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Financial services makes legal industry look progressive on social media

J P MorganA story by the New York Times Michael Kaplan (@mgkaplan89) regarding financial firms blocking employee access to social media is making rounds on the Internet today.

Though first and second year financial analysts apparently work 80 hours per week, there is a lot of dead time waiting for someone to turn something around or receiving your next assignment.

In the early 80′s University of Chicago Professor, Steven Neil Kaplan, said he would spend hours talking to friends on the phone. Today analysts, when not at work, live their lives through Facebook, Twitter, YouTube, and Gmail.

But strict regulations with severe guidelines prevent digital activity for which a record can’t be kept. Financial companies are covered with corporate email, but not with social networking and social media.

Even YouTube which doesn’t involve communication is outlawed. One analyst, as reported by Kaplan, gets around that by using a Russian version of YouTube.

It strikes me that financial firms ought to be looking at how they can use social media and social networking, rather than find themselves the subject of a story like this making the rounds. Why would Bank of America, Merrill Lynch, Barclays, and JPMorgan all want to be known as declining an interview with Kaplan for a story on innovative technology?

The financial services industry is much like the law, accounting, and insurance industry when it comes to relationships and a strong word of mouth reputation driving business development. Social networking facilitates and accelerates relationships and a word of mouth reputation.

Financial services is also being pressured on price and to be even more productive, just like these industries. Per the recent McKinsey report (pdf), between $900 billion and $1.3 trillion in value can be unlocked through the use of social technologies in various sectors, including professional services and banking.

I was having lunch with a friend who works in wealth management for a national concern. I told her I’d drop her a note to connect through LinkedIn. She said the company does not allow LinkedIn. More than that, the officers in her Seattle office weren’t even open to learning what social networking was and how it could be used in business development.

Walking away from lunch, I wondered if I would even want to work with companies outlawing social networking as simple as LinkedIn. I already had a relationship with my friend so I am sure I would in the case of this company. But what about others like me that routinely use social networking to nurture relationships.

I also wondered how much business would be lost by the company my friend works with as a result of not using social networking, a tool as common as a telephone for many people.

One JPMorgan analyst, as if wearing a badge of honor, told Kaplan:

It’s about the culture. We’re not a start-up. It’s a buttoned-up workplace.

Amazing comment when there’s 4,000 doctors at Mayo Clinic who are not only using, but being told to use, Twitter and other social media by Mayo leadership. Dan Goldman, in-house counsel at Mayo, once a skeptic of social media, isn’t sure how lawyers in private firms even remain relevant without the use of social networking. Financial firms are only getting further behind.

According to the research firm Gartner, the number of global organizations blocking social media is declining 10 percent annually. By 2014, fewer than 30 percent of all large organizations are expected to be blocking employee access to social media. As other traditionally strait-laced industries like consulting and law increasingly incorporate social media in the workplace, the financial services are lagging.

No question the use of social networking and social media will, in time, become the way of the world for all for all business professionals, including button downed non-startup financial analysts. Not for just killing time, but for learning, connecting, collaborating, and nurturing relationships.

Until we get there, business leaders in financial services, and other industries. ought to show that they are open to the future. Not to look at the future as something that can be brushed off.