Social Networking for Business?

In 2010 I wrote a blog that endorsed the need to embrace technology or risk losing relevance in today’s economic landscape. One aspect of technology that people far and wide have gotten on board with is social networking. The facebook phenomena is so compelling that Hollywood already made a movie about it. But does facebook, and other sites like it, have a broader application? I believe that they do.

One of my tech gurus is a young man named Richard Kaufmann. He and I worked together at a community bank in Louisiana and he later went to work with a major company that has world wide interests. One of his pet peeves is that social networking sites like facebook are often blocked, or have restricted access, on work related personal computers. He believes strongly that limiting access to sites like those is leaving money on the table, and I agree with him. Now don’t get me wrong the threat of viruses and lost productivity in the work place is very real if you open that door, but I believe that granting access to select employees with clear guidelines can make sites such as facebook a fantastic business development tool.

I am by profession a banker. When I first broke into the business in the early 1980’s my company was headquartered in a large building in downtown New Orleans. It was the largest bank by assets in Louisiana but was still a community bank. Our downtown location put us in proximity to our larger clients and our branch network cultivated our retail and business banking efforts. The key to our success is that we dealt with people we knew, and felt very comfortable with our credit decisions as a result of that.  

Once that industry began to expand the challenge was how do you conduct business safely,securely, and fairly with a client base that you were not familiar with? You could acquire banks that had an existing client base, and hire bankers that had a loan portfolio, but now you were dependent on the wisdom of those hires and moves. Additionally you had to be consistent in how you extended credit, which forced banks to rely more on math, and less on relationships, when the previous model gave a lot of weight to both.

Currently the banking industry is troubled by market saturations, overzealous lending fueled by performance related goals, and a customer base that feels challenged and maybe even beaten down. You also have small towns losing people, which in turn forces those smaller banks to either look beyond their traditional trade areas or modify their business model to better accomodate the population that is left to serve.

Lets go back and look at the old dynamic. Banks headquartered in central business districts with branches to reach clients in outlying areas. To me that model is becoming obsolete.

My bank of the future could be based anywhere. The main office would have some teller windows and a drive up lane so we would be accessible to local clients but our focus would be delievering services via the best technology available. Open an account with the Wautlet Bank and you get a smart phone with apps to view your accounts, transfer money, and deposit checks via imaging. If you were a business you would also get an image data capture machine for your deposits or the bank could receive them directly with a lock box. You would receive your statements online and could meet with your banker using a video phone link on your smart phone or computer. If you prefer a face to face meeting your banker will come to you via plane, train, or automobile. Even loan closings could be done remotely using technology and auto signature software.

Instead of branches we would have some strategically placed ATM’s that could receive cash and check deposits. We also would refund any charges you incurred using someone else’s ATM, so every ATM is yours to use. With no branch system or expensive downtown location the Wautlet Bank keeps overhead low and spends its money on technology and personnel.

Our trade area would be the United States. Basically my bankers would be encouraged to use technology to bank their friends and family regardless of where they lived. We would have a facebook page, a LinkedIn page, and all of my bankers would have individual pages, all linked to the company web site. Twitter would be used as well. Bankers would be hired based on prior experience with bank management but also based on personality tests and other mechanisms used to define work ethic and compatibility with the corporate mission.

You are now doing business with people you know and trust from the efforts of people you know and trust, which was the goal of the original community bank model. Except the community consists of the individual relationships fostered by the employees. By the way all of  the employees would have opportunities created over time to be owners of the Wautlet Bank to insure stability and fealty.

You are being fair and consistent in your credit decisions because you are bringing in the best client base available regardless of their location. Your business model is nimble because it brings the service directly to the client on their terms and schedule, not the other way around. And you get qualified referrals from the best possible source, your client base.

None of these ideas are new, in fact many companies are already phasing these concepts in. If a banker has 500 facebook friends, and successfully banks 100 of them, that is 100 clients that could refer an additional 100 people. Your growth becomes a product of your success, not an advertising campaign or teaser offer. Your overhead consists of technology upgrades, not huge amounts of bricks and mortar. in fact your sales force could be deployed from their homes. All they would need is a lap top and a smart phone. Loan meetings and other necessary gatherings could be done via video conference and using shared software to track customer calls and identify cross sell opportunities. You no longer rely on area demographics, marketing surveys, or peer group competition. You are cherry picking your clients based on who you know and subsequently who they know.

Smart entrepeneurs are already doing this. Some of my favorite restaurants have facebook pages and many of my professional colleagues in other industries are setting up company pages on FB whether they are in real estate, insurance, you name it.  I did all my Christmas shopping this year online. I saved on gas, time, and stress.

I have a great job and have no interest in starting a bank like the one I described, but I am sure anxious to see who does.

About Merrill Wautlet

I am a finance professional and volunteer coach. I have also served in a leadership role for numerous non-profit and civic organizations. For a complete profile feel free to check me out on Linkedin.
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