The 5 Stages of Social Media Grief

This week I’ve met with some very interesting people and the subject of social media has been high on the agenda. Yesterday, I met with Tom Cannon, who is leading the charge on the Internet Banking initiative that is part of HSBC’s “OneH” project – essentially their customer dashboard, single-view of the customer baseline technology. Earlier in the week with Sam Oakley from WolfStar, John Beck the Technology Editor for the Financial Times/The Banker magazine in London, and my good pal Christophe Langlois from Visible Banking, amongst others.  At these sessions we invariably repeated a discussion I’ve had 30 times in the last few months with innovators in the banking space the world over. The question simply being “when will the banking senior executives get social media?”

Facebook, Twitter, Foursquare – when will it end?

Facebook this week announced their 500 millionth active user. That number is pretty significant. Firstly, any corporation that can claim it’s customer base would make it the third largest country in the world (behind only China and India) has a case for celebration. Secondly, it doesn’t look as if its growth will slow any time soon. Lastly, their growth is not restricted by physical distribution or inventory constraints, their marketplace is anywhere you are.

Twitter is not far behind, with 190 million users as of June 2010, and 65 million tweets a day. Foursquare, the Geolocation Social Networking service is up there too – adding 100,000 new users every week at the moment. When will it end? It’s won’t – that’s like asking when the internet and mobile phones will end. Which brings me to the realization that dealing with innovation in banking is a lot like dealing with grief. So here are the 5 stages of Innovation Grief for Banks and Bankers (It probably works for most companies actually)

Stage 1 – Total ignorance

When a new innovation comes out banker’s simply ignore it because ‘banking has been around for centuries and it fundamentally doesn’t change…”

Stage 2 – It’s just a fad

“Visionaries see a future of telecommuting workers, interactive libraries and multimedia classrooms … Commerce and business will shift from offices and malls to networks and modems … Baloney. Do our computer pundits lack all common sense? The truth is no online database will replace your daily newspaper, no CD-ROM can take the place of a competent teacher and no computer network will change the way government works … Yet Nicholas Negroponte, director of the MIT Media Lab, predicts that we’ll soon buy books and newspapers straight over the Internet. Uh, sure.” – Clifford Stohl, Newsweek, 27 February, 1995

Ok so now it’s on our radar, but it’s just a fad – all the fuss will blow over soon.

Stage 3 – I still don’t get it, where’s the money?

Because of Stage 1 and Stage 2 banker’s are looking at social media’s incredible rise to fame and then looking at their competitors (who are mostly doing nothing) and saying, “well as an industry no one is making any money out of this, so let’s not bother just yet…” How can you tell you are this stage? You have a Facebook page for the bank, but no one actively managing your social media listening post

Stage 4 – The Sonic Boom

Internet banking, mobile banking, social media is all the same for bankers. It’s like them sitting there watching the Concorde or an F15 doing a low-pass, fly-by and not yet registering what they are seeing as significant, until the Sonic Boom hits them and blows them off their feet. By then it is already too late because at Mach 1 or Mach 2 your competitors are already way, way in front of you. This is where the message finally breaks through the ignorance! BOOM!

This is the stage we are hitting for most banks today… If you work in a bank how can you tell if you are at this stage – your bank has just hired a Head of Social Media.

Social Media is starting to hit banks like a Sonic Boom

Stage 5 – The Mad Scramble

Excuse the vernacular, but this is the “oh, crap” moment where bankers suddenly realize that they should have been heavily invested in this 3-4 years ago, and their lack of preparedness is highlighting to their customer base, employees and the world just how out of touch bankers are. The mad scramble may have occurred because of a PR disaster like those that BP has experienced with the Gulf Oil Spill, that Bank of America experience with Ann Minch’s Debtor revolt, or that Citibank experienced with the Fabulis debacle.

This is when the knee-jerk hiring spree starts with hit and miss initiatives occurring throughout the bank. How do you know when you are at this stage? The CEO of the bank is talking about Social Media in press conferences and how the bank is committed to better reaching customers through this medium.

Getting out in front

So how do you stop the grief cycle within your organization? The first thing bankers need to do is rethink their organizational structure around customer. Social Media is a tool for reaching customers, for engaging customers. It is as important as investing in branches, it is just as critical as having a telephone number for customers to call, but more than that, it can help you transform your business internally too. To fix your organization to serve customers in the digital and social media age – you need to think independently of channels.

We talk about multi-channel alot these days, but clearly social media is showing us that new channels and ways of interacting can grow very fast. Who’s to say what will come after social media? Something will. The key is that channel complexity continues to grow, and no single channel should be singled out as more important. For customers branch is no more important than Internet, mobile than social media, call centre than ATM. These are tools to engage, and increasingly banks need to be more pervasive – everywhere the customer is. So break the back of organization structure silos around channels.

Think customer – think total channel engagement, and get moving on Social Media fast: BOOM!

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