Ignore social networks at your peril, wealth managers warned

Many firms view social networking as another marketing channel, but are underestimating the damage that the growing power of blogging can do, writes Scorpio Partnership.
Ignore social networks at your peril, wealth managers warned

Last month Hung Huang, dubbed in the West “The Oprah of China”, took to the social networks to berate Deutsche Bank Private Wealth Management for the quality of its service offer.

Via the microblogging site Sina Weibo, on which she has a staggering 2.7 million followers, she is quoted as saying: “Deutsche Bank offers the worst private banking service in the world. They have nearly turned me into a proletarian.”

Huang’s comments have been forwarded and reposted thousands of times and have drawn about 1,200 comments, creating a global storm in a matter of days across the international wealth management market.

Worryingly for the scores of western firms looking to tap Asia-Pacific’s burgeoning wealth market is the rich seam of scepticism this incident has thrown up about the motivations of many foreign institutions that are swamping the Asia-Pacific markets.

One response to Huang’s initial blog commented: “Strangely, Chinese people do not seem to understand that the financial products sold by foreign banks are not that different from blatant fraud.”

Many wealth market watchers in the West have seized on Huang’s public declaration as an opportunity to talk about the dangers of social networking as a “double-edged sword”.

But the truth is that events such as these will happen with or without an institution’s presence on social networking sites – and they will become an increasingly common occurrence, as traditional methods of raising a complaint and sharing one’s discontent are considered ineffective and sluggish.

In fact, the real problem is how social networks are perceived by many large wealth management institutions – as just another marketing channel. Social networks are as much about “listening” as they are about “speaking”.

They are emphatically not just another marketing channel down which firms can thrust products and services to the consumer. They are a sensitive medium that can empower institutions to engage with clients, to connect with them and to build a relationship.

An effective corporate social network strategy could have afforded Deutsche Bank the opportunity to limit the damage from this box of firecrackers lit in a firework factory. They could have even emerged with some new-found respect in the online community by quickly responding to Huang and addressing her concerns in this very public of forums.

Instead, this blog storm is clear and an international lesson that those in relationship businesses ignore social networks at their peril.

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