BERKELEY, Calif.-Lots of financial institutions use social media as a marketing and consumer service tool, but few have figured out how to actually make money from it. Now some credit unions think they may have found an answer.
A startup called Shastic has created a simple financial calculator application that several credit unions have installed on their Facebook pages to help members quickly calculate the cost of mortgage or car loan. The Facebook calculator also works as a lead generator, immediately directing consumers to a financial institution's online loan applications.
"It's generating quite a few mortgage applications that are turning into funded loans," Shannon Doiron, the director of marketing at the $3.1 billion Kinecta FCU in Manhattan Beach, Calif.
Ariel Gomez, the 27-year-old CEO of Shastic, says he started the company three years ago with the intention of building a suite of consumer apps specifically for Facebook primarily to reach the largest possible audience. He began researching how banks and CUs were using social media and found that while many had Facebook pages most were not fully engaging with consumers.
"Facebook is a two-way conversation, but banks were using it to push information," Gomez says. "If you make it easy for a consumer to shop and play with tools, then you can deploy a robust business initiative on Facebook."
'Bells & Whistles' Included
The company began testing its MortgageCalcubot app earlier this year with a handful of credit unions, primarily because it has a partnership with AccessSoftek, a Berkeley-based provider of mobile banking products whose clients include several credit unions. Its goal is to eventually offer the service to banks as well.
The app comes with a few "bells and whistles" including the ability to pull interest rate information daily from a financial institution. It also has an "Alert Me" feature that monitors interest rate changes and notifies consumers if rates drop. Moreover, the apps are cheap, at $99 a month each.
"It's really a no brainer," Doiron told American Banker, an affiliate of Credit Union Journal. "One funded loan application pays for the app."
Doiron says Kinecta has been working on a social media strategy for a couple of years "trying to build up an audience" and installed the app on its Facebook page in June "to see how we could monetize that."
The app allows a lender "to start that transaction through Facebook and finish it up through your own channel," said Doiron, who branded the app the Kinecta Facebook Calculator.
Until it installed the calculator, Kinecta used Facebook mostly as a marketing tool. "We would post certain banners on Facebook that would link to landing pages but it was for short-term rate specials not a sustainable ongoing thing. There's no shelf life on [the mortgage calculator] because it's a constant learning tool and people shopping for a mortgage want to use tools."
Shastic's Gomez said Kinecta received 21 loan apps in the first three months it used the calculator, eight of which got funded.
'Better Get On Board'
Numerica Credit Union in Spokane, Wash., was the first CU to pilot Shastic's app earlier this year and so far 763 consumers have used the app and 28 clicked on the link to fill out a loan application, according to Gomez.
The $1.1-billion Numerica used to post special loan promotions on Facebook, but Brittanie Young, a communications specialist in charge of social media, says the financial calculator is now feature prominently on its page. Just this week Shastic launched a calculator for car loans, dubbed AutoCalcubot, and "Nobody wants to go into a bank office and fill out a loan application," he says. "As each year goes by, and the number of consumers using social media swells, banks and others better get on board."