Capco Blog

Harnessing the power of social media to become more customer centric

There has been a couple of blogs on social media and innovation penned recently in the Capco Blog that are well equipped to discuss these topics. Reacting to some of the realities in the banking space vis-à-vis social media, here’s my (inflation-adjusted) 0.021 cents.

I’ll approach this theme from the banks’ angle. Not so much the adoption of enabling technologies, or the development of products and services that aligns banks with this new paradigm, but rather about the efforts (or lack thereof) that banks are making to get a handle on this customer-centric emerging phenomena. Or, more precisely, their ineffectiveness on the matter -- and the potential impact that it could have.

At its core, banking is rather simple: financial institutions provide [mostly] commoditized products and services to the min, the max and the average Joe. Today’s technology contributes to narrowing the gaps between offers and services from mega banks versus those from “mom-and-pop” institutions. In some cases, the balance even swings the way of “David”. The main differentiator is who can provide those services cheaper and more efficiently. And although I’m an operations guy at heart (and industrial engineer by profession) I’ll resist the urge to carry this blog in that direction. Another day, perhaps…

The main variable in this equation is the average Joe/Jane or, to be gender neutral, simply “J.”

The J’s (or, rather, their “relation$$hip” with the bank) is what ultimately produces the revenue. Not the products. Not the services. And clearly not the associated fees. Yes, yes, some of it comes from those products and services, sure… but that’s been dwindling in recent years. And will continue to do so with the proliferation of new channels, alternate service providers, etcetera… Unfortunately, the vast majority of banks are still stuck in the pre-2008 financial crisis mentality. They lost a significant fee-related revenue stream and are working to replace it with enhanced (but similar) products and services. That’s a reactionary approach and I have witnessed very little innovation in that space, despite gobs of money being thrown at “strategies” from some of the bigger players. And if that were not enough, enter the increasingly present social media that has bank executives scratching their heads in collective confusion.

Besides depositing or borrowing money, the J’s provide financial institutions with a lot of relevant and meaningful information. Very relevant and meaningful information, if one pays attention. At the mom-and-pop level, that information is easier to digest, classify and act upon. That’s why community banks tend to score much higher on customer satisfaction (and implicitly – not accidentally – gain more trust, which translates into a better relationship and, ultimately, more revenue. Voilà!). The problem with the bigger banks is that although they may collect the same amount of information from the J’s (information that exponentially increases with social media and multichannel touch points), they seem to struggle to make sense of it and/or use it to their benefit (or the benefit of customers).

Increasingly, I come across papers and research that share my view on the customer-centric approach and what is being dubbed “next gen” banking. When it comes to “next gen,” I think we should burn the old manuals, forget everything that worked in the past, and build the future of banking around the customers. Radical, I know, but that’s what innovation is.

Recently I was researching some data for North American banks and ran across a site that ranked customer service feedback. On average, banks rank in the “disappointing” to “terrible” range1. The smaller ones tend to fare slightly better, while the mega banks are at the bottom of the pack. I’d like to think that’s not because they don’t care about their customers; they just don’t collect the right information and don’t have the right data available (at the right touch point) to provide that superior level of service. Unfortunately, data management, business intelligence, analytics and the like are not at the top of the list for most executives. Banks are still built around lines of business, products and services, and everything else is considered “enabling technologies.” Is it, though?

What does all this have to do with social media?

Well, personally, I don’t make too many plans without connecting with my social media outlets first. When I’m traveling, I rely on TripAdvisor for hotel selections, Yelp or Zagat for restaurants, Kayak for airfare, and so on. When I’m making a large purchase (e.g., recent Canon SLR), I swing by Epinions, Amazon or myriad other sites where the people who count – yes, the J’s – share their feedback, provide opinions and so forth. So far, there isn’t something like this for banking services (or none that I’m aware of) but give it time. When that becomes a reality (not if, but when), the J’s power will increase tenfold – and banks will have to be ready.

Remember what happened with Netflix about a year ago, with its ill-conceived “strategic” moves that caused the company’s fall from grace? It didn’t need much help, but once social media got hold of its misstep, the damage was irreparable. Is it too far-fetched to think that banks may some day be at the mercy of the collective J’s behind social media? Not to me!2

Social media is a two-way street, of course. There is outward communication, which most banks do a decent job with, but it provides little with respect to customer insight. It’s just another marketing and communication avenue. The inward stream (from every social media outlet) is what banks should harness, because that provides a ton of insight on individual (or collective) J preferences and experiences. I’m willing to bet that none of the banks that scored so low on the customer service site I mentioned above took any steps to at least align said negative social media feedback to internal operations and technology processes, let alone rectify them. Or that any bank claiming to have a complete view of the customer has a blurry, partially smudged image of what that J looked like three years ago, which was only 40 percent accurate (at best) to begin with.

There is plenty of social media buzz around risk, IT integration, data mining, executive support, information management, compliance, single-customer view, change, strategy, innovation, operating model, etc. But where should banks start, what’s their approach, and how should their social media be managed to help them become more customer centric?

How do you think banks should harness the power of social media to be more customer centric? Join the discussion.

1No surprise that companies at the top of that customer satisfaction list included Apple, Google, GE, Toyota and Southwest.
2Do you recall “Bank Transfer Day” last year? (; by the way, I’m not saying these figures are accurate – some claimed they were severely overstated – I’m just pointing to one occasion where social media drove some actions against the banks.


Adrian, brilliant post, thanks for this. As it is the use of such "unstructured" data was part of Capco's recent survey among 100 executives who are specializing in data management across 80 financial institutions in Europe. The study paints a similarly bleak picture around the usage of social media data and how to harness the power.

The results of the survey can be seen here:

I believe one problem the incumbents have is their current architecture and the way data is being used/handled there. The older and inflexible the technology the more difficult banks will find it to mine the data available to them. New contenders (I am thinking of Movenbank or Fidor Bank) can go the other route, which is putting the customer front and center and build their capabilities, processes and prodcuts around the customer.

The big banks need to find a way to play in that same space or risk loosing the younger generation for whom a branch is something that grows on trees...


While reading this blog- a central theme emerged in my mind and it had to do with the concept of scale you bring up. Larger players suffer in the satisfaction department due to lack of agility in an ever increasing agile marketplace. Markets and solutions emerge on a dime these days- remember Groupon? The concept of daily deals pushed (to say the least) to eagerly anticipating customers inflicting lethal margins on merchant goods? Talk to the nail salon owner that sold 1,000 manicures at a realized rate of 60% off, slammed their operations for a month and then needed to borrow to make payroll at the owner’s expense. Sounds like expensive marketing to me! This relatively simple, low cost model to drive deals concept will evolve to reasonable margins one day- but in the meantime- Financial Institutions are now getting to market with comparable solutions, just in time for margins to thin.

The point is that time to market matters- and matters more in spaces where rapid evolution is prominent- a prime example is yours: social media.

To address the final multi-part question in this thoughtful blog: “But where should banks start, what’s their approach, and how should their social media be managed to help them become more customer centric?”

Banks should start with focusing on offerings that are rapidly relevant, and this means look to “buy” rather than “build”. Outsourcing the expertise to be relevant in the field in a timely manner can yield more benefits and agility to react to accelerating evolutionary environments. Larger players particularly, with less ability to be nimble due to a ranging degree of organizational paralysis, should explore this option. The time it takes to hire/train/build/deploy and manage can take longer than the offering is relevant in many cases. Large players should devote resources to hone in on content and strategy and meeting customers’ needs. Figure out who within your bank should be accountable and in what communicative channel. Communicate clearly and consistently to build your brand and have internal employees focused on doing that. If it isn’t a “core” capability or a “near-core” capability- the costs to establish a foothold through internal development often is not worth the investment for short term relevance in the marketplace.

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