Love it, hate it, but you simply can’t ignore it. In recent years, few things have attracted more attention than the social networking phenomenon. With Facebook’s population adding up to the third largest country on Earth, the debate of whether social is here to stay, is long past.

Even as the more online-savvy businesses like retailing have embraced social media, banks have played reluctant. And they don’t seem to be changing their mind – a recent survey of retail banks said that two out of three had no plans to use social media in any way.

While the social media faithful may insist that banks without an agenda are shortsighted and ceding advantage to the few early movers, the question needs to be asked: Is social really relevant to banking?

Let’s face it. Studies show that even today, the majority of firms do not (or do not know how to) measure the success of their social media activity. What they’re hoping for is that it will bring them leads, generate awareness for their brand, position them as thought leaders and help them engage better with customers.  And in the latter lies the crux. While traditional media marketing can open up leads, build brand equity and deliver measurable ROI – albeit at higher cost – it simply cannot match the ability of social media to win customer loyalty and trust through open, direct engagement.

There’s another important reason why banks cannot afford to stay away. Today, their public reputation is no longer within their control, and is being built (or dismantled) within social forums instead. They obviously need to be part of these conversations – interacting with community members, understanding their needs, solving their problems, and doing whatever they can to influence opinion in their bank’s favor. Not to forget, controlling damage, when required. As Domino’s Ramon DeLeon succinctly put it, “The only way to put out a social media fire is with social media water.”