Financial services community tries to rebuild trust

From reputation management to social media, the financial services community is working hard to address a variety of challenges.

From reputation management to social media, the financial services community is working hard to address a variety of challenges.

With an almost immediate backlash from consumers after the economic bust in September 2008, Arun Sinha, chief marketing and communications officer at Zurich Financial Services, met with board members to discuss how the company could respond. The result was an integrated campaign promoting the firm's strength and stability to consumers, with the Zurich marketing team surveying customers on their wants and needs.

Polling 39,000 customers on what areas Zurich could improve upon, Sinha last year helped launch the Zurich HelpPoint, a Web site focused on answering clients' questions, connecting investors with specialists who can best fit their needs, and directing users to areas where they can find more information on a topic in which they're interested. Zurich uses tools like the Dow Jones Sustainability Index and the FTSE4Good Index Series to monitor the company's CSR standing.

These types of strategies are becoming more commonplace, as financial companies look to restore public trust. As the economy continues to recover following the crash, consumer concerns still linger on issues like company transparency and executive compensation. As such, financial companies are facing the dual challenge of addressing reputation issues in an environment that requires a clear social media strategy.

Industry insiders say companies are building marketing strategies to restore public sentiment by combining market research with CSR campaigns specifically designed to target areas of research-identified concern.

“CSR campaigns are on the rise, there's no question about it,” says David Langness, SVP and co-GM of MWW Group. “Financial firms are using campaigns for reputation management, and to make a connection with the community they're trying to reach.”

Beth Saunders, MD and head of the capital markets practice at FD, says she's noticed a trend in CSR campaigns focused on rebranding, as executives look to distance themselves from the crash, an image many Americans associate with greed.

“You hear words like responsibility and legacy going around a lot more,” she says. “A few years ago, that wasn't as common.”

Investing in outreach
ING Foundation, the charitable arm of ING, conducted research that showed that young women to be a group most in need of advice on investing. This led to a campaign last year aimed at girls ages 12 to 18.

The ING Girls Investment Challenge provided participants with a workshop-style investing experience, allowing the girls a chance to keep their gains in the form of college scholarships. To promote the effort, ING and its partner on the program, Girls Inc., created viral videos featuring young women, explaining how the initiative worked. The program also featured a Facebook and YouTube page.

“We must make sure the community understands the basics of investing,” says Rhonda Mims, ING Foundation president and SVP of the office of corporate responsibility and multicultural affairs. “As it is, we make investing more complicated than it needs to be. Providing that clarity to our customers creates a real trust.”

While CSR campaigns are a good first step, the initiatives must prove successful with the public to go the extra mile and restore brand sentiment. Because of that, there has been an increase in direct outreach to consumers.

“There's an industry acceptance that something needs to be done, and we're seeing that translated into real actions,” says Saunders. “2009 definitely saw an increase in outreach, and that's a trend we'll continue to see in 2010 as the economy tries to recover.”

“It's not a surprise that the biggest casualty of the crash is company reputation,” says Sinha. “Trend-wise, we're seeing a lot of giving campaigns, with firms like Goldman Sachs pledging money to help small businesses. And more financial companies are taking responsibility for their actions and repaying TARP money. This type of awareness may not cure public confidence, but it's a good first step on a long road.”

Sinha adds that when Zurich refocused its efforts after the crash, stressing a message of responsibility through its integrated campaign, he was able to use that campaign to steer sentiment in a positive direction. By staying on top of bloggers and responding to consumer complaints via a help board specifically designed for customer relations, he says Zurich created its own voice in the conversation. And by tracking comments on sites like Facebook and Twitter, he gained a sense of what the public sentiment was and used that information in shaping his marketing strategy.

“We found that by paying attention to exactly what our client was saying, we were able to better engage. Customers want to be heard and responded to,” Sinha says. “But these campaigns must be genuine. If you're just being reactionary, I'm not sure you'll get the response you want. You can't fool the public.”

OppenheimerFunds' OFI Private Investments recently saw a positive return through a new investment initiative. Last May, OFI launched its Keeping College Within Reach (KCWR) program, a college investment initiative that began with customer research.

Polling consumers, OFI found a majority of parents had no investment fund for their children's secondary education, though eight out of 10 said they would like an easy way to begin such an account. The company took those findings and used them as the basis for its KCWR campaign, providing customers with literature and support to begin saving for their child's tuition.

Donna Winn, president and CEO of OFI Private Investments Inc., a subsidiary of OppenheimerFunds Inc., says a successful outreach campaign can help create brand loyalty with customers. Following the launch of the KCWR effort, she noticed an increased number of customers coming to OFI for advice on college investment funds.

“Our customers responded to this campaign, and we're seeing a turn in what people are writing and saying about us,” Winn explains. “And we've taken what we learned from this effort and broadened it. We saw more customer interest in educational programs. Now, we have an advocacy campaign offering investment advice to women, as well.”

That extension came on the heels of further market research, as OFI team members realized there were more areas of education in which their customers were interested in receiving support.

Social media adoption
Reputation management isn't the only challenge the financial sector is currently facing. With strict SEC guidelines limiting how the industry can communicate with the public and investors, the financial community has been slower to adopt social media in its communications strategies.

Specifically, Regulation Fair Disclosure prohibits selective disclosure of material information, making the social media world a tricky playground for financial firms deciding how to share information in a 140-character Twitter post.

“Because of the tight regulations placed on how these companies can release information, there are a number of obstacles to overcome if a communications team wants to use a tool like Facebook or Twitter,” Zurich's Sinha says. “But if those obstacles can be overcome, these sites have a great capacity to make these firms more accessible to the public.”

Last year saw an emergence of financial companies in the social media playground, with banks like Wells Fargo, Bank of America, and Citigroup having a stronger presence on sites like Facebook, Twitter, and YouTube. The Wells Fargo-Wachovia Blog, averaging two blogs a week in November 2009, even helped break the news to consumers about the company's absorption of the Wachovia brand in the summer of 2009.

And that strategy can also work internally. In November 2009, Bank of New York Mellon Corp. created its own social network for employees that allowed workers to internally share ideas on tech problems, work strategies, and advice solicitation. The network includes Wikipedia sites to store employee ideas on a database-like system and blogs written by workers at all levels throughout the company.

The initiative followed the Bank of New York Co. Inc.- Mellon Financial Corp. merger, and acted as a way to generate motivation for the blended staff.

“We focused on leveraging the human potential for thought leadership,” says Kurt Woetzel, BNY Mellon's CIO. “This was an innovative way to bring our team together on a large scale, which makes the brainstorming process more personal, especially when you're talking about integrating hundreds of employees.”

Accounting firm Ernst & Young uses Facebook to communicate with potential new hires, implementing the tool to engage in a back-and-forth conversation with recent graduates. And H&R Block has gotten in on the mix, using Twitter, Facebook, and YouTube during busy tax season to handle a flood of customer requests.

“There's not a lot you can say in a tweet, but you can direct the public to where they can get the appropriate information,” says Robert Turtledove, CMO of H&R Block. “On Facebook, we make sure the information is there to move traffic toward our Web site where answers can be provided by our help team. And whenever there are updates to our services, we can get that information out in a brief tweet.”

Many insiders say clearer information on how to successfully use social media has had an impact on the increased participation by financial companies. For example, the National Futures Association (NFA) submitted a rule amendment to the Commodity Futures Trading Commission (CFTC) in early December regarding social media. The content provided NFA guidance on how social media can be used for its members. It was the first time the NFA had addressed the issue explicitly.

Amended Rule 2-29(h) originally required members to submit TV and radio ads to NFA's promotional review team 10 days ahead of launching. It now goes an extra step to include all audio and video spots being distributed through all types of media. At the same time, the NFA released an Interpretive Notice, with advice on a number of scenarios that might arise when members of the financial industry communicate to clients via social media, like how to respond to queries on Twitter or private messages on Facebook.

The CFTC passed the submission just before the end of 2009, and the new amendment became part of an already existing set of rules meant to provide guidance to financial firms in the area of radio and TV advertising. The literature now provides advice for financial communications teams on blogging, chat room use, webinars, and Internet sites like Facebook and Twitter.

“This ruling was created to remind members of their responsibilities,” says Larry Dyekman, director of communications and education for the NFA. “We consider social networking promotional material, and the same regulatory rules apply as with traditional media. The challenges are in the monitoring. It's very difficult to monitor all of the ways firms can communicate through social media.

“When we audit members, we look at whether or not the firm has a written procedure for how to use this material, and whether they follow up on that procedure,” Dyekman continues. “Firms are going to have to decide if the benefits of using social media outweigh the responsibilities.”

Social media conferences specific to the financial industry are popping up in Europe. In London, the Social Media in Financial Services conference hosted by IFALife, a social networking site for financial planners, took place in January 2010, featuring speakers from groups like YouTube and LinkedIn. The European Financial Management Association hosts an annual social media conference in Paris, with speakers from around the world.

Zurich's Sinha says this type of global coming together is one of the goals of social media. “Conferences are a big trend in Europe,” he notes. “I expect that will spill into the US as we get into 2010 and 2011.”

And social media specially designed for the financial sector is on the rise. Internet site Covestor, created in 2007, allows investors to share portfolios and follow trade activity of colleagues. The site has an area for investment bloggers, and allows investment professionals an opportunity to social network in space designed specifically to securely share information.

ING Foundation's Mims says in 2009, her team began using social media to promote campaigns, and is currently working to create a specific Facebook page for the group's girls' investment initiative to bolster excitement. By using tabbed browsing and URL link-backs, the team hopes to create an interactive space where information can be shared at a rate not achieved through traditional media.

“It's an incredibly useful space, one we want to make sure we're utilizing to its best ability,” she says. “You can't ignore social media's potential for word-of-mouth advertising, but you must make sure you're using the medium in a capacity that best serves the message you're trying to promote.”

“This is a new ballgame, and we've already had about a two-year period of looking at social media and seeing how it was going to fit into a company's strategy,” says Lisa Westermann, assistant VP of PR at Wells Fargo & Company, adding that sites like Facebook and Twitter offer communications teams value for their ability to be so easily monitored. “Now we're seeing less thinking about getting involved and more actually getting involved.”

Understanding the challenges
Paul Rand, CEO of Zocalo Group and president for the Word of Mouth Marketing Association (WOMMA), cautions that while social media offers an exciting new area for communications growth, knowing the challenges of the field and combating them are imperative steps in incorporating social media into a company's PR and IR strategy.

“Education is paramount it's the best way financial firms can make sure they're adhering to regulations that might otherwise make it difficult for them to participate in the social media game,” he explains. “When banks and financial companies get involved with sites like Facebook, it's a whole other animal for them than it is for other companies because of the sensitivity of the information they might disclose. But I'm seeing companies get around that by carefully monitoring what they post and by being well-informed on how to post.”

Rand says more and more financial companies are educating their teams through webinars, training sessions, and attending technology conferences aimed at better understanding word-of-mouth and viral marketing.

One of the most important components to making sure a financial firm's Facebook or YouTube campaign is successful is ensuring the PR team is well educated on what is and is not appropriate content. Rand adds that he expects to see the creation of product tools in 2010 to aid financial firms in creating Twitter, Facebook, and YouTube accounts. These have become more popular, as companies look for ways to make sure all its bases are covered.

“The technology is beginning to put forth things that take away some of the stress and worry associated with ‘Can I or can't I put this up?'' he says. “We're getting to a point where whenever there's an industry need, there's going to be an industry solution.”

“Social media is actually creating a new workforce, and PR pros can't afford to be left unawares on how to represent their financial clients through this medium,” says Dave Balter, CEO of BzzAgent, a word-of-mouth marketing company. “A big trend is the creation of compliance officers whose whole purpose for a firm is to track what their executives are saying and how the online community is responding to it.”

Balter says such compliance officers will be a big trend throughout the year, with some financial firms creating an in-house team that specializes in what to look for when creating new blogging or YouTube material. He adds that as 2010 progresses, the industry will see more use of these types of professionals who are trained in the intricacies of social media.

And though social media is an incredibly technological tool, the medium offers a human element the financial world must not ignore. Because the world of finance can be a foreign arena for many of a company's clients, circulating a company name on a Web site that the lay-public feels comfortable with can give a firm a more approachable quality. Sites designed to allow individualized profiles can also provide a unique voice to a firm, over time giving clients a better idea of what sets one company apart from another.

“There's a discoverability to social media,” says David Spark, founder of Spark Media Solutions, which helps companies communicate through social media. “If some-one is calling your office with a problem, they're probably also going to the Internet.”

At a time when big firms are being criticized by both the media and government for big bonuses and spending, Sparks says advocating a company message through word-of-mouth marketing can promote a company's commitment to more humble communication. A financial CEO spending time to tweet about his day in the office is a step away from an image of that same CEO flying around in a private jet.

This type of strategy would have been unheard of a decade ago, ING Foundation's Mims says.

“Even just a year ago, you didn't see financial groups involved in social media,” she adds. “There was just too much liability. As communication has progressed, and we've seen clearer guidelines and education on how these social media tools can be put to use, it's become possible to take those steps toward setting up, for instance, a Facebook or YouTube page for a financial company that previously would have abstained.”

The reputation battle
With constant media coverage slamming the financial sector, recent studies have shown consumer confidence in financial institutions hasn't improved as much as those firms might have hoped.

“Financial firms have been under extreme pressure to redeem themselves with consumers. For the first time in years, they're ranked worst in the industry, behind oil and gas companies,” says Aneysha Pearce, an associate partner at brand consultancy Prophet, which released its 2009 Reputation Management Index in December.

“We found that consumers are twice as likely to purchase products and four times as likely to recommend a product or service from a company with a stellar reputation,” she notes.

The index, based on 4,300 consumer queries concerning 130 leading businesses, shows insurance and financial services giant American International Group (AIG) at the bottom rung, with a 30.8 ranking. Not far behind, embattled mortgage corporation Fannie Mae scored 33.6 in consumer opinion. In comparison, the index's top contender, Kellogg, came in at 82.1.

“That kind of sentiment turnaround isn't something financial firms can afford to ignore,” says Pearce. “The public is sending a clear message, and prompt attention is being paid by these firms. By integrating strategies into their current PR projects, firms big and small will be able to fight this data. But it won't be an overnight procedure.”

Making social media work
In 2008, Charles Schwab unveiled the Schwab Trading Community, an online networking site where trader clients could blog, answer polls, and leave comments on industry happenings. The material is gated, offering privacy while still allowing users to network freely with one another.

“The model for social media didn't exactly fit into how we would like to use it, so we changed the model,” says Rich Levine, VP of acting investing.

The online community went through several weeks of testing by Schwab's communications team before the official launch in July 2008. Since that time, Levine says membership has risen steadily each month, as users share experiences and connect with other traders.

And taking a nod from Facebook, members of the site are asked to create a personal profile. This enables each user to identify traders with interests and specialties related to their own work.

“When you create a social networking site for your client's use, you make the site proprietary, and give yourself a hand in how the content will be shaped,” Levine adds. “It's a good way to serve up a popular tool in a manner that won't compromise your firm's practices.”

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