Derek Bradley, CEO of Panacea Adviser, explains why it’s time for the financial services industry to get on board the social media train
Way back in the 1990s, many businesses, and especially those in financial services, didn’t see why they needed a website, email or even mobile phones. What a long time ago that seems. And how wrong they were.
In a way, social media is exactly the same. Not everyone understands exectly why they need it, but eventually everyone will.
There is indisputable evidence everywhere you look of the increasing importance of social media. Incite’s recent Social Media Report said that consumers continue to spend more time on social networks than on any other category of website. The report also noted that the total time spent on social media in the USA increased by 37% to 121 billion minutes in July 2012, compared to just 88 billion minutes in July 2011.
People, Not Machines
Here in the UK, the recent proliferation of mobile devices and better, faster connectivity have helped fuel the continued growth of social media. Some 5% of UK households now own an internet-connected smart TV. But ultimately, social media isn’t about technology – it’s about relationship building. And surely all client-focused business can recognise the importance of that?
But we seem to have a special situation in financial services. The desire to embrace social media is constantly countered by the urge to regulate it – and regulation and the internet are not easy bedfellows. So does this restrictive attitude from authority go some way toward explaining why the financial services sector has been so slow to engage?
Fear of the Unknown
It could, of course, be simply a question of age. The average age of a financial adviser is considerably greater than you might find in other industries. But I think it runs deeper than that. I believe the industry’s reluctance stems from a fear of trying to understand how matters like what, where, when, and importantly “is it compliant?”, all impact upon the ease for them to engage.
Providers are also very concerned that engaging with social media will open the floodgates to a tsunami of negative comments that they cannot control. Individuals and businesses care a lot about what their peers think – and, for better or worse, modern technology allows for information on products and services – good and bad, true or false – to be instantaneously shared.
Getting information from the internet can be like taking a drink from a fire hydrant on full flow. But by engaging with that social media flow, influence can move both ways.
That you or your business lack a presence on Twitter, LinkedIn or Facebook does not prevent others from making negative statements about you. Whereas, by being there, at least you can put the record straight and engage with the same audience.
“The internet is the first thing that humanity has built that humanity doesn’t understand – the largest experiment in anarchy that we have ever had.”
Eric Schmidt, Chairman of Google
Persuading the Regulator
The old FSA was never keen on the using of social media, because it couldn’t control it. The guidelines that came from its Canary Wharf head office about the consumer detriment that 140 characters on Twitter could cause displayed a telling ignorance about the fact that, increasingly, consumers don’t search for products and services. Rather, services come to their attention via social media, warts and all.
Pleasingly, the FCA seems to be adopting a more considered position. Chief executive Martin Wheatley recently clarified the regulator’s intentions to make better use of Twitter. Indeed, @TheFCA had some 10,000 followers even before the regulator officially came into existence. And it has been deploying people from throughout the organisation to monitor and engage with Twitter users.
Business usage of the internet has expanded way beyond just making money. These days, it’s all about brand awareness, reputation, creation, influence, opinion seeking or forming and much more. The power of social media is that it forces necessary change. And any regulator, any adviser and any consumer, should see that as a very big and positive outcome.