When Financial Services Met Social Media — A Tale of Two Tweets
Aug 11th, 2009 by David Svet
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness. . .” Or, so one would think in the short span of a week to hear the latest dustup on the use of social media in the financial services sector. In the palace of financial news we have Shelly Banjo of the Wall Street Journal, and in the darkened shadows haunted by libertines is David Meerman Scott; blogger and author of World Wide Rave, The New Rules of Marketing and PR as well as numerous other books. Let the revolution begin! I haven’t seen this kind of polarity of opinions since the last Presidential election. What they are writing about is how the biggest change in communications in years is impacting a highly regulated sector at a historically vulnerable and sensitive time in its history. Sometimes change is hard.
Shelly Banjo’s article, “Twitter Doesn’t Yet Measure Up For Advisers,” is another swipe at the use of social media in the financial services sector. She loosely notes some of the same issues that have been sited previously by the nervous non-participants grinding the same old saw about compliance issues and regulatory review. But the real issue for Banjo, and the rabid advisers who commented on the piece, seems to be sales or the lack thereof. “Droves of financial advisers who flocked to the micro-blogging site as a route to new clients haven’t gotten the results they wanted.” It’s apparent from her line of interviewing that what she and her proponents wanted was to sign a lot of new business as a direct result of participating on Twitter. Then she dismisses Twitter as something that may be useful if advisers simply lower their expectations and use it as a way to expand their social networks. Yes, use the social networking tool for expanding your social network. Do not use the social networking tool to sell. She then goes on to quote several advisers who have found that Twitter is in fact useful for social networking and they appreciated it as a useful tool. The blog’s commenters loudly disagreed, dismissing social media as a total waste of time, although no one actually said, “let them eat cake.”
David Meerman Scott’s commenters weren’t able to muster the same level of vitriol for a variety of reasons. Meerman Scott has a thorough understanding of social media and how to use it effectively, as do most of his followers. His blog post, “Putnam Investments breaks ground on blogs, Twitter, and social media,” is a small case study dissecting how a major financial institution has successfully proceeded to use social media. His primary point, “is that there is nothing in RegFD, SOX, or any other regulations that say you can’t communicate.”
Fear is gripping the markets and the financial services sector. Fear of the unknown, fear of change, and the fear of getting spanked again are weighing heavily and making the profession slow to respond. Putnam’s CEO, Bob Reynolds, is an example of how to take the next step even though it’s hard. He’s put himself and his company on the line by moving forward. Mark McKenna, Managing Director of Communications at Putnam explained, “We’re proof that the SEC and FINRA have created broad guidelines and it is up to the industry to work within the guidelines to make social media work for shareholders.” Change comes hard. This is a big one at a bad time. However, it isn’t going away. The tools will change and the name brands will come and go, but many-to-many communication in a social context is here to stay. It’s a revolutionary change that cannot be ignored or dismissed.
As an ex communications bod for 2 of the UK’s largest financial services providers, and now CEO of a social media agency this post is especially interesting to me. We are talking currently to a financial services provider who operate a ‘mutual’ model, meaning value and rewards are returned to it’s members (in the form of better rates usually), rather than it’s share holders. ‘Value’ can take many guises, and clear communications, rapid and personal customer service and general industry insight all add value to a businesses proposition. Add to that the fact that advertising new rates, new products and new services becomes free across many social networks, and would help to recruit a younger generation of saver who could be with their chosen bank for a lifetime (admittedly there are regulatory factors to consider here), and it becomes a compelling proposition.
My final point is around the AGM which is so important to a members focussed business: Many people can’t be there in person but still have a huge interest in business direction. Quite often votes are cast, and opinions garnered at AGMs. Social networks such as Twitter could facilitate further participation and inclusion for these events (as in the examples of TED conferences), and again add further member value.