Should Financial Institutions “Like” the Dodd-Frank Act?
By Brian Solis
On May 16, 2012
Over the course of the last year, I have spent a great deal of time working with several financial institutions as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Why? Well, Dodd-Frank introduced the most dramatic financial regulatory reform measures since The Great Depression.
As the financial industry aligns around the new agency responsible for implementing and enforcing compliance with consumer financial laws, fear, relief and questions are rampant across the industry. At the same time, consumers trudge through confusion and misinformation wondering why the financial system and the government failed them.
Financial institutions are also faced with reform with many suffering, either deservingly or not, from a loss of trust among investors and consumers.
In a time of uncertainty, what consumers need now is clarity through leadership. Answers, transparency, and protection…three pillars of relationships that everyday people assumed were part of the financial equation. They, or rather we, would later discover, quite painfully of course, that business as usual was anything but that. These pillars are needed more than ever to earn trust and business now and over time. Those who excel here will excel.
The public has spoken and regulation has been reframed. While change is in the air, leadership, direction, and answers are ethereal. Its presence is imminent, but it has yet to take shape.
One of the most incredible financial reformations in history is matched with one of the greatest information revolutions since the proliferation of the World Wide Web. Social media democratized information, media publishing, and distribution with social networks such as Facebook and Twitter, connecting almost one billion people around the world. Consumers now expect relevant information to find them. Together, financial reform combined with the connectedness, reach, and speed of social media can unite consumers around a common understanding and renewed confidence.
A grand stage has arisen in the form of PCs, tablets and smartphones. The spotlight is cast. The audience is seated. The question is, who will step up to the microphone? Who will take this opportunity to lead and instill confidence and trust among consumers and investors?
Beyond government, commercial organizations will need to compete for the attention, support, and investment of consumers. What’s at stake goes well beyond capital however. At the center of everything is trust. Those who earn trust will also earn the business and loyalty of customers and those to whom they’re connected.
Social media represents the key to unlocking relationships with consumers that mirror the long gone days of customer appreciation. Now in a time of need, these values can reignite customer engagement to fuel a new economy. Everything begins with the desire to engage. The next step is to package regulatory transformation, with useful guidance and advice along with brutal transparency. From there, the creation of an authoritative presence in social networks of relevance will serve as the hub for connectivity and education. Whether or not a presence already exists, businesses will need to think beyond “Likes” in Facebook, followers, and Retweets on Twitter.
To earn a position of authority requires the dispersal of unquestionable and relentless expertise. When it comes to social media, consumers have already spoken and they want tangible value. Add to the mix of social networking the capacity of a corporate blog rich with insight and financial institutions are gifted with a tremendous gateway for information that gives way to a new era of community building. We move from paradigm of one-to-many broadcasting to a human-powered network of one-to-one-to many that travels well beyond traditional media or word of mouth.
Regulation is not designed to restrict customer engagement. It is designed to protect and inform customers and guide businesses in the engagement of their customers. Talk to any lawyer however, and they’ll scare a business away from using new media as a bridge to building trust.
The market for answers and solutions is infinite. Your challenge is to take mundane regulatory information and inject meaning into it, as you inform customers and help them learn and make more informed decisions. Additionally, staff must be empowered and trained how best to embrace the new regulations and in turn share critical updates and relevant insights to their existing and prospective customers.
The truth is that customers are entitled to just that, the truth. Instead of working against progress, we should find ways to work within frameworks to be of service. We are after all, in the service business. And while the industry at large is risk averse, it is this aversion that will eventually lead to digital Darwinism or more importantly, irrelevance among an increasingly sophisticated and connected customer.
This is why in the face of new regulation, legal teams must also learn how to embrace social media rather than dismiss or refute it. Doing so places businesses on a path of obscurity. For those businesses that do embrace new media and transparency within the law will find customer solace and appreciation. To put it in financial terms, by connecting with customers in social networks and providing useful information over marketing messages, businesses will drive profitability. Why? Because customers want to know how financial reform affects them and more importantly they want to know that you value their business and that they can trust that your business values align with their own.
The importance of social media is that it represents the present and the future of connections and the dissemination and consumption of relevant information. It serves as the epicenter for how people find and share. Whether we like it or not, it is how people communicate with one another. It is also how customers expect to connect with the businesses that are important to them.
This is the time for leaders to lead or they must otherwise step aside to give way to a new generation of leaders. We are entering a new era of open leadership. And, in the social economy, information and engagement become a competitive advantage while traditional marketing, gimmicks, and rhetoric disappears into commodity. As your customer, I don’t want a free t-shirt or a stuffed animal. I would just like to know that my life’s work is your top priority. And, I want to be reminded of that at every touch point.
Change, it’s closer than you think….but, it’s up to you.
Brian is the author of the new book "The End of Business as Usual" and a principal analyst at Altimeter Group, a research based advisory firm specializing in enterprise strategy and disruptive technology. Connect with him on Twitter, LinkedIn, Facebook, and Google+.
