I read a good article on Web 2.0 and how its adoption by the investment banking industry is influenced by the ghost of compliance. click here for further reading.
Whereas many other industry sectors can easily open the gates and deploy their 2.0 initiatives, FSI is struggling with an additional inhibitor namely compliance. For those not familiar with compliance in the financial services industry, I take the liberty to quote the online financial dictionary Investorwords : The state of being in accordance with the relevant Federal or regional authorities and their requirements. In the context of financial services, the most important compliance rules come from the Securities and Exchange Commission. Most large financial services companies have compliance teams whose role is to take an independent stance in making sure that the company is following all the necessary rules and regulations. Typical compliance topics include insider trading regulations, Chinese walls, audit trails, four-eyes principle, transaction history logs, audit trails, risk profiling and Mifid.
The one million dollar question is now how you can roll out enterprise 2.0 if security, reputation, data protection and conflict of interest are at stake whereas web 2.0 stands for sharing, freedom of opinion, openness...
FSI providers like Fargo Wells, Citi, Morgan Stanley, ING US, JP Morgan have already seen the light and have a couple of web 2.0 initiatives live or in the pipeline - at least for internal purposes. After all, business benefits are obvious :
1. You retain knowledge and information in an environment which is susceptible to high employee turnover
2. You can improve cross-boundary collaboration in an industry which is driven by global consolidation
3. You incentivise creativity, innovation and business development as you give your human capital the opportunity to connect and collaborate freely and across product areas
Deploying Web 2.0 vis à vis your customers can also give you a competitive advantage as you become more accessible for your clients. No need to do the call center queue or go to your local branch as all answers can be found online. Nothing new so far...
Personally, I believe that becoming twopointzero will not be an option but an imperative for banks if they want to reach out to the Generation Y. These digital natives will force organisations to rethink and adapt their business models if they want to attract new talents or customers. They are used to tools like chatting, VOIP, social networking and online collaboration so companies that cannot equip them these technologies will have a hard time appealing to them... compliance or no compliance.
It will be a challenge for the conservative banking industry to embrace this line of thinking but there is no other option. Bank 2.0 will not be a nice to have but a must have in a not so far future.
