This was about Social CRM and its application to Retail Banking in Germany.

1. Social CRM in German Retail Banks
Goethe Business School
Global Consulting Project 2010
BearingPoint - Frankfurt
September 6, 2010
Shridhar Dharne| Vijay Gaikwad| Gaurav Sharma| Venkat Srinivasan| Laura Vantellini | Martin Wellnitz

2. Agenda
2
German Retail Banks – Post Crisis
What is Social Media
Power of the Community – Examples of Social Media in Corporations
Social CRM for a German Bank
Implementation Steps
Q & A

3. 3
Financial Crisis led to loss of trust
General opinion that banks make profit at customers’
expense
Banks are trying to rebuild their image after the crisis
German Retail Banks – Post crisis
“Most banks make money by keeping their customers c
BankSimple
Changes in Customer Relationship
Higher Customer Advocacy leads to more repeat business
1 2 3 4
Need to maintain customer loyalty
Build fundamentals for cross selling
Regain customer trust
No hard-selling
Urgent Need for Customer Advocacy
5

4. 4
German Retail Banks – Post crisis
“Banking is necessary, banks are not” – Bill Gates,
1994 BankSimple was born out of our frustration with
banking. We were fedup with our bank: the
fees, the constantly changing rules, the crappy
customer service.”. –-BankSimple website.
Changes in market conditions
 Fierce Competition
 Competition to get new customers
 Competition to retain existing customers
Reasons for changes in market
conditions
 Difficult business landscape
 Lack of differentiation
 New ‘non traditional’ players demand
a piece of the pie
 P2P Banks
 Social Banks
 Direct Banks
1 2 3 4
Focus on differentiation strategy & build stronger relationship with existing customers
5

5. 5
Internet usage for financial products
in Germany
Top 4 Retail Banking products
researched online by Germans
1
2
Savings/ Deposit Accounts
Stocks and Shares
3 Current Accounts
4 Personal Loans
Top 4 Retail Banking products
bought online by Germans
1
2
Savings/ Deposit Accounts
Stocks and Shares
3 Credit Cards
4 Current Accounts
25% of consumers researched at least 1
financial product online
11% bought at least 1 product
1 2 3 4 5

6. Agenda
6
•
German Retail Banks – Post Crisis
•
What is Social Media
•
Power of the Community – Examples of Social Media in Corporations
•
Social CRM for a German Bank
•
Implementation Steps
•
Q & A

7. 7
 Online communities are interactive group of
people joined together by common interests or
friendship
 Characteristics include:
Reach
Accessibility
Usability
Recency
Social Communities
“A group of Internet-based applications that build on the ideological and technological foundations
of Web 2.0, and that allow the creation and exchange of user-generated content. It transforms and
broadcasts media monologues into social media dialogues” – Andreas Kaplan
Social Communities
Family
Colleagues
Interest-
groups
Friends
Blogs
Social
Networks
Virtual World focused:
“Online Social Communities”
Real World focused:
Forums
Customer
Twitter
ONLINESOCIAL
COMMUNITY
1 2 3 4
Banks
5

8. 8
German Banks don’t like Social Media
German retail banks are very traditional, conservative and risk averse.
Social media are unconventional, non-traditional, and carry some risks with them.
Skepticism
towards user
generated
content
 Less structured
 Less formal
 No single point of distribution
No measurable
ROI
 There is no simple way of measuring
ROI of any social media initiatives.
 Social Media initiatives cannot be
‘accounted’ for properly.
Power of
communities
 News travels very fast using Social
Media
 Bad news travels faster.
Legal Issues
 Bank’s communication to the public
has legal implications
 Legal departments prefer to monitor
fewer and less complicated channels
of communication
Reasons why German Banks are not interested
in Social media…
Reasons why German Banks are not interested
in Social media…
1
Source: http://managementchords.blogspot.com
Half duplex
Communication
 Banks prefer half duplex
communication not full duplex.
They like to send out messages
but not receive feedback
simultaneously
Differentiation
 There is no way of differentiating
customers from non-customers.
No Cookbook
recipe
No Early
Adoption
 German banks are usually not early
adopters of new technologies.
 There are no established ‘Best
Practices’ and there is no cookbook
for social media.
1 2 3 4 5

9. Agenda
9
•
German Retail Banks – Post Crisis
•
What is Social Media
•
Power of the Community – Examples of Social Media Usage
•
Social CRM for a German Bank
•
Implementation Steps
•
Q & A

10. 10
Social Media in Action
Some examples of social media use
 Hornbach
 ING Direct USA
 United Airlines “United Breaks Guitars”
 Bank of America
Negative Examples Positive Examples
1 2 3 4 5

11. 11
Negative Example: United Airlines
 “United Breaks Guitars”:
 The power of the groundswell
 10% drop in share price within 4 days
from the day the video was released.
 Twitter used as product promotion tool,
rather than as a service portal
 Facebook page not carefully taken care of
 Social media: YES
 Social media strategy: NO
Impact
1 2 3 4
Social media initiatives
5

12. 12
Negative Example: Bank of America
 Facebook page (4,400 followers) is
completely empty and not maintained
 There is a Facebook page called “Bank of
America SUCKS” with almost 3,000 followers
and a page called “I hate Bank of America”
with 1,000 followers
 No reaction from Bank of America’s side
 Strong focus on Twitter: they have a portal
on it (customer service and career
information) which was opened early 2009
 No holistic social media strategy
Bank of America
1 2 3 4
Social Media Initiatives
5

13. 13
Positive Example: Hornbach
Numerous examples exist, on how companies managed to profit from the dynamics of
existing social communities.
 Strong Twitter and Facebook presence
where they continuously build and support an
engaged community
 Strategic use of social media and all channels
to support the “Make It Yourself” community
 Social media (Twitter, YouTube, Facebook
and own page) and its community used for
viral marketing actions like “Das Grenzenlose
Haus”
Integrated Social Media Strategy
1 2 3 4 5

14. 14
Positive Example: ING Direct USA
 Different business model: direct online bank
– no branches, just “banking cafés”
 All their customers already online
 Easier online interaction and use of
platform
 “wethesavers.com”:
 “The official blog of savers”
 Creation of a community of savers with
a 10 point “Declaration of Financial
Independence”
 Funny polls (funny but useful for sure)
 20,500 followers on Facebook:
 Useful information
 Links to interesting money-related
information
 Strong community feeling
 Mostly positive feedback
Successful Social Media Implementation
1 2 3 4 5

15. Agenda
15
•
German Retail Banks – Post Crisis
•
What is Social Media
•
Power of the Community – Examples of Social Media in Corporations
•
Social CRM for a German Bank
•
Implementation Steps
•
Q & A

16. 16
German Banking 2.0
(Competitive landscape & innovations)
Whofinance.de: an advisory
website where bank advisors
create their own profile and offer
advice. Customers rate these
advisors based on their advice
quality.
 Consultants have to pay
a fee to the website for
commercial advice
 The site also sells leads
 They have a “Best Bank
Contest” based on bank
ratings and the results are
published in the
“Bildzeitung”
Quirn Bank: Uses ratings
as a way to establish and
show greater customer
confidence, increase
service levels and get
more customers.
Socially responsible and
sustainable banks.
Kd-bank.de
ethikbank.de
umweltbank.de
pax-bank.de
bkc-paderborn.de
ligabank.de
noabank.de
triodes.de
Social bank Advisory Services
Source: BearingPoint Internet Research
Fidor Bank
 They are social media savvy
and so are their customers
 Their motto is “What would
google do”
 Social media is in their vision,
strategy, and culture
 They co-create products with
their customers
 They use all social media
channels and use the ‘word of
mouth’ strategy
Auxmoney.de
Smava.de
P2P Banks
1 2 3 4 5

17. 17
Germany: Deutsche Bank
1 2 3 4
Present in several
social media
channels but no
social media
strategy to engage
customers
5

18. 18
How can a German Retail Bank benefit?
 A chance for banks to add to their brand
 Be seen as an innovative company
 A chance for banks to add to their customer
centricity drive
 Provide support and fast and easy resolution
to customer queries
 Design better products
 Reduction in customer acquisition and
retention costs
 Drive deposit generation
 Opportunities for cross selling
 Improve MROI
 Reduce churn rate
 Increase contribution margin per customer
 Social media is a trend that every bank will
have to adopt.
 Generation Y and the generation of digital
natives is becoming an important market
segment
 Banks will need to enhance their existing
customer advocacy drive
 Customers will demand faster solutions to
their banking issues and seek answers
through the social channels
 The way banks traditionally communicate
with their customers will have to change,
banks will switch from half-duplex mode to a
full-duplex mode.
Non-Financial Impact.Future trends in German retail banking
1 2 3 4
Social media can impact sales, maybe not directly but this is a good chance to influence the
decision of online financial product researchers
Financial Impact
5

19. 19
Opportunities in German Retail Banking
 The communities already exist, they need to
take the community online and to their social
media assets
 Organize communities around the local
events sponsored by these banks (sports,
cultural events, festivals)
 Build special interest local communities by
utilizing their local knowledge. For example:
community of entrepreneurs, students
wanting to study abroad, home buyers
 They can be called social banks because they are
involved with the community.
 These Banks are deeply rooted in the regional
economic life
 They have excellent knowledge about the local
market and personal contact with the people in
the region and that is their main business
strength
 They support the local cultural and social
activities in their respective regions
How can they leverage their strengths?Characteristics
Huge opportunities: Especially for Volksbanken, Raiffeisenbanken, Sparkassen
1 2 3 4 5

20. Agenda
20
•
German Retail Banks – Post Crisis
•
What is Social Media
•
Power of the Community – Examples of Social Media in Corporations
•
Social CRM for a German Bank
•
Implementation Steps
•
Q & A

21. 21
Social Media Strategy for:
a German Retail Bank
1 2 3 4
 Establish a baseline before you begin
 Create a time line for creative activities
 Pick a small number of social media goals for the
coming year and start engaging
Pre-cursors of a strategy Strategy
5

22. 22
Listen
 Who is talking
 What are they talking about
 Needs & Complaints
 Customer perceptions
 Engagement platforms & channels
 Facebook/Twitter/Blogs
 Engagement spread, level & diversity
 # Involved customers
 Identify influencers
Identify
Reach of one influencer
62
Tools
1 2 3 4 5

23. 23
Engage
Full Duplex dialogue
 Join the conversation discussions (e.g. blogs, Facebook, forums) and
enhance the conversation
 Build your own community on various social networking websites
 Facebook/Twitter/Blogger/Youtube
 External community driven websites focusing on common
interests
 Drive traffic to your social media assets using various sources
 Don’t be afraid of negative feedback. Responding appropriately to
negative feedback shows that you care
 Have a “call to action” in your communication
 Invite the community to contribute or interact (e.g. ING Direct)
 Have engaging and creative posts/communications
 Have a URL to your other social media assets of your website
in your communication
 Interlink the social media assets for a seamless user experience
Radian Engagement console
1 2 3 4 5

24. 24
Support
Support
 Get employees to contribute to the channels, on which people are
talking
 Offer free advice about common questions and concerns in blogs,
over Twitter or Facebook
 Have some dedicated staff offers customer support over “verified”
Twitter accounts
1 2 3 4 5

25. 25
Measure (What is the ROI of a smile and a warm
handshake?)
 Dollars Earned
 Costs
 Cashflows
 Risk
 NPV
What the management
wants to measure
 Customer satisfaction
 # of followers
 Community Sentiment
 Reduction in Call/email
volume
 Customer loyalty
 Site traffic
 # of comments
 Community Engagement
 Response speed
 Post/ comment ratios
Available matrices
 Customer satisfaction
 # of followers
 Community Sentiment
 Reduction in Call/email
volume. Savings
 Reduction in acquisition
cost
 Increase in customer
lifetime value due to
reduction in acquisition
and retention cost
 Customer loyalty
What banks should
measure
There is no straight forward way of calculating the monetary value of a social media initiative.
There are some recommended methods but each bank will have to devise its own way of
calculating the ROI from social media initiatives based on the social media initiative goals.
 Net present Value (NPV) of social media initiatives = (Cash inflows – Cash outflows)/Time
 Cash outflows= Manpower, IT, Opportunity cost, Consulting fee, Miscellaneous
 Cash inflow = Reduction in acquisition costs, Reduction in support cost
1 2 3 4 5

26. 26
Innovate
Innovate
 Gain customer insight through the listening process
 Identify their needs
 Find creative ways to get feedback from customers
 Opinion polls
 Blog comments
 Facebook Analytics
 Website Analytics
 Design new products and services based on the insights gained
 Improve service levels based on complaints
Provides a channel for community
members to contribute new ideas
through crowdsourcing and collective
intelligence
1 2 3 4 5

27. 27
Q & A

28. 28
How are some banks using Social Media as a
CRM tool?
28

29. 29

30. 30

31. 31
How are German Banks using Social Media
as a CRM tool?

32. 32

33. 33

34. 34

35. 35

36. 36

37. 37
Facebook is the fastest growing medium with over 20 banks on Facebook
 Deutsche bank is the most active with more thatn 3000 followers
 The next in line is GLS bank with 400 followers
 Cortal Consors has a facebook page and a facebook app.
Youtube: Some banks are on youtube but it is mostly used for marketing.
 Volksbank Raiffeisenbanken had a contest channel on youtube where they showed how human
needs create the need for financial services. They got 300,000 visitors per day till mid Jan.
 Fidor bank founder posts videos of himself and his vision for banking and the bank.
German Social media platforms: studi.vz ; schueler.vz ; werkennetwern.de ;
lokallisten.de are there but they are not as mature as Facebook and thus are only used
for advertising and not for dialogue
None of the banks have integrated their social media channels with their traditional
marketing and support channels. Social media channels run alongside with their
classical marketing and sales campaigns.
Customers going to the main bank website don’t see the social media activities. No
german banks have their own newsrooms