Business Insider Intelligence reports that Americans spend an average of 37 minutes daily on social media, longer than any other internet activity, including email. In fact, social media has even overtaken pornography as the number one activity on the internet. However, most large banks and finance companies are not readily pursuing the social space, and are way behind with their social business strategies. In fact, the majority of banks and financial institutions I work with actually think they’re innovative because they have a Facebook page. This unfortunately means that true social business innovation for banks and finance is a distant vision.
As the former innovation leader for a large financial services institution, I experienced the challenges first-hand of trying to bring social innovations to life. I experienced the humility of simply trying to explain to board members how social media innovations could help us and was politely rejected. I made a mental note to never bring any social business innovations before board members again.
[For More on This Topic: 2014 Forecast: The Evolution of Social Media in Banking]
1) Protect the early development of key social business innovations. Some of the more disruptive ideas are just too foreign to exist within the operational environment of an established company. Social business innovations usually fit that category. For those ideas, there must be a protected environment where ideas can grow and incubate. They must be protected either through a separate structure with different approval gates, or through a laboratory type environment where social media experimentation is allowed and mistakes are forgiven. With some protection from the large company culture, social ideas can grow. The idea of incubation isn’t new, but it needs to be modified a bit to be effective for social business.
2) Embrace reverse mentorship. Those old-school board members and senior leaders must be trained, and one of the best ways to train them is through mentorship. Not the kind they’re used to where senior leaders impart knowledge and wisdom to young upstarts, but the reverse, where the young, social media savvy employees teach the senior leaders. Financial services leaders have a lot to learn from the millennials, and a formal reverse mentorship program is a good start.
3) Promote and hire innovative and transformational leaders. Leaders who understand how to inspire and motivate others to generate change are essential for any kind of innovation including social business. The traditional transactional leaders are fine for some elements of running the business, but transformational leaders are necessary to carry new ideas forward. To truly gain traction, established companies must make it a priority to promote and recruit transformational leaders that see beyond the status quo.
The solutions will not be easy for banks and finance firms, but the above methods will definitely start to move the organization in the right direction. Of course, the alternative is for established companies to defend the status quo until their customers are being lost. But by then it will be too late. New market entrants and non-traditional competitors are learning and refining how best to operate in the social space. As hard as it seems for established financial institutions, social business innovations must be pursued now, or forever lost.
Mick Simonelli is an independent consultant on innovation in financial services. He previously worked as the head innovation executive at USAA.