Texas-based vendor fisoc is offering US community banks
and credit unions a new tool to use social media to help them
compete with the country’s mega banks. As Charles Davis reports,
fisoc’s BuzzBanking product integrates into the bank’s core
services to offer customers rewards points via use of their debit
cards.
Go deeper with GlobalData
BuzzBanking customers are four times more profitable and carry
out three times as many transactions. That’s the pitch from an
Austin, Texas-based technology firm for community banks and credit
unions.
According to fisoc,
BuzzBanking-enabled financial institutions write significantly more
loans and can triple their debit revenue within three months of
signing up.
In a retail banking environment
beset with regulatory pressures and the dizzying pace of
technological innovation, fisoc claims its BuzzBanking product
helps banks solve a whole set of headaches in one fell swoop.
The Buzzbanking platform aims to
increase consumer engagement – a buzzword in internet circles these
days – by offering incentives for social media usage.
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By GlobalDataPointBank, a Pilot Point,
Texas-based bank, is the latest enrollee in the programme, which
lets customers earn points both for debit card use and for
publicising their points-earning activities on Facebook and
Twitter.
Social media
platform
BuzzBanking will provide PointBank
with a turnkey social media platform designed to increase
interaction with customers and reward them with gift cards that can
be redeemed at participating national and area merchants.
When customers share their rewards
experience with online friends, they earn additional points.
Participation in the social media programme is based on an opt-in
basis.
Fisoc chief executive Jay Valanju
said BuzzBanking enables community banks and credit unions to more
actively participate in social media while competing with the
rewards programmes of larger banks.
“BuzzBanking addresses two major
issues for smaller banks,” Valanju added. “The social media
component is something these banks struggle with, and all of them
are struggling with debit revenue in the wake of interchange
reform.”
Valanju said fisoc launched
BuzzBanking earlier this year, and now has about 12 Texas banks
participating. PointBank plans a soft rollout of the system in
March.
The BuzzBanking model allows banks
to stay active in social media at a time when their participation
on such sites is becoming an increasingly important part of the
delivery mix. Banks risk being left behind by more nimble
competitors, Valanju said.
“You have to offer consumers a
compelling experience, which is more than mere rewards,” he said.
“You have to provide a modern interface, a lot of interesting
content and a frequent touchpoint. Incentives are important but
ties to local merchants is as important.”
Equally important, the system
allows banks a convenient way to enter the social media world while
still maintaining control of the environment, a key concern for
banks lacking the staff to host a social media presence on their
own.
“It’s free to customers, and it
creates a social networking relationship through rewards points, so
we are encouraging consumers to put banks on their social media
radar,” Valanju said. “This is solving a real ‘my house is on fire’
issue for banks.”
Valanju said fisoc takes the data
from Facebook and Twitter and uses social media contacts to build
profiles of consumers likely to be receptive to specific
messages.
“We are taking a lot at what people
are doing on social media, and we build profiles segmented by
interest, age, geography, and other variables, and let the bank
generate tailored messages,” he said.
“Then the bank can send relevant
social media messages to groups of Facebook users, for example,
whose activities indicate that they are in the market for a new
car, or a mortgage. The bank reaches the consumer with the right
message at the right time, and it’s no more than a suggestion they
check out their options.”
Besides providing additional
exposure for the bank and its merchants, BuzzBanking helps banks
replace lost income from a rule change in consumer overdraft
protections as fewer people are using this service.
The rule, which went into effect in
July 2010, now requires banks give customers the option of
participating in overdraft protection services.
By adding a requirement customers
make signature debit transactions, which are more lucrative than
PIN, to earn points from debit-card purchases, banks can replace
some of the revenue lost in other areas. Participating merchants
may set their own rules of when and how customers earn points.
BuzzBanking also appeals to
merchants. The programme is automated and does not require any
paper coupons, training for in-store staff or changes to POS
systems. Fisoc is also developing a smart phone application that
will point BuzzBanking customers to merchants enrolled in the
programme. Participating merchants can range from local retailers
to national chains.
Invaluable spending
data
Banks also can charge merchants a
fee for participating in the programme in exchange for information
on customer patterns. The consumer spending data generated through
social media may be as valuable for banks as it is for merchants,
Valanju said.
“If banks don’t reach out to
younger, technologically savvy customers on social media, they risk
losing any understanding of those consumers’ needs,” he said.
“Young people are not going into
the branches any more, but they are all over the social networks.
As you are interacting with the bank, this allows them to
understand the customer better and the products they really
need.”
Fisoc was founded in June 2010 by
Valanju and a group of online banking executives who founded
FundsXpress, the industry’s first online banking network which was
acquired several years ago by First Data.
The bottom line, Valanju said, is
that banks simply cannot afford not to engage customers on social
networks.
“Engagement matters because customers are inundated with
information and they get overwhelmed by the stuff coming in every
day. Buzzbanking helps people get to what’s important,” he said.
“If we are sending appropriate messages, at the right time, and we
aren’t asking them for a ton of personal information, when they
interact with the bank it is on their terms.”
