BAI Managing Editor Lou Carlozo
Lou Carlozo Oct 4, 2016

Facebook’s Noah Choi and his enticing digital invitation to banks

The banking industry is still trying to master the recipe for peerless digital transformation. Social media services boast all the key ingredients to make it happen. No wonder when Facebook’s Noah Choi looks at the present state of things, he sees an unappetizing option: stale cookies.

In a mobile-first world, where people spend lots of time, cookies are particularly bad at tracking people,” says Choi, Facebook’s client partner in financial services and based in New York. Put another way: Cookies are too vague for effective target marketing in a social media milieu.

Now, compare cookie-driven marketing to the exciting alternative.  “For banks to track and target a specific individual and take them from product arenas to product adoption and then to servicing, that’s an incredibly powerful thing,” Choi says. “Banks are trying to help people to navigate their finances and plan their financial life. If they can leverage personal data, then that will be a massive, massive win.”

How to get there? Choi discusses how Facebook and social media are working to answer that question.  Choi will speak at Wednesday at the BAI Beacon session “Millennials & Mobile: Identifying & Reaching Your Next Best Customers.”

BAI: Banks continue to speculate that Facebook might rise up as a competitor. How do you respond to these rumblings?

Noah Choi: This comes up a lot in conversations I have with my own clients. The idea that we might do that probably comes from Facebook activating payments in our Messenger app, and maybe also from that David Marcus, the president of PayPal, came over to run all of Messenger. From my vantage point in the organization, I don’t see Facebook providing banking services any time soon, for a number of reasons. Facebook’s mission is to make the world more open and connected. Almost every big move the company has made to date –Instagram, Whatsapp, Occulus, Internet.org, our pivot to mobile-first in 2012 – has been in direct service of that mission. With a global community of more than 1.7 billion people we can offer banks – and other businesses – a huge amount of value as a platform for connecting with customers and prospects. But for us to suddenly start acting like a bank – lending or offering savings accounts or something like that – wouldn’t line up with that mission of connectivity.

On a less aspirational level it would also mean we’d have to change our business model to start complying with federal banking regulations. In a lot of ways that would hinder our ability to keep scaling globally, and might even prevent us from operating as a platform for advertising. Facebook made over $6 billion in ad revenue in second quarter – ads are our main revenue source – and I have a hard time seeing us give that up to do something that isn’t in service of our mission to connect the world.

BAI: So where does Facebook see itself in the banking universe?

Choi: We see ourselves as providing an extremely powerful communication platform for banks to plug into, for marketing and for customer service. On the marketing side, more people access Facebook in a single day than watch the Super Bowl. We have a vast amount of data marketers can use to segment this massive audience, both from our own platform and from partnerships with 3rd parties, some of which include credit bureaus. We even offer ways for banks to plug in their own lists for targeting and insights, through our Custom Audiences products. So if a bank is using marketing data from a third party or from their own targeting models for offline efforts such as direct mail, they can use that same data to market on Facebook. And because Facebook is built on real identity, and not on proxies like cookies, we can help banks track and manage marketing across multiple devices and even help close the loop when measuring the full online and offline impact of ads. 

On the servicing side, Messenger especially is emerging as a platform on which banks can build new and exciting services. Amex recently launched a Messenger bot for cardholders, and TD Bank has been offering customer service on Messenger since last December. Messenger is a multimedia experience and it is still evolving, and I think we’ll see banks increasingly find ways to surprise and delight customers and build memorable servicing experiences on Messenger in the coming months.

BAI: How does the Lookalikes system work to create customer outreach opportunities for the banking industry?

Choi: Lookalike Audience is a targeting model that takes a list of an advertiser's best customers as an input, and finds other people who "look like" those customers. We have many, many, many variables that go into that model, mostly managed through machine learning. It’s an extremely powerful targeting capability, but one that can present challenges for banks, because they have to comply with Fair Lending regulations in how they target their marketing.

With so many variables in machine learning it’s challenging to crack open that black box and feel like you always know exactly what the machine is doing at any given moment. There are specific ways Facebook has worked with our banking partners to help them leverage this feature and still be compliant, and as our Lookalike Audience toolkit keeps evolving – and as machine learning is adopted by more businesses in general – I suspect we’ll continue to innovate with banks in this area. What’s particularly interesting to me as a former statistician and someone who used to build similar kinds of models is that, in many ways, Facebook and its partners in the banking industry are at the forefront of a very important issue: how do we use machine learning responsibly in business? Models will only get bigger and more complex, so how do we make sure we’re effectively monitoring inputs and outputs, and accounting for biases? At a certain point it becomes almost like training a seeing eye dog – the neurons of dog’s brain are far less important than the commands you give it and how you monitor its reaction to those commands. Lookalikes are a part of that conversation; I’m sure other parts will evolve.

BAI: Banks so often talk about mobile: They're involved and interested, but still have ground to gain. How do you see this playing out?

Choi: I think banks are still working through how to truly make their products mobile-first. A lot of banks have mobile apps, and while some really do a fantastic job I would argue that most still underutilize those apps as a channel for servicing and cross-sell. But I also believe that even bigger opportunity exists outside banks’ apps themselves – it’s how banks interact and integrate with other platforms in mobile. The average consumer checks their mobile phone more than 100 times a day, and more than 20 percent of that time – or one out of every five minutes – is spent on Facebook and Instagram. Even beyond Facebook properties, people spend most of their time with only 2-3 apps on their phone, and their banking app is typically not one of those apps. The more banks can find ways to plug into mobile platforms where people already spend a lot of their time – Facebook being one of those – the more opportunities they will have to grow their business and add value to customers’ lives.

One area where this is really stark is form fill on mobile. Trying to fill out a credit card or checking account application on a mobile device can be very challenging, and last year, Facebook launched an ad product called Lead Ads to help address situations where advertisers have heavier signup experiences. The ads auto-fill any information Facebook has about a person into an in-app lead form, and the information can either be collected by the advertiser or used to pre-fill the advertiser’s own, longer m-site form. Facebook has also enabled a Send Message call to action in ads, so that advertisers can get to one-to-one interactions with customers and prospects more quickly and potentially speed up the conversion process in mobile.

All that said I believe that to stay competitive, banks will need to continue to look for ways to make their products and services more easily accessible in mobile, whether that’s through their own infrastructure, through platforms like Facebook and Messenger, or some combination them all.

BAI: How else can banks up their game?

Choi: Focus on the customer journey. In a lot of marketing organizations – and this is probably true of many large companies but particularly within banks – there’s often a divide between the teams that manage brand marketing, the teams that manage direct response, and the CRM teams whose data ties all of it together. But the consumer isn’t thinking about whether an ad is for branding or direct response, and every ad represents an opportunity to accomplish either, or even both. If banks can approach marketing holistically, from the perspective of the customer, there’s a massive opportunity to build not just single campaigns but actual marketing narratives that move a person from awareness to consideration to conversion – and potentially into higher LTV behaviors once they become a customer.

To take an example from Facebook, we’ve built several ad products that give advertisers the ability to build up narratives and tell deeper stories, both over a series of ads and within a single ad. We have Carousel Ads where a person can swipe over multiple panels, so that advertisers can build up a story or showcase additional product features. We launched Mobile Canvas ads, which allow advertisers to craft interactive, multimedia experiences that expand to fill the viewport of a person’s phone. All of these experiences can be crafted to meet both brand and direct response goals, but those lines also have to be blurred within an organization to be able to take full advantage of them.  

It’s also worth noting that the data and tech exists to track and measure these types of efforts – whether on Facebook or other platforms – at a person level, so that you can track individuals all the way through their customer lifecycle. But to do that involves, again, breaking down silos and building coordination between teams that, in a lot of companies, don’t often collaborate.

BAI: How crucial is personalized marketing for banks to address, no matter which platform they plug into?

Choi: The biggest complaint Facebook gets from our community about ads is not that they see them in their News Feed, it’s that they want the ads to be more relevant. They know that advertisers have a lot of information about them, and so it’s noticeable when that information isn’t being applied for more personalized and relevant advertising. Last year, Lexus ran a campaign on Facebook with 1000 modular videos targeted to 1000 micro-audiences. It was a very exciting campaign, but at the same time I’m not sure all marketers need to take things to that level. I do think, however, that some form of personalization has become an expectation, partly because companies like Facebook, Google, Amazon, and others, have built whole businesses on learning peoples’ tastes and accurately predicting what they want, when they want it.

This doesn’t mean that mass marketing is dead. A narrative that is compelling will always sell, whether a person sees it on TV, Facebook, YouTube, or anywhere else. Apple’s famous 1984 TV spot doesn’t need 1000 variations. But I do think there’s a growing expectation from the average consumer that a mass-market message won’t be the first and last thing they see from a company, and that something more personalized - even along broad lines like age, gender, or geography – will ultimately reach them.

Banking products – credit cards, loans, savings account, investment services – these things can open up massive opportunities in someone’s life. They also represent a good amount of responsibility being taken on by both the customer and by the bank itself. A mortgage, a small business loan, even a credit card – those can involve some big decisions. And if you’re marketing those things, a personal touch goes an extremely long way.

Lou Carlozo is managing editor at BAI. He can be contacted at lcarlozo@bai.org.

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