Ed Terpening, VP Social Media Marketing at Wells Fargo, invited me on a virtual tour of Stagecoach Island. SI is a  Second Life spinoff where users immerse themselves in a virtual world created by Wells Fargo (see previous coverage here).

Wells Fargo launched Stagecoach Island in 2006, originally within Second Life, and then spun it off on its own. It's a chance for Wells to give users a truly interactive experience with their brand and increase their relevance to Millenials, who may feel that banks don't understand them. 

They are doing some key things very well:

• Pioneering new ways to extend their brand using social media
• Reaching a youthful demographic most banks can't reach
• Harnessing new technologies to redefine marketing

Here are some screenshots from the tour:

We're all gathered at the Wells Fargo ATM near the entrace of Stagecoach Island, including fellow NetBanker blogger Ron Shevlin.

The ATM interface, where you can open an account, get a credit card or a mortgage.

The Stagecoach Island Career Center where interested job seekers can learn about virtual careers in SI.

A place to buy things for your SI avatar, using your virtual Wells Fargo credit card.

Yours truly on the slopes, ready to snowboard.

My Take

I believe that creating a virtual world that combines elements of fun and whimsy with financial education is a great way for a bank to start a conversation with tomorrow's bankers about the role of money and credit in their lives. Although Wells is currently doing many things well, I also noticed some opportunities for them to consider as SI evolves:

• The "fun" and "financial" elements didn't come together as much as I had hoped. It could be improved with an SI-wide games and challenges requiring users to acquire and spend money and use credit to solve puzzles and attain things they need to complete the game. 
• Currently, the ATM is very text heavy and somewhat non-intuitive. Wells is missing an opportunity to make the ATM into an amazing interactive experience. And, there could be ATMs throughout SI, which could be part of a larger game.
  
• It would be great to have real Wells Fargo job openings in the SI Career Center, like TD does in their Facebook group.
  

Also, where was the stagecoach? It had to be there somewhere, I probably just missed it.

In the end, Ed and his team deserve much credit for paving the way. There is great potential left in this idea, and it will be fascinating to see how it continues to evolve. Thanks for inviting me on the tour.

William Azaroff is the Interactive Marketing & Channel Manager at Vancity where he develops interactive marketing initiatives, and pioneered ChangeEverything.ca, the groundbreaking change-themed online community. William builds on a decade of experience at digital agencies in Vancouver, Seattle and Los Angeles driving strategy, extending brands to the Web and building relationships for companies in several verticals, including Honda, Disney, Intuit Canada and the Government of BC. He discusses trends and noteworthy achievements in social media at his blog: azaroff.com/blog.

Wells Fargo marked the one-year anniversary of its first blog, Guided by History, with a Q&A today with the bank's Social Media VP, Ed Terpening. The post appeared in the the bank's Student LoanDown blog (post here), which just made it past the six-month mark. I've already weighed in on its blogging strategy (see previous coverage here), so I won't repeat myself.

The bank is experimenting with a number of social media outlets to extend its brand and see what works and what doesn't. Not all of these will pan out. The MySpace presence seems like a long shot, but then again, the cost is negligible so it's worth a try. Wells Fargo has wisely not posted a pure "banking" presence, but instead used one a character from its StageCoach Island game (see screenshot below). 

Bottom line: The bank's willingness to try new things has created an impressive lists of "firsts:"   

• First U.S. bank with a blog (though Verity Credit Union beat them to it by more than a year)
• First bank with a student loan blog
• First bank with a business banking blog
• First bank in the world with a Second Life presence
• First bank on MySpace at <www.myspace.com/stagecoachisland>, really more an extension of its StageCoach Island game which also has its own blog here (see below; though several credit unions beat them to it)
• First bank with 2, 3, and 4 blogs
• First bank with an avatar persona on MySpace
• First bank with a VP Social Media (who appears to be proactively reaching out to the blogging community)

Second Life, the alternate reality with four million members worldwide, has a surprising driver, capitalism. According to Second Life Insider, US$1.5 million changed hands yesterday (link here). And if there's money changing hands, there are opportunities for banks and financial scammers (not necessarily in that order).

In a March 6 search, Second Life Insider found ten banks operating in Second Life (SL) (post here). Several operate only in Second Life, raising numerous questions about the legitimacy of these non-regulated entities. 

But what most interests us are the six real-world banks that have set up shop in Second Life such as ING's Virtual Holland (see inset above and screenshot below).

Here's a banks in Second Life timeline:

Sep. 2005: Wells Fargo is the first real-world bank with a presence in Second Life (SL)
Dec. 2005: Wells Fargo leaves SL, moving its Stagecoach Island to a new platform (see previous coverage here)
7 Dec 2006: ABN Amro becomes first European bank in SL (press release here)
7 Jan 2007: BNP Paribas opens a small test area (post here)
7 Feb 2007: Swiss bank BCV opens its doors in SL (press release here)
21 Feb 2007: ING Bank launches website and blog to get users involved in building what it calls Our Virtual Holland <ourvirtualholland.nl>
2 Mar 2007: Danish Saxo Bank announces plans to create trading platform in SL (Reuters article here)

Analysis
It's hard to predict whether banking will ultimately become a transactional business in Second Life or other virtual realities (note 1). However, with four million registered users and an inordinate amount of press attention, leveraging a Second Life presence for marketing purposes looks to be a winner.

But if you are going into SL, make sure you mirror the effort with a Web presence that lets the other 1 billion Internet users see what you are up to. And there is no one doing that better than ING, who's taken a Zen approach to its SL strategy. They've made the process of building a SL presence more important than the actual result. Their Web 2.0-inspired website ourvirtualholland.nl involves the community with blogs, suggestions, and an email list (see screenshot below).

Note

1. For the record, we believe that full banking capabilities, including transactions, lending, currency exchange, will eventually be conducted in virtual communities such as Second Life. Whether it will ever be more than just a niche play, is unknown.

We've come a long, long way since the dawn of the commercial Web, which in banking began in May 1995 when Wells Fargo posted the first customer statement on a website.

Back then, when we talked about virtual banking, we meant Internet banking. Now, there's the very distinct possibility that banks and credit unions will set up shop in virtual worlds such as Second Life from Linden Lab <secondlife.com>.

Let's call it truly virtual banking. Second Life, with more than 940,000 users, allows the exchange of virtual Linden dollars for real greenbacks, currently at a rate of L$273 to US$1. Due to the possibility of real profits from virtual activities, this metaverse has attracted more than 10,000 businesses including Starwood Hotels and others (see Analysis below). 

Apparently, the first real-world bank with a truly virtual presence is none other than Wells Fargo, whose Stagecoach Island debuted in Second Life late last year. However, after a few months the site was moved to a standalone site with no connection to Second Life <stagecoachisland.com> (see screenshot below).

In Second Life, the private island was accessible only to Wells Fargo customers who received an invite from the bank. Normal Second Lifers could not gain entry. Users were given a $30 stake in virtual cash. Although the island tempts them with various ways to spend it, the goal is to save, with interest paid at the rate of 10% per day. Users can earn additional cash by taking finance-oriented online quizzes.

The stated purpose of Stagecoach Island is financial education. It is part of a larger program aimed at younger adults. The We Take the Fun of Money Seriously program was piloted in Austin and San Diego last year. Here's an excerpt from the Sept. 14, 2005, press release:

Wells Fargo is hosting a series of live "We Take the Fun of Money Seriously" events throughout Austin and San Diego during September and October where young adults can participate in various activities — from karaoke and trivia games to athletic challenges and photo booths — and win prizes while learning about banking basics. Event participants will receive the Web address and a unique log-in code for the Stagecoach Island software and will have the opportunity to play the online game at home for 30 days.

Apparently, the pilot was successful. This year, the program was used at summer rock concerts, primarily a dozen venues of The Warped Tour, and at 19 college campuses this fall. The first stop was Aug. 20 at the University of Nebraska and the tour ends Nov. 1 at Central Washington.

The bank was assisted by Swivel Media, a San Francisco-based marketing firm which hosts a Web page and short video devoted to the game at <www.swivelmedia.com/fun_money.htm>. According to a July blog post at Clickable Culture, the company paid $17,000 to Second Life freelancers to build the game.

Analysis
Online gaming, or advergaming as it's sometimes called, is a good way to make an impression with younger users, even though it may be difficult to create a game not considered totally lame by the target audience. We recommend keeping it simple, and bribing the target audience with numerous prizes.

The bigger issue, whether to create a presence in Second Life and/or other metaverses, is more complicated. Several major brands have recently taken the plunge including American Apparel, Starwood Hotels, and others.

The Starwood's program is interesting. They are using the Second Life hotel project, aloft, to create a buzz for a real-world brand they intend to introduce in 2008 under the same name. The hotel's Second Life effort is chronicled in its own blog, <virtualloft.com>, which includes a virtual grand opening featuring Ben Folds scheduled Oct. 19.

Financial institutions, looking to create some buzz, should consider a presence in Second Life. With an expected population of one million by year-end, the marketing opportunities within the metaverse are intriguing. But more importantly, a Web-based blog and marketing campaign could yield millions of free impressions for online and offline media.

However, this is not as easy as it seems. There are numerous risks and obstacles that must be overcome. The largest banking operation in Second Life, Ginko Financial <ginkofinancial.com> which lends Linden dollars at 44% interest, has been plagued with accusations of fraud, specifically of being a Ponzi scheme (read Reuters article here). There have also been recent incidents of Second Life hacking that have caused problems.

But the biggest risk is to your reputation. Not only are you vulnerable to the whims of the game players, you also risk being associated with the more adult-themed activities in Second Life. Before taking the plunge, you should have a staffer join the metaverse and consult with seasoned players for advice on proper "game etiquette" (remember "netiquette" ten years ago?). You want to make sure you position yourself as "less lame" than the average financial institution.

But those risks are manageable; in fact, they are similar to the problems you deal with in the real world. And given the potential buzz from a successful Second Life brand, it's worth your while to investigate the potential.

P.S. If you think this is all a fad, consider the source of the Ginko Financial article cited above. It was written by a new full-time reporter from Reuters who works IN Second Life (see NY Times story here).

Resources:

• Sept. 2005, CNET article on Wells Fargo's Second Life promotion (15 Sep 05)
• Aug. 2006, BusinessWeek article on Starwood Hotel's virtual hotel in Second Life
• June 2006, BusinessWeek article on American Apparel's store in Second Life
• Oct. 2006, brief article on the overall economics from Silicon Vally Bank
• Today's Reuters story on Ginko Financial