John Jaser's Oct. 21 op-ed entitled "Embracing Social Media May Be Dangerous for Your Members" suggests that the rewards of social media are not worth the risk. "Some day there might be," he writes, "but that day has yet to come." He attempted to support his thesis with vague references to the risk of phishing schemes, the reputation risk of loose-lipped employees representing your credit union online and misconstrued survey data.
On the surface these are valid concerns, but Jaser, unfortunately, chose to not dig any deeper. Sincere analysis of the risks and rewards of social media in credit unions would likely have led him to a drastically different conclusion.
Jaser suggests that interest in social media is more "a curiosity" than an opportunity for "positive ROI." He rhetorically asks, "Have any companies actually gained enough new customers to warrant the expense of a full-blown social media effort?" He never quantifies the numerator or denominator of the associated ROI formula and clearly has not read the excellent coverage of credit union social media successes regularly covered in this publication.
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How about looking at Shell FCU's iLife program, which lowered the average age of membership from 47 to 42 in just 10 months? Members Credit Union's "What Are You Saving For?" program generated upwards of $100,000 in earned media coverage for a program that cost less than $300 to launch. Vancity's ChangeEverything site has 5,000 registered users and several thousands of unique visitors each month, improving member engagement and community impact. Let us not forget the amazingly successful Young & Free program, which opened 4,100 new accounts, $4 million in deposits, $45 million in loans and $2.3 million in investments in its first 24 months. A similar program launched at South Carolina Federal opened 12,200 new accounts, including 1,500 new relationships with an average of 3.91 products per member in the program's first eight months.
These successes are uncommon, I would agree. They are, however, possible. Each required careful planning, diligent execution and continuous improvement. A credit union with a suitable corporate culture, talented staff and dedicated leadership could enjoy similar results.
But what about the risks of social media? First, Jaser insists that social media is a breeding ground for phishing schemes, that "malicious scripts are routinely planted on Facebook and Twitter." Although hyperbolic, this statement is not false. Consumers do face some risk in using these services, especially in cases where social media initiatives are poorly executed or insufficient time and attention were paid to staff and user education.
A 2009 Javelin Strategy & Research Study found that only 1% of all identity fraud cases were a result of phishing schemes, and 9% were perpetrated through criminal access of the victims' home or work computers by hackers, viruses or spyware. Contrast that data with the fact that 43% of cases resulted from a lost or stolen wallet, checkbook, credit card, or other physical document. Victims reported that the next most popular sources of identity fraud took place during purchases/transactions (19%) in the home as a result of friends, acquaintances, relatives or in-home employees (13%) and data breaches (11%), respectively. The study concludes that "online is safer than off line when consumers use available security controls."
I doubt Jaser would recommend that a credit union ban checkbooks, ditch core data processors in favor of paper transaction ledgers and forbid members to associate with friends, acquaintances or relatives based on this data. Why, then, would one suggest that social media is too risky for a credit union? The data simply do not support that assessment.
The truth is that it may be riskier for a credit union to stay on the social media sidelines than embracing its capabilities. Monitoring the online conversation, engaging members and communicating with potential members can provide invaluable marketplace feedback, increases in member satisfaction and a much-needed boost in sales. At a minimum, these technologies provide credit unions with the opportunity and obligation to protect their brands.
We will all agree that the successes, failures and risks of social media have been dramatically overblown. The sooner we can converse without such hyperbole, the sooner we can capitalize on social media's true potential.
Matt Davis, Director of Public Relations
Members Credit Union, Winston-Salem, N.C.
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