Traditionally the financial sector leads technology innovation and used to invest huge sums in systems and software. Looking at the engagement rate of social media and the adoption of multichannel approaches it seems this industry is not yet embracing social media marketing (see graphic below) - was it hit too hard by the credit crunch? Obviously there’s room to improve when it comes to engaging socially with customers or community building since many participants in that market are perceived rather monolithic and imposing as opposed to caring and engaging. Caused by the economic crisis in particular Banks also deal with trust issues which probably accelerate a change towards an opening to social media in the future.
Social media engagement by industry
Nevertheless there are some success stories of how regulated industries like the financial industry can gain from social media and below are great example of sites in or about the industry from the world wide web.
Tracking social media participation
For some great insights and to get an overview of the adoption have a look at Visible Banking. It’s not very pleasing on the eye but is bursting with articles, interviews and a directory about social media initiatives of the financial services business. An example of its Twitter watch is here:
Visible Banking Twitter Watch #15 – November 2009: 877 Accounts / 46 Countries / 331,351+ Followers / 9,960 Lists – Top 10s Financial Institutions / Credit Unions / Insurance
Communities / Networks
HSBC appears to be the most innovative player with its HSBC Business Network and the “Little Black Book” microsite for First Direct customers to exchange recommendations. The HSBC Business Network is an online community for both customers and non-customers, allowing businesses and entrepreneurs to share information with and gain information from their peers. It is a good example of brands using online communities to provide a service that compliments and enhances their existing product portfolio.
The Little Black Book an affiliate of HSBC is a community where users exchange information not related to financials. But in in particular the page live.firstdirect is a remarkable progression towards social media openness and authenticity. It monitors and visualises live customer and non 
customer feelings about the brand. This is a brave step in a sector where balancing customer satisfaction against profitable customer management has proved challenging to say the least. It currently says 74% of all live words are positive; hope remains that this is unfiltered information ….
Compliance and regulatory issues are amongst the major reasons the financial services industry is shying away from the openness and accountability of social media marketing. ComplianceOnline is a regulatory compliance solutions provider operating in the B2B arena. Operating in a highly fragmented and hyper-competitive marketplace the website has more than 2 million unique visitors per year and 500,000 registered users. By actively engaging users in a two-way dialogue the company behind the community MetricStream uses social media to ultimately create awareness and generate qualified leads which make up 30% of their total sales leads.
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Mobile
Another financial services company namely Nationwide Insurance provides a free, company-branded “Accident Toolkit” iPhone application for advising what to do after an accident. The app can call emergency services, collect and exchange accident information (even using the iPhone’s camera and GPS), connect with a towing service, and (for Nationwide customers) initiate the claims process, among other things. That is indeed social media.
Crowd-sourcing and Peer-to-Peer
Peer-to-Peer lending makes perfectly sense where there are enough people needing to borrow money and those wanting to lend. They are better off dealing directly with each other rather than using banks or other middle-men. Each, for a fee of course. Have a look at Prosper.com and Zopa.com to find out more about that great idea.
If you still have unfulfilled dreams make us of the social saving approach of smartypig. Its a bit of a crowd-sourced social network where, if you share your saving goal (dreams), friends and family can provide financial support. You can 
also add your personalized SmartyPig widget to your Facebook or MySpace page, blog or Website. Not to mention, you can start your own SmartyPig Friends Network. Cute.
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Often quoted the Bank of America Twitter account is a good example how Twitter can be used to help, listen and learn from customers, even in a sensitive environment like sharing financial information over social media.
Other twitter based applications worth mentioning are StockTwits and AdviserTweets. More geared towards financial professionals rather than customers, they are innovative approaches of how social media can be utilised by asset managers or financial advisors.
Not so good examples
Just two examples I came across today. These are Deutsche Bank’s and UBS’ facebook fanpages. I am asking myself why and how they managed to get 1,700 users (by the time of the writing). There must be a reason why they don’t put any content on their pages. Is it regulatory reasons? Maybe someone can shine a light on this.
Certainly compliance issues are important for financial institutions considering social media. But for most, compliance issues are not the crippling concern, as you suggest. There may be a few financial firms with a fascist compliance officers, but compliance is not keeping these organizations from pursuing social media. I talk to hundreds of financial institutions every year, and the #1 reason they claim they aren't delving into social media is that “there's no clear and definitive ROI.” This argument is disputable, but it is the most-commonly cited reason by a factor of 10:1.
Also, the graph at the top of this article suggests an organization is “more successful” with social media if it is utilizing more channels. This is a fallacy. “More” is not “better.” More is simply more. I see many financial institutions who are using Twitter, Facebook, YouTube, MySpace, Flickr and a blog, and none of those channels are being used well.
Hi Jeffry – thanks for stopping by.
I agree on what you say – in terms of social media sometimes more can be even less. I am thinking of useless and meaningless social profiles or content neither maintained and nor engaging.
Also the social media ROI discussion is rather overrated. Where do you get a clear ROI in internet marketing theses days? Looking at numbers, SEO receives the most budget but it's a process as laborious and lengthy as social media. On top of that the importance will be diminished by social media content and social search approaches by the search engines. PPC is pricey for the financial industry and what happens after the click is also not quite clear.
What about linkedFA? They claim to be the only social media company that meets the compliance needs of the industry. It is a US based company but i have read they are customizing an application for the UK.