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FinancialServicesWhitePaper

20. Apr 2016
FinancialServicesWhitePaper
FinancialServicesWhitePaper
FinancialServicesWhitePaper
FinancialServicesWhitePaper
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FinancialServicesWhitePaper
FinancialServicesWhitePaper
FinancialServicesWhitePaper
FinancialServicesWhitePaper
FinancialServicesWhitePaper
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FinancialServicesWhitePaper
FinancialServicesWhitePaper
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Social Media Trends and Best PracticesSocial Media Trends and Best Practices
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FinancialServicesWhitePaper

  1. Harnessing Social Networking In Financial Services Whitepaper
  2. 2 Why Financial Services Firms Need a Social Networking Strategy 3 Social Media Versus Social Networking 4 The Social Way to Communicate Externally 5 Five Stages of Social Engagement 6 Governance and Information Security 7 Regulatory Guidelines 8 Building a Social Business Strategy 8 Business Process and Information Technology 9 A Pragmatic Action Plan 10 Summary 10 Table of Contents
  3. 3 The democratizing forces of web social networking are transforming the way enterprises worldwide do business. Online social networking has enabled individuals and organizations to join communities of interest and share information widely and easily. The ever-increasing adoption of mobile oriented consumer technology permits people to carry powerful, networked devices everywhere. This constant connectivity is driving the expectation of an always-on, always- available interaction with organizations. Countless brands participate on networks such as Twitter, Facebook, LinkedIn and other specialized web communities, where people have cometoexpect,ifnotdemand,organizationsmakethemselves available for multi-directional communications. At Cisco Systems, 80% of visits to their Facebook Support Community, with over 6,000 active monthly users, has eliminated the need for support phone calls. The cost per interaction with traditional customer support averages $162 per phone conversation versus $0.06 via Facebook.1 At Dell, 25,000 online conversations take place every day through Facebook and Twitter.2 Dell strengthens brand awareness, enhances customer relationships, gains valuable feedback, protects its reputation, and increases sales by fully utilizing social networking. Both Cisco and Dell integrate social networking fundamentally into their business processes and reap the rewards accordingly. In the financial services industry, social networking is here to stay and demand to use social technologies byclients, financial advisors, and business partners is out ahead of most firms’ ability to manage it. 85% of financial services professionals under 50 years old are utilizing social networking for personal use.3 More than 40% of financial services professionals under 50 years old say a social networking presence led to cultivating current business relationships or helped identify new clients.4 A firm’s business ecosystem includes employees, clients, prospective clients, business partners, suppliers, shareholders, regulators, and competitors. They comprise the constituents participating in and reachable through social networking. Currently available technology can empower your firm to engage, internally and externally, in ways that traditional one-way communication cannot support. Successful financial service firms need to embrace and manage social networking and let it become part of the firm’s operational fabric. Here are the most common reasons motivating financial services firms to build a social strategy: • Measure sentiment. • Enhance awareness. • Increase assets under management. • Build brand community. • Protect reputation. • Facilitate relationship management. • Improve internal collaboration. • Assist fund portfolio design. Social Business Ecosystems are the New Reality Why Financial Services Firms Need a Social Networking Strategy Successful financial services organizations need to embrace and manage social networking where it makes sense to do so.
  4. 4 Currently, most businesses use social technologies for external marketing communication purposes. The term “social media” is most often linked to brand advertising and online engagement with parties outside a firm. Public relations and digital marketing agencies have played a large role helping many companies, across industries, with their external social engagement messaging to date. “Social networking” has a broader meaning which includes and extends social media concepts to all internal and external communications and processes utilizing social technology platforms. These software platforms enable virtual communities of interest to form around a topic, brand, or organization. In a purely internal example, social networking technology can permit virtual teams that include product development, marketing, sales, and relationship management to collaborate more effectively than using e-mail, conference calls, and face-to-face meetings alone. Enhanced internal processes in turn deliver differentiated value back to business partners and clients. Utilizing social networking in this broader context is outside the core competence of public relations and digital media agencies and requires a more holistic business process and technology skill set. The paradigm of an always on, streaming flow of tailored information targeted to a community of interest made so popular by Facebook, LinkedIn, and Twitter, is being demanded by the employees of many organizations for internal use as well. A complete social networking strategy must anticipate the broad implications of how financial services firms will communicate, both internally and externally, in the years ahead. Social Media Versus Social Networking Listening and Engagement Vibrant Internal and External Communities Social Innovation User-influenced products and feedback, identify product enhancements and new requirements Brand awareness, stimulate interest, measure sentiment, protect reputation, gain client feedback, collaborate with internal colleagues Keep track of financial advisors’ career changes, understand client issues and sentiment, identify new clients, shorten sales cycles Active outreach, resolve issue quickly, improve efficiency, eliminate support phone calls, reduce costs Collaborate with business partners, share thought leadership, build trust Product Development Marketing Relationship Management Sales Customer Service Figure 1. Broad impact of social networking across the organization. H H H H H
  5. 5 The focus of many current social networking initiatives in the financial services industry is the use of social networking to help drive marketing and sales. While the impact of social networking will be profound inside organizations as well, the focus here is on financial services firms’ interaction with the outside world. There has been a fundamental shift in the tools and techniques used. The Social Way to Communicate Externally Social Strategy Tips: • Have a Plan. • Start Small. A successful plan will take on a life of its own. • Be innovative. Get to know your community and find out what will inspire and motivate them to participate. • Understand your employees and how they will respond to new ways of conducting business. • Tie the campaign into direct marketing and place information, invites to participate, and links in email, newsletters. OLD WAY NEW WAY Telemarketing Trade Shows Direct Mail TV, Newspaper and, Radio Ads Search Engine Optimization (SEO), Adwords, Social Engagement Applications Blogs, Webinars, Tweets, Virtual Conferences Facebook, LinkedIn, Twitter YouTube, Google, and Facebook Ads As target audiences increasingly spend time on social networking platforms such as Facebook, LinkedIn, and Twitter, it becomes imperative for financial services firms to effectively engage with them there. The power of participating comes from the ability to communicate with large target groups very efficiently. Figure 2. Old marketing techniques replaced by new. R R R R
  6. 6 Fully harnessing social networking initiatives requires clear goals and measureable objectives to evaluate success. There are five steps to an effective social engagement model: • Plan • Listen • Engage • Measure • Evaluate and Revise Plan A well conceived plan with executive commitment, clear goals, measurable objectives and appropriate resources is necessary for success of a social marketing program. Having answers to the following lays the proper foundation: • What are the social initiatives’ goals and objectives? • What are the risks and rewards? • What will stimulate the desired target audience engagement? • Are government regulation and corporate governance considerations well understood? • Are all stakeholders appropriately involved? (Distribution, Marketing, Legal, Compliance, IT, HR ) • What marketing and technical personnel skills are needed? • What new technology needs to be implemented? • Who in the organization will lead the initiative? • How will success be measured? • How much will it cost? • What comes next? Listen Knowing what is being said about your firm and the competition is an important early step. Finding out which social networking platforms your online target audiences congregate and collecting a thorough understanding of the dialog takes technology and know-how. The quantity of both structured (i.e. opinion surveys) and unstructured (i.e. tweets) data can quickly grow so large, sophisticated software tools are needed to identify trends and determine relevance. Numerous software products are now on the market and the pace of leapfrog advancement is rapid. A recent report, “Your Brand: At Risk or Ready for Growth,” found that 75% of those surveyed said it would have a positive impact on their experience as a client if a firm took the time to find out more about their needs.5 Listening in effectively to the dialog taking place on the social networking platforms can enhance and potentially replace the need for traditional opinions surveys. Engage Where and how does the firm participate in the social dialog? What should be said that creates brand awareness, stimulates interest and drives commitment? How is the firm’s reputation protected and enhanced? What human capital resources are required to handle the task? The social web is based on human interaction and the target audiences you engage. If done well, utilizing social networking will help your constituents develop a closer affiliation with your firm over time. In most cases, the best people to interact with your constituents are subject matter knowledgeable and from your own staff. A successful external social networking initiative should create something of sufficient interest that the word spreads, more people join the dialog, and the firm’s brand image is enhanced. Five Stages of Social Engagement
  7. 7 Innovative technology plays an important role in managing how your firm engages in the social web. Software can now assist and control issues such as: • Who within the firm is allowed to do what with social engagement? • How will all interactions be captured and cataloged for audit, monitoring, and regulatory purposes? • How can communications be produced once and efficiently distributed to many social networking platforms simultaneously? • How can inbound traffic from multiple social networking platforms be aggregated and managed efficiently? Measure Social data must be treated as any other corporate data asset andthereforemustbeintegratedintoanorganization’sreporting and analytics strategy. Management considerations are: • Selecting and implementing, monitoring, and analytic tools to measure social initiatives effectiveness. • Developing analytic and reporting requirements. • Creating discovery and analytic rules from which critical business information can be obtained. • Designing and developing social reports and dashboards consistent with the firm’s overall reporting strategy. Again, software tools play a key role in making sense of an external social networking initiative and give firm management the information needed to make intelligent decisions. Every initiative requires metrics and reporting in order to determine the extent to which it has met the business objectives. Social networking monitoring tools aggregate conversations from all social channels in one place making it possible to create high level management reports. The sophistication of these tools is improving rapidly and evolving from simplistic key word search results to a deep understanding of social dialog relevance. Evaluate and Revise Reviewing the success of an initiative is essential for planning future ones. Questions to consider are: • What worked and what could have been executed better? • Did the initiative meet the business objectives set at the outset? • Was the effort worth the investment? An effective social engagement strategy requires a firm be committed for the long haul, continually learning, revising, improving, and investing appropriate resources. Governance and Information Security Strong corporate governance and information security helps the organization establish the accountability necessary to align behavior with corporate goals. It is important to understand the implications social networking has on the organization and the governance required to adopted it responsibly. Implementing the software tools and business processes necessary to ensure control and manageability is vital. A firm’s social networking engagement must be according to corporate governance policy, information security standards, industry guidelines, and government regulations. Before proceeding past the planning stage, ensure the firm has the governance and security infrastructure in place to satisfy the requirements of the business.
  8. 8 Financial Industry Regulatory Authority (FINRA) Regulatory Notice 10-06 issued in January 2010 provides guidance on the use of blogs and public social networking sites. FINRA 10-06, in conjunction with SEC and NYSE rules, gives clarity to how financial services firms must operate in the web social world. According to FINRA: • Postings on publicly available social networking web sites are considered advertisements. • E-mail or instant messages sent to 25 or more prospective customers are considered sales literature. • E-mail or instant messages are considered correspondence if sent to a single customer, an unlimited number of existing retail customers, and/or less than 25 prospective retail customers within a 30-day period. • Postings on password-protected social web sites are considered sales literature. • Chat room discussions are considered public appearances. Software products are now generally available to address the authorization, reporting, approval, auditing, and regulatory requirementsofFINRA10-06andtheotherSECandNYSErules. Depending on the policy your firm defines, adopt a solution that automatically routes social networking messages to a registered principal to accelerate the review process while providing a complete audit trail. Adopt a solution that enables configuration of supervisory rules based on the FINRA guidelines as well as your firm’s own unique procedures and policies. Ensure the solution enables the firm to capture and retain all social networking activity, with the associated description about the content, and archive it in a structured fashion enabling easy retrieval. Be able to selectively disable social network platform functionality by role, user, and location. Tight control will protect the firm from harm and allow the social networking investment’s impact to be well understood by the firm’s management. Your compliance solution should give real-time usage insights down to the individual level, clarity of rule violations, and indications on the effectiveness of employee social networking training. Building a Social Business Strategy A social business strategy involves a systematic approach to ensure success. Social strategy needs to be designed and not just implemented. An organization’s success is based on the involvement of all critical stakeholders and must start with education. As with anything new to an organization, the possible must be explored but accomplishments are achieved only by getting stakeholders on the same page about those possibilities. Successful strategy eliminates ambiguity through alignment and adaptation. In the case of harnessing social networking, this can be a real challenge since new innovation is being introduced to the market almost every day. Don’t hesitate to evaluate your competition and the market in general. Engage in social networking to learn and help create your strategy. Social business strategy involves 4 critical steps: 1. Prepare: align the organization on what is possible. 2. Visualize: evaluate current state, identify opportunities, and document the plan. 3. Implement: build the solution and complete the deployment. 4. Manage: use metrics to determine progress and adjust to improve. Regulatory Guidelines
  9. 9 Educate Connect the organization to social trends and opportunities. Analysis Assess current state and organizational readiness. Plan Define the business model, approach, and budget. Design Design project approach and select technology options. Build Solution implementation and integration. Sustain Broaden scope of project, on-going operation, and monitoring. PREPARE VISUALIZE IMPLEMENT MANAGE Figure 3. A staged social business strategy. It takes highly skilled business innovation, information technology, sales and marketing professionals to build a first class social networking strategy. Below is a series of best practices steps: • Define social networking goals, objectives, and return on investment criteria. • Create an overall social business innovation approach and architecture blending business objectives with appropriate technical solutions. • Link your organization to the social web communities where the various target constituents congregate. • Integrate internal sources such as customer service databases and collaboration tools into the social business ecosystem. • Implement software tools and processes that ensure control and manageability according to corporate governance, information security policy, and government regulation. • Select and implement software tools to listen, understand, and engage in relevant internal and external social dialogs. • Select and implement monitoring and analytic tools to measure social initiatives effectiveness. • Integrate with existing customer relationship management systems. • Ensure organizational readiness to fully harness social networking. • Continually review and enhance the technology and business processes to ensure maximum effectiveness. • Stay current with the social technology changes and keep the organization informed of those offerings that have relevance. Business Process Innovation and Information Technology
  10. 10 1. Ensure that your organization wants to adopt social. As with the introduction of any new technology, the smart organization starts small. In the case of social technologies, there is no guarantee that your organization will embrace them. Carefully define the business issue you want to address and work closely with business leaders in a controlled pilot to ensure that your firm will embrace social technologies. Do not underestimate the change management efforts to drive adoption. Change management should certainly include access to training materials, but far more important is that users have a strong understanding of the business goals and objectives regarding the initiative. 2. Define success, avoid risk. Build on the pilot success. Expand the use of social technologies to include more users and more business use cases. Look for business cases that reflect the lessons learned earlier and engage appropriate business leaders to support the broad initiatives. Particularly in financial services firms, determine policy and governance to guide the emerging social environment. Many firms have balked at wide- scale use of social technologies because of challenges related to security, privacy and compliance. These issues are generally manageable, and a well-governed social environment will lower risk because of transparency. Involve all stakeholders; marketing, sales, relationship management, product development, customer service, human resources, legal, and network security professionals to build policy and governance models. 3. Treatsociallikeatrueenterpriseasset. Asyourfirmmoves social technologies into enterprise-wide deployment, be prepared to harden the implementation. A social business ecosystem should be capable of existing in a mission-critical environment. Operationally, your social applications should be highly available, integrated with corporate authentication systems, and deployed widely to drive critical mass of adoption. Integration with adjacent technologies, like line-of-business systems, should be part of your long-term strategy­and technology selection shouldsupportthosegoals.Organizationscurrentlymoving toward broad deployment are in the process of building out strategieswithcoreline-of-businesssystemslikecustomer relationship management (CRM). Summary Social networking combined with powerful, mobile, personal communications devices is the most impactful information technology trend of our time. It requires a new way of thinking and a fresh look at your firm’s business process from the outside in. While care needs to be taken to adopt social networking prudently, not moving assertively forward carries far more risk to the long-term viability of your firm. The use of social networking globally is now so widespread, there is simply no better new way for financial services firms to reach targeted audiences efficiently. First movers have a competitive advantage because they build experience and brand loyalty that will be challenging for others to overcome. Fully harnessing social networking requires expertise your firm many not have internally. The pace of change is so rapid that it is difficult for non-dedicated professionals to keep up. Along with stakeholder representatives from across the firm, get help early on from trusted outside sources that are experts in the field and technology vendor agnostic. Taking the steps described in this document will position your firm for social networking success in the short and long term. A Pragmatic Action Plan
  11. 11 Sources: 1 Cisco internal source. 2011. 2 Dell internal source. 2011. 3 85% of financial services professionals under 50 are utilizing social networking for personal use. (Ledermark, 2010). 4 More than 40% of advisors under 50 said a social networking presence led to cultivating current business relationships or helped identify new clients. (Ledermark, 2010). 5 Your Brand: At Risk or Ready for Growth (Alterian, 2011). SoclWorx, LLC is an independent business process innovation and information technology professional services firm dedicated to helping organizations fully harness the value of social networking. We make Social Work. CONTACT US: SoclWorx, LLC 240 New York Drive, Suite 6 Fort Washington, PA 19034 Phone: 610-783-5350 E-mail: info@soclworx.com
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