What you learn when you spend 17 years in the same company

Screen Shot 2015-04-04 at 9.35.57 AMLinkedIn recently reminded me that I’ve been working at the same big firm for 17 years. “Say happy work anniversary!” they said.

So I liked my own announcement, as did 76 other people. Their comments made me reflect on what I’ve done, what I’ve learned, and why I’m still working in the same place.

“Congrats! WOW has it really been that long?”

Most of the comments were a simple “Congratulations” and many expressed mild shock at how time flies, or how I survived for so long, or both.

My favorite was this one: “17 years and mostly glorious. Well done!”

Mostly glorious. I remember when I joined in 1998 and it felt like we were building a business. In those early years, I spent months in London in a small apartment in South Kensington, working with smart people and intimidating traders to implement new technology. Then we were off to Frankfurt to do it there. It was thrilling. Against most predictions (including my own), our business thrived. We all did.

I also remember laying people off and barely escaping that process myself. I remember fear and stress. I remember a string of bosses and the worst performance review I ever had.

17 years in a large organization means I've seen the best and the worst of people, of teams, and of the firm overall. It means I've failed many times, and learned about the vicissitudes of business and life. Much of what I see now at work is comprised of movies I have seen before.

“All the best for the next 17”

Working in a big organization, I’m increasingly conscious that my work there is not obviously ennobling. I’m not saving lives or saving the planet.

What keeps me working there are 3 Cs: craft, connections, and compensation. Large organizations provide unique opportunities for developing valuable skills, to do so with people around the world inside and outside the firm, and to get paid regularly while you’re learning and connecting.

The organization is a platform, one that I get value from while I deliver value of a different kind to the firm and the people in it. Late in my career, I’ve learned to spend much more time on my craft and my connections and less time focusing on the yearly bonus that’s largely out of my control.

The biggest surprise

The biggest surprise to me is that the recent years have been my best by far. Not the best-paid or best-titled but the most important and the most helpful to people. We’ve changed the culture, given people a voice, and enabled them to take greater control of their career and life.

Although almost all of the people I worked with when I started are long gone, and the people and management I work with now have no idea of my contributions in the past, it's fine. There’s a more important legacy I’d like to leave.

As Maya Angelou has said, “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”

One woman who left the firm said congratulated me “for making people's work lives sunnier.” I liked that. Increasingly, I’m learning to mark my success by the number of people who say “Thank you for making this a better place.” That kind of feedback makes my work fulfilling and inspires me to do and be more.

Maybe working in a big company can be ennobling after all.

7 ways an industry community can help you and your firm

Do you really need another network? For those focused on making work better, there are already many networks and channels to choose from. (For me, in addition to a small group of people I know well, I rely on the Social Business Council, the Jive Community, Twitter, Google+, LinkedIn, and my firm’s social collaboration platform.)

Yet, last week, we started a new industry network. What could I possibly get there that I can't get elsewhere?

What I need

While I have plenty of networks, I need more than just connections. I need help - and more help than I’m getting currently. I need to accelerate my learning so I can make work better at my firm - more efficient, more effective, more fulfilling. And I need to do all of it more quickly.

There are 7 ways I’m expecting our new industry network will help me. I experienced 3 of them in our first meeting.

  • Use cases: Learning about other problems firms are solving - e.g., extending their communities to include partners or consolidating their entire intranet onto their collaboration platform - will broaden my sense of what’s possible.
  • Compliance, legal, HR: Sharing precedents - e.g., the handling of alumni data - will make it much easier to change opinions at my own firm.
  • Adoption: Hearing about creative approaches at other firms - like making the collaboration platform subsume the corporate directory - will help me re-think how we promote our platform.

In the coming weeks and months, I’ll be looking for yet more help via our shared online space, working group meetings, and future symposia.

  • Policies: knowing what other employees can or can’t do and how that’s communicated.
  • Technology: learning how to deal with everything from basic product implementations to integration and customization.
  • Suppliers: learning how we might act as a group to specify requirements for, say, on-premises implementations, support for Ethical Wall requirements, and even applications to save money.
  • Talent: connecting good individuals and vendors with good opportunities.

Sharing this kind of information doesn't fit neatly into 140 characters or email. This kind of learning requires richer, in-depth discussions, documents, and other forms of knowledge you can build on. This is one of the benefits of having our new community use a comprehensive collaboration platform.

And there’s another, even more important thing we’ll need.

What’s been missing so far

To realize all of this potential, the key thing we’ll need is trust.  As much as the new community members want value from participating, they won’t contribute unless they know they’re safe and have control over their content.

It’s a difficult thing to achieve. Trust is personal and human. It’s earned over time. It involves shared goals and actions more than policies. In my own networks, without trusted relationships, the sharing is shallow.

The closest I’ve come to experiencing a trusted network was in the Social Business Council managed by Susan Scrupski. She was constantly contributing, brokering relationships, curating knowledge, and tending to the needs of members. I trusted Susan (and still do) and met some great people via the Council. But as many new members joined from a wide range of different firms with different problems, I found we couldn't do much in-depth work toward shared goals.

So that’s why I need another network, organized specifically for my industry. To make meaningful progress towards changing my big, regulated firm, I need to do more than swap stories and tactics. I need to work closely with people I trust on specific problems we share. And I need to keep working with them until we solve those problems.

Together, we can make work better, faster.

Building a community to improve an industry

We’re still moving too slowly.

Big firms know they need to change, but most are spending too much time wrestling with technology, policies, and a scarcity of good use cases. For banks and insurance companies, change is even slower due to regulations and a culture of information hoarding.

It’s time to try something different. And, earlier this week, we did.

A symposium

On Monday, 19 banks and insurance companies convened on Wall Street to talk about improving collaboration at their firms. How to make work better - more efficient, effective, and fulfilling. Unlike other meetings or conferences, the focus wasn’t on presentations but on building a community - a purposeful network whose goal is to accelerate learning.

For example, everyone is trying to interpret country-specific data privacy regulations so we know what content we can store and share. It’s important to get this right but the lack of clarity is slowing everyone down. If we could share interpretations and implementations that were already approved, we could all move on more quickly to work that would generate more value.

Banks can share, too

This wasn’t a secret club talking about trading algorithms. The discussions were on basic issues like ways to eliminate waste or the best ways to build a community. Things you might read online or hear at an industry conference.

The key difference was the focus on connecting people who care about specific topics and understood the specific issues in our industry so they could accelerate change. In this network, there are no vendors selling products or fees to join. The motivations are more intrinsic: the desire to make work better.

“Why would you do that?”

Later in the week, I was speaking to a large consulting firm and happened to mention the symposium. They were a bit taken aback. “Why would you do that?”

Because our industry is in desperate need of eliminating waste.

Because our industry and our customers need more innovation.

Because the millions of people in our industry want more fulfilling work.

Because, in just a few hours working with peers at other firms, I learned of ways I could realize more value for my firm, more quickly, than I thought was possible. And now I have friends (yes, the “f-word”) who can help me.

“Oh,” they said. “That makes sense.”

What’s next?

One meeting doesn’t make a community. It will take quite some time before we develop the personal relationships and the trust we need to call it that.

But we took a step. Now, we’ll use an online space to share questions and some simple content. We’ll organize working groups to focus on specific problems we discussed at the symposium. We’ll share stories and back each other up so we can take greater advantage of precedents. As we learn and as we build trust, we'll be ready to share and do more.

To achieve the kind of change our industry needs, it’s time for a different approach.

Why are banks so interested in collaboration platforms?

This Tuesday, 7 banks attended an event to learn more about Jive, a social business platform. Insurance, publishing, consulting, and technology firms were there, too. But there were more in banking than any other industry.

Why?

Money

The main reason for all the interest is that banks have the most to gain from better collaboration and communication.

Many banks are huge companies. The top 4 US banks alone spend almost $300 billion and employ over 1.1 million people all over the planet.

More importantly, they tend to be wasteful. Over the past few decades, they made enough money that they could afford to be wasteful. They were focused on growth over efficiency - particularly on the investment banking side,

Now, with fundamental shifts in their business models, all the big banks need to seek other paths to profits. Eliminating waste, always an obvious thing, is more of an imperative than ever.

Staff recruiting & engagement

Just as it used to be easier to make money, it used to be easier to attract and retain people. Bank employees always worked hard under difficult, stressful conditions but they were paid a premium in exchange. And there was always a decided cachet to the phrase “investment bank.”

Now, as bonus pools and social recognition have been diluted, banks need to pay more attention to how work gets done. That includes, among many things, giving people the tools and convenience they're used to at home. It includes making it easier for people to do their jobs and to have a voice.

More than ever, if young, bright people feel like they’re going back in time when they enter a bank, they’ll look for other options.

Compliance

When it comes to sharing information, banks are conflicted. They aim to enforce “need to know” policies and “only use bank devices for work” policies. Yet they also want to break down the silos and discover more cross-selling opportunities.

Which is it? Well, it’s all of the above. Yet, the combination of old tools combined with restrictive policies leads to a set of incoherent, inconsistent, and ineffective controls.

Studies by regulators (e.g., looking for business use of public social media by employees) have shown that people, while conscious of the rules, tend to do what’s easiest and most effective to get their jobs done. Regulators caution that “willful ignorance is not an option.” If there's evidence that policies aren't practical, then banks need to do more.

Modern collaboration platforms are part of the solution, allowing firms to consolidate the current disparate array of tools. That makes it easier for employees to communicate while also making it easier for banks to retain and supervise communications where they need to.

What are you waiting for?

Every single bank I know recognizes that their collaboration solutions are inadequate. A few have made significant progress. Some started well but stumbled on compliance or organizational churn. But the remainder, the majority, are spending protracted time running pilots and wondering what to do next.

If you’re one of those firms, please stop. Given the extraordinary potential for commercial and personal benefits, the time for dithering is over.

Now is the time to make a decision, lead a movement, and change the way your firm works.

What’s it worth?

If social tools and practices can fundamentally change how we work, how much is that worth? As a starting point, I estimate the top 4 US banks alone can use social business efforts to realize an extra $5 billion of value.

At least.

Things to focus on

Sameer Patel is a noted social business consultant (now at SAP) who writes about accelerating business performance using social software. In a recent post, he pointed out that much of his audience is still asking the wrong questions.

“...we’re still looking at things such as “Encourage Sharing”, “Enable Action”, “Knowledge Capture” and “Empowerment” as end value points via social business...If practitioners can’t draw connectors between strategic and tactical objectives and how social networks facilitate execution, end users and executives won’t experience the needed aha moment.”

Focusing on people is important. But to be relevant to businesses, we better also focus on eliminating waste and increasing revenue opportunities.

Where to look

At large firms, in particular, controlling expenses is always difficult. The larger the firm, the harder it is to know who does what and who spends what. The costs - and the waste - add up quickly.

In just the top 4 US banks, for example, there are over 1 million employees and over $287 billion in costs.

Employees

 Costs
Bank of America

285,000

$90 billion
JP Morgan Chase

260,000

$81 billion
Wells Fargo

264,000

$65 billion
Citigroup

266,000

$51 billion

Not all costs can be reduced using social tools and practices. (Legal costs, for example.) But, in looking to improve efficiency, a good place to look is in the support areas - large divisions that cost a lot but don’t bring in revenue. A good rule of thumb is that about 1/3 of the people and 1/6 of the costs are for 3 such functions - IT, Operations, and Finance.

Just that slice of these firms costs $47 billion.

A good match for social business

Drilling further into that number, a firm like Bank of America might have 50,000 people in IT alone. (In contrast, Facebook is worth almost as much as all of BofA yet employs only 3,000 people.)

What are those IT people doing? They’re not writing software. Largely, they’re moving information around. They’re coordinating work among multiple teams and functions. They’re supporting systems and trouble-shooting problems. They’re overseeing the use of expensive hardware, software, and market data.

And those are terrific areas to apply social tools and practices.

Social business efforts are ideal for connecting people across locations and across teams to solve problems more quickly, reduce cycle times, reduce service calls, optimize the use of resources, and a wide range of other use cases.

These banks have all tried the traditional, centralized approaches to cost-cutting - offshoring, vendor management, bonus reductions - with some good results.

But the waste is too insidious, too pervasive, to just be managed centrally. And the only way to drive out the waste in that $47 billion of support costs for these 4 banks (and in the overall $287 billion of expense) is to enable much more distributed approaches.

  • Can the 4 banks improve the spread of best practices to reduce their computing costs of $12+ billion by more than 8%?
  • Can they reduce the time associated with chasing information to increase productivity of the 300,000 support people by more than 5%?
  • Can they crowdsource the quality of who’s using what (and how) to reduce overall expenses - not just cut but optimize - by an extra 5%?

Yes, yes, and yes. It may not necessarily be $5 billion in savings. It could be more.

How to generate more revenue

It’s important to focus on costs because those are the hard dollars. Still, a lot of revenue flows through banks. The 4 big banks generated revenues of well over $300 billion.

How much more could they generate using social tools and practices?

Morten Hansen writes about one aspect of this answer - cross-selling - in his excellent book, “Collaboration.”

“Wells Fargo is able to collaborate internally across its eighty-four businesses to present “one Wells Fargo” to customers, who in turn buy more products. This collaboration contributes to profitable growth.”

Social tools and practices are ideal for exactly this kind of objective - connecting people, products, and ideas across the firm to deliver “one Bank.”

The Wells Fargo CEO knew that “The cost of selling a product to an existing customer is only about 10 percent of selling the same product to a new customer.” And, with a focus on cross-selling during the period from 1997-2007, Wells Fargo doubled their sales-per-customer.

Importantly, that number was twice what Bank of America sold per customer in 2007. And the profits-per-customer was also double. (Hansen includes excellent data in the endnotes of “Collaboration” to back up these numbers.)

With well over 100 million customers, think of how much more revenue the 4 banks could generate. Now, add that to the cost savings above and my estimate of $5 billion of extra value looks conservative.

Think big

In the past year, I’ve been guilty of aiming too low. Of trying to save, say, $10 million so I could have a positive ROI. That’s nowhere close to good enough.

We’re in the middle of a megatrend. And now is time to go after the big commercial benefits.

As Sameer writes,

“The first innings of social in the enterprise is over. Those organizations that like to experiment have done so...But there’s massive untapped opportunity out there to revise the value proposition...Until then...executives will treat “social business” as another Mickey Mouse program until they see how it matters to revenue increase, cost reduction and risk mitigation.”

For the social business movement to be sustainable and relevant for enterprises, then we have to focus on achieving measurable commercial benefits.

To help the people working in our large enterprises, we have to go beyond just connecting them. We have to make our enterprises much more efficient and effective.

Re-humanizing banking: making savings social

Banks focus a lot on scale and efficiency. On making financial plumbing work better. And that’s good. But banks are largely ignoring another source of value: personal connections.

Now, social tools and practices make it practical to “re-humanize banking” - to connect employees to employees, employees to customers, and customers to each other. (In a “re-humanize” series of posts, I’ll be writing about each category.)

“Social saving” is one area where connecting customers to each other can help banks as well as customers.

Here are several examples. Note where the innovation is coming from - and where it isn’t.

SmartyPig

Social saving” is broadly defined as sharing a saving goal with your social network and having them help you reach that goal through peer support or contributions.

Perhaps the best example of social saving is SmartyPig: “a free online piggybank for people saving for specific financial goals.”

With an engaging mobile app, SmartyPig makes it easy for users to “add money to an existing goal, make contributions to friend’s goals...and share messages through Twitter and Facebook.”

Where does the money go? Not to your bank but away from it. (“Savings accounts are securely held at BBVA Compass and are FDIC insured.”)

piggymojo

piggymojo focuses on “impulse savings.” (Here’s a nice article on Mint.com describing the concept.)

When it comes to money, piggymojo aims to “make saving it more rewarding than spending it.” Every time you turn an impulse buy into an impulse save, you text the amount to piggymojo. Then they share it with your savings “partners” (e.g., your spouse) as well as your social networks.

Unlike SmartyPig, piggymojo doesn’t handle your money. They just track your savings and “make it easy for you to transfer your weekly savings to a dedicated savings account.”

Savingspoint

Savingspoint “is an online social savings account that allows you to save and contribute money towards savings goals.” You simply share your goals online and with your social networks. Then you give or receive money for things like weddings, college, or fund-raising events.

Like SmartyPig, Savingspoint uses a 3rd-party to hold the funds instead of your bank (“your funds are held by Partner Bank(s), which are FDIC members”) but they charge fees on some transactions.

Banks encourage savings, too. (But they’re not social.)

Putnam, an investment company, takes the idea of impulse savings a step further. Their PriceCheck&Save app lets you scan a barcode, retrieve a price, and (instead of you buying the item) transfer that money to your Putnam 401k account. (To further motivate you, the app tells you how much more you’ll receive every month throughout your retirement as a result of saving instead of buying.)

PNC Bank lets you “Shake the Pig” with its Virtual Wallet. Their mobile app lets “customers...shake device [sic] or tap the wallet to transfer funds from the Spend Account to the Growth Account”

Both of these financial firms want to make it easier for customers to save and increase balances. But they’re missing the social element that provides support and encouragement and makes the whole savings process more engaging.

There’s more. Much more.

All the banks are looking for ways to be more profitable. Instead of a race to the bottom on efficiency (or, worse, adding fees) - instead of just using social tools to generate Likes - they might look for new ways to connect people to increase engagement and create value.

The customer-made videos on SmartyPig’s inspiration page speak to the possible increase in customer engagement. And this quote from a SmartyPig customer speaks to the business threat and opportunity for banks:

"Went to a bank yesterday to open an account. Picked up a magazine while waiting for the rep, saw an article about SmartyPig, went home and opened up my SmartyPig account. Funny how things happen."

— Susan B. (via Facebook)

Re-humanizing banking

The only people I trust with all my money are my wife and my bank. Yet, while I love my wife, I don’t know a single person at my bank.

Despite all its skills and resources, my bank is, for me, just a faceless institution that houses cash machines. There’s no personal connection or trust. No real difference for me when I walk into any of my bank’s branches or a competitor’s.

Isn’t that odd? Isn’t that an opportunity?

Branch of the future(?)

Banks know that things can be different. And several are promoting their version of the “branch of the future.”

The problem is they all seem to focus on the wrong things.

The NY Times, for example, reviewed one such opening:

“[The CEO said] “customers want to be served in a very different way.”

To accomplish that, they, first and foremost, bought many flat-screen televisions.

The new branch features them on seemingly every available surface, including six “interactive sales walls” that take the place of paper brochures. The branch — which has the feel of a chic hotel lobby more than anything else — also features a 24-hour video-chat terminal for customers who happen to find themselves needing assistance from a representative at, say, 4 a.m. on a Saturday.

“We want this branch to be more than just a bank,” [said a head of retail banking]. “We want this branch to be a place where customers view it as a hub, a center of the community, if you will. A place where they feel warm and welcome, that they can come in and experience our free Wi-Fi access.”

That's the future? Really?

Banks are people, too

Flat-screen TVs and WiFI won’t make a branch a “center of the community.” People will.

Banks don’t have to be faceless institutions. There are 2 million people who work in the top 20 banks alone. And, in all the banks I’ve worked in, it’s the people who’ve truly made those places great.

Banking can and should be personal.

Branch of the future!

The branch of the future should focus on personal connections - on re-humanizing banking.

While “personal banking” has traditionally been reserved for very small banks or very wealthy clients, social tools and practices make it easier to scale a wide range of personal connections.

  • Connections between employees and customers. Using social platforms to build relationships with customers that want them. Complementing the globalized, standardized bank processes with local, personalized advisory services that build trust and engagement.
  • Connections between employees. Cultivating internal communities of practice so employees in similar roles can help each other solve problems and get better at what they do.
  • Connections between customers. Cultivating customer communities to connect customers with similar financial goals and challenges. Enabling customers to help each other by providing the platform, community management, and professional advice.

Yes, there are significant risks and tradeoffs with all of this. Yes, it’s hard.

But, given the amount of money involved and the number of people working with and for banks, the benefits of re-humanizing them are staggering. And well worth the effort.

Forget Likes. Your bank should be your best friend.

Recently, someone sent me a list of the “Top 150 Banks on Facebook.” There was a note attached pointing out how the banks at the top of the list were out-innovating the others who were failing to achieve “social media success.”

That’s ridiculous.

It's a tough time to be a bank - or a banking customer. So banks shouldn’t be using social platforms to be popular. They should use social platforms to make banking better.

Here’s a real example.

Billguard

BillGuard is a small start-up that “alerts you to hidden charges, billing errors, misleading subscriptions, scams and fraud on your credit cards.”  They claim 9 out of 10 people don't check their bills, or merely skim them quickly for large purchases (that’s certainly true for me). So they aim to make it easier to catch problems on your bill.

When you sign up for their free service, you register your credit cards by giving them your login and password. They scan all your charges, looking for possible problems based on their own data and analytics as well as a unique crowdsourcing approach to fraud detection:

“Every day tens of thousands of people report bad charges on their credit and debit card bills to their banks and merchants. Millions more post their complaints online. Up until now all that knowledge hasn't been benefiting the most important person of all, you. BillGuard is a free service that harnesses our collective vigilance to protect everyone from hidden charges, billing errors, forgotten subscriptions, scams and fraud.”

Real “social media success” for banks

Billguard is a great idea and I use it every month. But isn’t odd that I’m giving all my credit card data to a small start-up?

Shouldn’t my bank provide this valuable service for me?

  • They already have my data and my money.
  • They already have sophisticated fraud detection mechanisms.
  • And they could have a huge social network of their own to crowdsource further improvements to their data on fraudulent charges. (Bank of America, for example, has 40 million cardholders.)

It’s another opportunity for banks to apply network thinking. An opportunity to engage their huge customer base to solve old problems in new ways.

Instead of getting me to Like them, my bank should treat me as a friend - a really good friend who’s trusted them with all my money and needs help taking care of it. In doing so, my bank would improve their reputation, my loyalty, and their value.

That would be real social media success.

Why “we’re regulated” is no longer a good excuse

“We’re not sure we can, so we’d better not.” That’s what you’re likely to hear if you try to pursue a social media project in a pharmaceutical or financial services firm.

It’s because some industries have very specific regulations when it comes to moderating, supervising, and retaining electronic communications. And, when the rules were new, a “wait and see” approach might have made sense.

Now, though, more businesses want to use social media. There are more tools and practices to help address the regulations. And more firms are already using social media in compliant ways.

So, waiting on the sidelines while other firms capitalize on one of the biggest trends in a decade is no longer good policy. It’s irresponsible.

If your firm is still saying “no”, here are things you can and should do to get to “yes.”

Know the rules

Part of the issue is that too many people simply don’t know the regulations. Whether you’re in a business line or in IT, it pays to educate yourself. The material isn’t long or terribly complicated. In just a few hours, you can learn enough to eliminate most of the ambiguity. The policies you’ll need. The kinds of content you’ll have to pre-approve. The data you’ll have to archive.

And being able to quote “FINRA 10-06” will let the governing functions know you’ve done your homework.

Know the tools and practices

Since those rules first came out in early 2010, services have sprung up to meet the new requirements of regulated firms. Examples include new companies like Socialware, who “enable leading Financial Services companies to profitably build valued relationships.” (They recently enabled Morgan Stanley’s brokers to use LinkedIn to generate leads.).

Or Actiance, “enablers of safe and compliant use of unified communications.” They’re a more mature company (they were formerly known as “Facetime” until they sold the name to Apple). And they’ve been helping firms for years to handle compliance rules for instant messaging and other media.

While software services like these don’t address all the issues, they make it easier than ever for regulated firms to use social media in compliant ways.

Know the benchmarks

Perhaps the most powerful way to ease the minds of compliance and legal is to tell them “other banks have already done it.”

The governing functions might hate the idea of using Twitter, for example, to deal with customer complaints. But they’ll be mollified when they see how Citibank, BofA, Wells Fargo and others are already doing it.

Being able to point to a precedent gives them confidence that a compliant solution is possible. And they can always speak to vendors or to their counterparts at other banks to understand the details.

Strength in numbers: Connect the businesses + Prepare the case

With all this knowledge, you’ll still need to answer the questions: “What problem are you trying to solve?” and “What’s it worth?”

Too often, social media efforts shy away from these questions. They bemoan the difficulty of measuring ROI. (“What’s the value of a phone call?” they’ll ask.)

That’s a mistake. Like most legal and compliance issues, it’s all about managing risk. You have to offset the downside of introducing new electronic communications with measurable benefits (or with the political capital of your sponsor).

You further increase your chances by connecting different business lines that want to pursue similar initiatives. Say your case to use LinkedIn for recruiting isn't compelling enough. Then look within your firm to see who else could benefit and bring that aggregate case to the governing functions. They'll be more disposed to say "yes" if they see private wealth management and retail brokerage are also sponsors. (A prior post introduced the idea of an internal social media council that allows your firm to easily make just these kinds of connections.)

Simply put, your best tactic in getting approval is a strong business case and one or more strong sponsors.

Take a step

At a recent regulatory conference, Morgan Stanley's executive director of legal and compliance quoted 2 key reasons why he cares about social media:

  1. 50% of investors with $1 million or more in assets are active on social media;
  2. Social media accounts for 1/3 of the time users spend online in the United States

So even the legal and compliance people understand the need to act.

If they’ve said “no” to social media in the past, it’s because they’re typically presented with projects that include real risks and costs but few specifics about the upside.

Change that. Do  the necessary research, prepare the business case, and take a step.

Banking + social media: 4 business examples

Banks are conflicted. Almost all of them block employee access to LinkedIn, Facebook, and Twitter. Yet the individual businesses within the banks all want to use those channels.

Beyond just advertising, those banking businesses recognize that they can engage people in new, more commercially effective ways.

Here are 4 examples.

Recruiting

This is the most obvious example. If you want to inform people, it makes sense to use the same channels they use. To go where they go. Online, for graduates, that tends to be Facebook. And for professionals, it’s LinkedIn.

Of the banks, Deutsche Bank has some of the best material on Facebook and LinkedIn. (I particularly liked their tongue-in-cheek video : “The unofficial guide to investment banking.”)

These channels complement their company portal which has additional material and links to application processes. Being social, they make it easier for candidates to share that content with their networks (broadening the company’s reach) and to ask questions (increasing engagement).

Supporting retail customers

Another common example is providing customer service, particularly via Twitter. Bank of America, Citibank, and Wells Fargo all do this well.

It’s hard to measure how effective this is. But it’s easy to see that doing nothing while customers trash your brand in public is a bad thing. Here’s a typical exchange on Twitter that turns a negative experience into a positive one - one that’s shared with the customer’s entire network.

@KUSH_MULLA: "#ShoutOut To Bank of America for letting my ATM card expire without sending me a new one in advance still waiting"

@BofA_Help: "I work for Bank of America. Did you call to check the status of your card? Anything I can do to help?"

@KUSH_MULLA: "They need to give you a raise. This is what I call outstanding customer service"

@KUSH_MULLA: "@BofA_Help yeah, I called they said my card should be here within 7 to 10 business day thanks a lot"

Generating leads for brokers

This is where it gets tricky. Having HR and customer service use social media is relatively benign. But when it comes to talking about financial products, there are significant restrictions on who can say what. Anything that seems like an advertisement or recommendation has to be approved by compliance beforehand.

The legal risk is real, and so most firms have shied away from it altogether.

So, Morgan Stanley created a bit of a stir when they announced their brokers would start using LinkedIn (and soon Facebook). In their own words:

“Many of our clients have been demanding social media,” said Andy Saperstein, head of wealth management for Morgan Stanley Smith Barney. “Many of our advisers have been demanding it....”

“The crux of social networking is building relationships,” said Lauren Boyman, Morgan Stanley Smith Barney’s director of social media. “That’s what financial advisors do, build relationships, build trust with their clients. This is a tool for them to do that in a more effective way.”

Ms Boyman added that both young and seasoned advisors had long been asking for permission to use these tools to market themselves and get referrals: “I talked to one financial advisor who said, ‘I’m 52 years old now and I know that if I ignore this, five years from now, I’m really going to be a dinosaur.’”

Morgan Stanley is taking it slow. They'll open up LinkedIn to only 600 of their 17,000+ brokers. Then they'll see how it goes over a few months before proceeding. But it's a positive step that other firms are sure to emulate.

Recommending funds

Even if banks have difficulty recommending specific products, it’s easy for customers do so. As for many retail products, consumers face a dizzying array of choices when it comes to asset management funds. And so referrals from friends are a particularly powerful way to cut through the noise:

“Nearly 70 percent of consumers said a positive referral from a “friend” on Facebook would positively influence their purchase decision. In addition to a tool that retailers can use to promote their brand, products and services, Facebook can also serve as a peer-to-peer comparison shopping tool where consumers can seek advice from their friends and family members.”

This is why social platforms are so relevant to commerce. Increasingly, they are a channel for recommendations that lead to purchases. Whether you’re a shoe company or a bank, you’ll have to use those channels to remain competitive.

“Willful ignorance” is not an option

With all these examples, blocking access or preventing businesses from engaging on-line is no longer a viable strategy. Even the regulators don’t recommend it.

Why? Because their own studies show that individuals at firms are already circumventing official policies to use the public social media channels. And the regulators want actual enforcement that works.

Pretending it’s not happening is not enough. So it’s time to work through the difficulties and the rules. To find ways to use the public channels in compliant ways.

It’s better policy. And it’s better business.