more than volume because engagement helps to spread a positive, or negative, brand perception. Engagement is all about liking all that is being put up there. Measuring sentiment - whether or not people are saying positive or negative things about the brand - however, is the trickiest of the three. A host of social media analytics products are available to measure buzz and sentiment and banks need to choose a tool which exactly meets its specific needs.



Analytics help banks assess influence of  its communities

Social analytics enables banks to listen to conversations in different channels of social media, identify key trends and sentiments, assess the influence of various community members, and distil all this unstructured information into actionable insight such as customer sentiments, emerging trends, popular value-added services. Monitoring competition and leveraging negativity related to them is another social strategy that works in a fairly subtle manner. Banks can identify more vocal customers and use them as influencers on other community members. But, banking on social analytics is not an end in itself. Banks need to constantly evaluate the effectiveness of their analytic tools, benchmark the analytics procedure against latest techniques and assess how robust their strategy is in keeping with evolving needs. Participatory Decisioning approaches can help banks launch better performing new products. Individual interest based customized offers lead to faster and higher customer lifetime value. Social Media is a powerful vehicle to listen what a customer wants to say in an unprovoked manner. Willingness to listen and act can be enabled by Social Analytics Strategy and Execution Techniques by leveraging technology solutions and strategy-aligned business processes. Ensuring these will help banks create more innovative ideas to drive competitiveness and improve customer experience.