In the latest issue of NYMag there is a great portrait on Mark Zuckerberg by the infamous Henry Blodget. The former Internet star analyst, who was one of the evangelist of the DotCom bubble, makes some very good observations about Zuckerberg: he is a great CEO, he is a product genius, he has a very ambitious long-term vision and he doesn’t care about the short-term view of Wall Street. One may add: business people from more traditional industries tend to underestimate the guy who usually appears in a hoody before analysts or other Wall Street type suits.

In the banking industry and in the financial services industry in general, people do also tend to underestimate Zuckerberg and Facebook as a business factor. Our latest report shows, that the most important social network of the world is not very important to financial executives: on average, banks reach only 60% of the total possible points for their Facebook presence in the MyPrivateBanking benchmark.

This is a big mistake…as Paul Ford writes:

“Facebook’s platform has been so overwhelmingly successful that the company hardly had time to do anything but grow. Yet when the growth of the network itself slows, as it too inevitably will, Facebook-as a publicly traded leviathan whose mandate is to increase profits-will need to find new ways of slicing and dicing humanity into groups that will respond to marketing. That’s what lurks on the other side of peak Facebook, and it is going to suck.”

Or, to draw a slightly different conclusion, Facebook will do to the service industries what amazon has done to retail.

Our latest report on Social Media in Banking 2012 shows that there are extreme differences in the social media strategies of leading banks worldwide. Whereas we found a relatively small elite group of banks that is mastering the requirements of social media (lead by Citibank in the US and BBVA of Spain) a large group of banks is lagging, only offering a very basic social media effort to their clients and online users. Another significant group is even further behind, offering not even a minimum of social media content.

Today it is a no-brainer that social media is rapidly becoming one of the leading channels in shaping the communication and conversation with customers. Young, middle-aged and even older folks are populating social networks in ever increasing numbers, discussing all topics from babies to banking, linking to their favorite stuff and sharing opinions about virtually everything. Fiancial services companies - targeting retail, affluent or small-business customers must become part of these networks or perish. It’s basically like the decision around 1994-1999 whether to have a website and offer online banking.

To learn from the best social media practices of the leading financial players in this fast moving market is an easy and simple way to play the catch-up-game. It is not about copying but about learning and adapting. Every (digital) marketing executive of a bank worldwide should be aware of the strategies and tactics of the leading players. It is the first and necessary step to develop a sustainable strategy of their own to navigate the social media world today. The next step is to create a unique and differentiated profile in networks like Facebook, Twitter and co. - attracting new customers and increasing the loyality of existing customers.

For the last months our analyst team has been working on a new landmark report “Social Media and Banking” - this report will get published in mid April. It will be an in-depth analysis of the social media strategies of the 50 globally most important bank. We are looking  at social media strategies targeted at private customers, retail customers or general users. The banks will be rated and ranked according to a very detailed set of evaluation criteria.

It has become increasingly clear to us that banks approach social media with very different overall strategie - and many have no strategy at all. I think there are right now 3 main social media strategies of banks:

1. Customer support via social media
2. Product and service information via social media
3. Strengthening the brand via charity & community initiatives, sponsoring etc. which is communicated via social media

In many cases, more than one of the strategies are blended together. Rarely, we find an integrated but differentiated offering which brings together all these strategies but doesn’t mix them up or confuses them. In addition, we find typically communication offerings with investors or recruits.

Most banks keep their social media teams separate from their general marketing or communication department. Right now I guess this ist the right strategic step as otherwise the development of social media will develop way too slow. .

We are finding that banks struggle immensely with the issue of how to integrate social media in their regular online strategies and Internet marketing. I am not sure if there is “one best way” to do it. I guess at this stage various experiments are in order to see which approach works best. But this means a good bank will do lots of different things on their website to try out the new media.

So, stay put for our new report - there is lots more to come.  By the way, here is our  older report on Wealth Management and Social Media.

This chart summarizes a lot of our insights with regard to segmentation of wealthy customers and their usage of social media and mobile apps. Put in a nutshell, we are seeing that particularly the entrepreneurial segment and the “young & hungry” are aggressively using social and mobile media, followed by “Old Money” and the “Mittelstand”  (managerial class and owners of medium-sized businesses) segments.

It is a development that will profoundly influence the business of wealth management over the next decade. As social media are increasingly entering the financial industry, clients will demand new solutions and communication patterns from their banks and advisors. Another development shows, that recommendations from peers will become critical in the decision making process when choosing a new provider. The brand of financial players can also be heavily influenced through discussions and sentiment on social networks. In summary, social and mobile media are a strategic challenge, involving communication, sales and marketing efforts of every financial player. Be ready.

Google+ was launched 7 months ago in June 2011. On January 19 it was reported that G+ has surpassed a user base of 90 million and may reach 400 million by the end of 2012. However, these are not necessarily active users (as the 900 million reported users of FB). MPB analysts are working right now on a new analysis of social media & banking (to be published end of March 2012). The preliminary results on Google+ show that most banks have a presence there - but usually without any or with very little content. It can be described as “wait-and-see-strategy” or simply to put a placeholder on the network.

Over the last 2 months G+ has gained a lot of traction and there seems also some clear support from Google’s search services for the network. I guess that G+ as a networking platform is still technically a bit confusing (may be a consequence of the different terminology like “circles”, “hangout” etc.) but is essentially offering a similar platform as Facebook. Some innovations like “hangouts” and the search function seem even better than on FB. Yet - despite some heated discussion among tech geeks - this is not really important. What seems crucial is the point that Google potentially has the market power and leverage to push G+ to become a FB rival. The key here is the search services of Google and some existing services which - in combination with a new viable network platform - can potentially become very successful. Yes, Google Buzz was a disappointment - but probably a necessary stepping stone to the technically much more mature G+.

What does this mean for banks and other financial service providers? They should probably have a presence on G+ and also spend some resources on filling this presence with content & life. Not necessarily too much yet - as it remains to be seen what will happen to G+ over the next 12 months but don’t underestimate the marketing power of a 800 pound gorilla. If G+ can keep its speed one will have to take it seriously very soon. It will be fascinating to watch how and where G+ and FB will try to get a competitive advantage and how the will try to differentiate themselves from each other. Make sure to follow our research when our new report will come out in March with more analysis about Google+, other social media trends and how banks can profit.

Chinas’s Internet users cross 500 million reports TechWorld. Almost 70% of those users access the Internet via their mobile devices. Today, China (and in a broader sense the whole of East-Asia) is at the forefront of the mobile and social media revolution. Therefore, it is no wonder that Asian financial institutions are time and again leaders in our rankings for social media and mobile apps. For instance, the Bank of China has - according to our latest app report - the best single mobile banking app. DBS Bank from Singapore made the 4th place in our overall mobile app ranking.

For the future, we are expecting that Chinese financial institutions as well as players from Singapore, Indonesia and India will will play a much bigger role in the application and web development for the socially networked and mobile consumer. It’s a matter of survival in a market place that is dominated by ever more tech-savvy customers who expect their bank to be easily reachable via social media channels as well as on various mobile devices.

Brainyard has a great piece on Wells Fargo’s efforts to implement an internal social media strategy. The intermediate conclusion goes like this:

“…there have been some early signs that internal social networking tools will add significant value to the company. “We’re still in the first iterations–whether or not internal social networking tools will reduce service times or the email volume remains to be seen,” Carlson-Jagersma said. “But what I do hear from everyone is, ‘Oh, my gosh–it’s so nice to put a face to a name.’ We’ve made this huge company feel a little bit smaller. That has been the immediate benefit.”

I guess this is a pretty good outcome for a start. MyPrivateBanking will in 2012 analyze not online the external social media strategies of financial services companies (as we have done extensively in 2010/2011) but also focus more on the internal side.

New York Times has reported about our research on apps as well as the German edition of the Financial Times. Some more coverage you will find here (TechNewsDaily, US), here (Fondsnieuws, Netherlands) and here (CIO, Germany).

Frankly, this is probably the most comprehensive report worldwide on banking and apps you can find. It is full of insights on how banks are doing with their mobile apps for private customers. One of the most surprising findings for me was that only 40% of the surveyed banks offered some kind of brokerage via mobile app. Another interesting result is that US banks (with the exception of Citbank) are very weak with regard to their mobile app strategy. Not sure whether this is due because US banks are more conservative than their competitors in Asia or Europe or whether they are facing some specific hurdles (like privacy laws…)

A few days ago the Bank of New York Mellon was named in a foreign exchange fraud case by the New York State Attorney General. BNY Mellon allegedly has promised insitutional clients to give them the best exchange rate available. But in reality the bank gave clients the worst or nearly the worst rate defrauding clients of USD 2 bn.

In this case institutional clients were the victims. But as we know from many complaints of private clients, it happens to private wealth clients as well. In these cases most often the bank does not even promise a good or the best foreign exchange rate. The bank executes transactions just at bad or very bad rates for their clients. Most clients don’t even notice as they have no clue what the market rate for a specific currency pair is at the point in time when the transaction is executed. It is common for private banks to deviate 100 to 200 basis points from the market rate (1% to 2%). This generates a very nice income stream for the bank - the client does not even register the scam. We can only recommend to check very closely any foreign exchange transaction, compare with competiors and re-negotiate the rate.

There are a few things every private investor should know about foreign exchange:

1. Before you make a foreign currency transaction, check the real time market rate on the Internet. Yahoo Finance or other portals give you an easy set of tools to get the most up-to-date market rate on almost any important currency pair.

2. Beware of automatic currency exchange when you do an online or telephone trade with your bank or broker. They might just convert money from your dealing account to buy foreign assets at the so called “system rate”, which is usually the worst on offer from your bank.

3. Negotiate your exchange rate: make sure that you get preferential treatment, an improvement on the system rate, when you want to change small amounts quickly online. Be even more insistent on preferential rates for any amount higher than USD 10,000. You should be able to negotiate a rate between 10 and 40 basis points better than the market rate.

4. If you can’t get what you want from your main wealth manager, don’t hesitate to switch to special platforms to get a better exchange rate. In most countries you will find online brokers who offer extremely competitive deals on foreign currency - especially if you make frequent trades for substantial amounts.