Local Banks Are Very '90s With Digital Marketing

Banks are missing out on ways to leverage customers through digital marketing. Here's why.

For the better part of the last two decades, major retail banks in Hong Kong have been early adopters of the Internet as a transaction platform to provide customers with better services. They were instrumental in turning the Internet into the mass medium it is today by attracting the older segment to get online via Internet banking. It is thus ironic that they are one of the slowest adopters of the Internet as a marketing medium.

To be fair, conflicting phenomenon are making it even harder for banks to figure out how to open themselves up to interact with customers online: the openness of social media, the heightened question of trust from the Lehman Brother fiasco, and the increased awareness of personal data privacy.

Unsure of the balance between openness and privacy, engagement and compliance, banks shy away from any online interaction with the end-user, which is why they tend to deliver advertising driven banner ads and only send one-size-fits-all emails.

They are completely missing out on opportunities to leverage passionate customers to drive Internet word of mouth, to deliver strategically segmented messages and offerings, and to connect with key demographics that rely heavily on online interaction to make spending decisions.

One could say banks are still very ’90s with digital marketing.

As I ponder the reason behind this, here are a few observations:

1. Local regulators need to play catch up
An afternoon of fun browsing around websites of the three banking regulatory bodies of Hong Kong confirmed my suspicion that local regulators are not catching up with the latest Internet trends.

The Securities and Futures Commission states on the first page of the “Guidance Note on Internet Regulation” that, “As Internet technology continues to evolve, the Commission will revise and update its regulatory approach.” That’s encouraging given this was written in 1999, unfortunately there hasn’t been any updates for this Guidance Note since. Perhaps the SFC does not think the Internet has evolved.

It focuses heavily, though rightfully, on the Internet as a transaction platform, but said little of the Internet as a marketing platform. Not to mention the outdated terminologies used, such as “multi-media presentation”, “banner advertisement”, “update of website information”. What about email, SMS, search marketing, social media, micro blogging, and location-based services?

Other than that, nothing specific about the use of the Internet for marketing could be found on the websites of the Hong Kong Monetary Authority and the Hong Kong Association of Banks.

Not only are the guidance and regulations outdated, they are not specific about the use of the Internet for marketing, presenting a grey area for the industry. As a result, no banks want to take the first step to experiment given the inherent conservativeness of the industry, but hide in a wait-and-see mode instead. Without updated guidelines from regulators, the banking industry will be slow to fully embrace the most powerful customer engagement platform there is.

2. Internal compliance needs to relax about online conversations

Compliance is a very important part of any bank. It is instrumental in ensuring a bank is not breaking any rules, given banking is such a heavily regulated industry. Juxtapose it with the unregulated nature of the Internet and you will see why there is a need for a fundamental shift in thinking in order for internal compliance to embrace the Internet, especially social media.

Your customers are always talking about you online. It is a fact. It is your decision to ignore them, or to engage them to make the wrong right, and the right better. It is as simple as that.

Pretending your customers have no complaints because they can’t tell you on your digital presence is not a social media strategy. It is not facing reality.

Internal compliance needs to realise that the need to join these online conversations is inevitable and it is not necessarily a bad thing.

Many big brands in various industries and markets have already demonstrated that the benefits far outweigh the risks of engaging your customers online. It is time to learn to relax a bit.

3. Internal IT needs to appreciate digital marketing
Digital marketing related software systems are often not considered as mission critical by internal IT departments. They are not “sexy” enough. They are not what the IT guys went to university for.

Systems for web analytics, email delivery, banner ad tracking, and social media monitoring do not rank high in terms of priority as compared to ATM, online banking and securities trading platforms, and rightly so.

As a result, digital marketing at banks doesn’t get the support it really needs from IT and often feel its hands are tied by the rigidity that comes with mission-critical thinking.

If, however, banks understand the importance of digital marketing as I have mentioned in the points above, then the relative priority of digital marketing systems should instantly move up at least a few notches.
Digital marketers need flexibility to react quickly to market events. They may want to send an email in 24 hours because something unforeseeable happened and not wait a few weeks for the next blasting slot.

I have never worked as an in-house banking digital marketer before, therefore it’s natural to question the accuracy of my observations above. But having worked with a few financial institutions on a variety of digital assignments over the years, I like to think they are fairly accurate. Please share your thoughts if you think otherwise.

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