Sunday, May 15, 2011

Social Media and Innovation in the Financial Services Sector

I recently attended a conference on IT in financial services in Macau and had the opportunity to meet with several CIOs from prominent financial services organizations in the Asia Pacific region.

During the event, much discussion was around innovation. Financial services organizations are exploring ways in which technology can engender innovation, such as the manner in which they engage with their customers and the types of products and services that they offer.

Financial services firms have a very strong history of using technology to engage with customers in new and innovative ways. For example, Internet banking was quick to emerge once Web usage became widespread. Similarly, smart phone bank apps appeared very rapidly and allow us to interact with banks using our smart phones.

Social media also offers opportunities to innovate in the way financial services firms interface with their customers and other stakeholders. However, most financial services organizations in Asia Pacific are more pre-occupied with blocking employee access to social media than engendering innovative use of social media. The reason for this is usually given as a need to adhere to internal policies. But what is driving such policies? In my discussions with CIOs, the need for security and data leakage prevention was mixed up with concerns around productivity. To me, these are two totally different beasts and need to be addressed in totally different ways.

Data leakage and other aspects of security must be addressed comprehensively by financial services organizations. Is it necessary to block or to restrict access to social media to achieve these goals? Products such as Zscaler allow organizations to offer access to social media while preventing any uploads or downloads. It enables organizations to separate security and productivity concerns that are associated with social media. Such products address security risks while permitting access to social media. I know of at least one major financial services organization in Asia that uses Zscaler for precisely this reason. The CIO believes that allowing staff to use social media can enable them to work more efficiently and engender innovation. He stated that even though he doesn’t use social media extensively for his work, he recognizes that he cannot force others to approach their work in the same way, especially younger workers. In this particular institution, there is no longer a concern around falling productivity because of social media usage. It acknowledges that attempting to restrict access to social media is a losing battle and will eventually backfire as social media tools become increasingly widespread within businesses.

Concerns around falling productivity existed around the use of spreadsheets in the 1980s and around the Web in the 1990s. These concerns have proved to be unfounded as employees found new ways in which these tools could support them in doing their jobs. The same is the case with social media. Ultimately, employees must be measured on their performance. No link has been demonstrated between improved employee performance and restrictions on social media. It is doubtful that the two are even related. Financial services institutions must focus on real issues that impact them when social media is used. They need to concern themselves with engendering innovation and allowing individual employees to work in the ways that make them productive, while addressing the security issues around these activities. Social media will be a key tool for financial services as they innovate, enhance customer experience, and make themselves more competitive. Indeed, blocking and restricting access to social media, based on unproven productivity concerns may well make financial services firms less competitive, less efficient and less productive.

No comments:

Post a Comment

Post a Comment