For some time now we’ve used the tagline, “Enable the New Internet,” and it’s amazing how that tagline continues to resonate. The Internet is continually reinventing itself, which means it’s always new. The latest wrinkle is the proliferation of so many new handheld devices to access the Web. Not long ago, you needed a PC or (horrified intake of breath) some kind of wired (!) device to effectively access the web. Now any smart phone or pad computer can deliver wireless access to the social network of your choice, which just adds another layer of complexity to social media monitoring and compliance.
We recently hosted a webinar with Forrester Research on Maximizing the Social Opportunities for Financial Institutions, and the discussion was partly based on a new research report from Forrester Research, “Mobile and Social Technologies Come Late to Wealth Management.” According to Bill Doyle, vice president and principal analyst of Forrester and author of the report, the latest Internet evolution is giving rise to a new phenomenon that Forrester has dubbed the “splinternet.”
What’s driving this splintering effect is the proliferation of both social media use and the new generation of wireless connected devices. Facebook now has 700 million, Twitter is at 200 million, LinkedIn has 100 million members, and YouTube gets 2 billion views per day. And the new generation of users is accessing social media using smart phones, tablet computers, and e-readers. As Bill noted in the webinar:
Mobile devices have taken over the world. There are more mobile phones than cars, credit cards, or PCs. The mobile screen is the one that we all have with us – most people even sleep with their mobile phone by their bedside. And the mobile market is highly fragmented by devices, user interfaces, and operating systems. The mobile Internet has really arrived delivering mobile data because of fast broadband provides good coverage, mobile handsets are delivering a competent Internet experience, and Internet brands are placing mobile first.
Bill predicts that the splinternet effect will be the norm for at least the next five years.
According to the Forrester report, wealth management firms and their ilk have been largely insulated from the splinternet effect, since their target clientele are older and don’t gravitate toward social networks or new hardware platforms, such as mobile devices. Half of Gen Y users are connecting to the Web monthly via the Internet where there is only one in one in eight older baby boomers use mobile hardware to access the Internet, and only one in 14 percent of seniors use mobile Web access each month. To compete, wealth management firms need to start adopting digital technologies to meet their customers’ needs.
For the old school financial planners, it’s old world views versus new technology. To compete in the new world order, even highly regulated firms will need to follow the technology:
- Younger users are leading indicators of digital technology, and the platform du jour is clearly mobile. Generation Y has adopted mobile, and Gen X is closing fast.
- The baby boomers who make up the bulk of today’s wealth management clientele are becoming more active. They are a little farther behind on the adoption curve, but they are coming up quickly as the new users of mobile technology to access data and assets.
- The younger generations don’t abandon their channel preferences as they age, or as they accumulate wealth. As the younger users become more prosperous, they will continue to use those channels that are popular today – social media and mobile platforms.
So this means financial service companies need to adapt or lose out. The mobile infrastructure is in place and growing and the market is going mobile. Those brokerage firms and regulated companies taking the lead are embracing both social media and mobile platform because that’s where their clients are. As Doyle points out, it’s not about technology, but it’s about people. Social media provides a means to connect with clients in a new way, building intimacy, and deriving referrals. Through Facebook, Twitter, LinkedIn and other social media platforms you learn about clients’ life changes, such as wedding, graduations, and births, that direct affect financial strategies. And you can connect to clients at crucial moments – the more you connect, the more loyalty you promote.
And as the regulators continue to upgrade their policies to encompass new technologies, as with FINRA 10-06, those being regulated have to create a balance between embracing new technology like mobile to keep pace with their clients, and placating the regulatory watchdogs. It’s enabling those new technologies in a safe, compliant fashion that keeps Actiance in business. We keep track of social media usage no matter what the platform.