Social And Financial Services Can Drive More Than Chump Change, McKinsey Says
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“The social economy: Unlocking value and productivity through social technologies” presents a 184-page case (download the full PDF) for the value potential to be created by business’ adoption of social networks, blogs, social commerce and a host of other applications. (Or, how McKinsey defines social technologies: "IT products and services that enable the formation and operation of online communities, where participants have distributed access to content and distributed rights to create, add, and/or modify content.")
Special attention is paid to consumer financial services (insurance and retail banking are the focus) for which social technologies could create $256 billion–$423 billion in value annually across product development, operations and distribution, sales and marketing, customer service and business operations, McKinsey says. What mutual fund or exchange-traded fund (ETF) marketer wouldn’t want to drive some of that!
This screenshot shows how McKinsey gets there (note that marketing and sales are the top levers). But, this exhibit appears more than halfway into the report. To understand it, you’ll need to take a look at the full discussion.
A few excerpts from the report:
Why Financial Services And Social Are A Match
In general, the companies that stand to benefit most [from social technologies] have one or more of the following characteristics:
- A high percentage of knowledge workers
- Heavy reliance on brand recognition and consumer perception
- A need to maintain a strong reputation to build credibility and consumer trust
- A digital distribution method for products or services
- An experiential (hotels) or inspirational (a popular sports drink) product or service offering
The Great Potential Value: Enterprise Collaboration
“Our research suggests that the application of social technologies to enterprise collaboration holds the biggest value potential for the industry.” Earlier, the report made the point: “Many of the top consumer-facing financial services players in mature markets are large, complex organizations that were formed from mergers and acquisitions, resulting in siloed personnel structures, fragmented processes, and differing IT systems. Effectively applied electronic collaboration tools can help create more cohesive, transparent organizations that consistently and effectively share knowledge.”
Investments Limited To Marketing Functions
Noting financial services’ compliance and organizational barriers to adoption, McKinsey says “so far, most of these institutions have limited social technology investments to marketing functions and not attempted to implement large-scale collaboration or communications applications on social platforms. By definition, banking and insurance firms have a culture of confidentiality and discretion that bodes against the blossoming of a free-wheeling open community of ideas on an internal social network. However, as innovative upstarts such as Movenbank and Zopa prove that there is more value to be gained from social technology than cutting marketing costs, even the largest institutions may be convinced that social technologies can work for them, across operations.”
