Written on 10 July 2009 at 13:23 by Allan Schoenberg

Building a Social Media Marketplace in Financial Services

Filed under Uncategorized {2 comments}

I remember in my days working at Edelman during the ERP heyday that online B2B marketplaces, particularly for manufacturing, were the buzz and actually changed how many companies did business. Last month, I presented at the Ragan Corporate Communications Social Media conference (we also hosted the conference at the exchange) about what we are doing in the financial services industry (you can view my presentation here via Slideshare and a recap from Barbara Rozgonyi here).

In my opinion we are in the midst of developing a new marketplace at the exchange. In the past several years alone we have seen tremendous and rapid change in our industry. As a marketplace founded in 1848 (version 1.0) our model was unchanged for more than 150 years. Buyers and sellers came to our trading floors to hedge their risk and sell their products. They also used the markets to discover what the market would pay for a price. In 2002 that evolved (version 2.0) when the exchange went public (Nasdaq: CME) and we had new audiences to communicate with (investors, analysts) besides our members. When I came to the exchange in 2004 another shift occurred when for the first time ever electronic trading (version 3.0) surpassed floor trading. This shift in trading create even more opportunities for us as we now had customers in more than 85 countries directly connected to CME Group (as opposed to our trading floor). Today, more than 80 percent of our volume is now electronic. If you want to know more about how the exchange operates you can watch the video here.

So where are we now? I believe social media is profoundly changing financial markets once again (version 4.0). Social media, in particular Twitter, Facebook and LinkedIn, are having profound effects on the way our customers interact, communicate and research what is happening in the economy. If you want a great example of this just go to StockTwits and follow the conversations. We’ll see where all of this takes us but I think social media will continue to create a number of real business opportunities for traders and the financial markets in the coming years.

I’ll be talking more about this idea and concept at Blogwell and Ragan in the coming weeks. So how is social media changing your views about your industry? I welcome your thoughts, ideas and questions.

  • http://www.communicationammo.com Sean Williams

    Allan, thanks for posting this and your presentation.

    We’ll see what happens, but as usual, most financial services companies are asleep on social media — check out #citizensbanksucks on Twitter for a recent discussion (one-way…)

    Banks can’t yet wrap their heads around social media – there are exceptions, of course, but by and large they’re not even monitoring in any consistent fashion. The question always comes up, “well, how many of our customers are actually ON social media?” or “That’s not our target market.”

    I’m not sold on Social Media over the long haul, but for banks, you at least have to monitor and respond personally — the customer service application for Twitter, for example, is becoming increasingly clear. But, you have to monitor. See @comcastcares.

    Other roadblocks are compliance and legal — the regulations and policies haven’t caught up — read that the Federal Trade Commission is going to monitor blogs for “commercial claims” http://tech.yahoo.com/news/ap/20090621/ap_on_hi_te/us_tec_bloggers_freebie_disclosures — that can’t make the local legal department too confident.

    But, I agree that this mode of interpersonal mass communication (kind of a contradiction in terms, eh? ) is likely to morph into something that financial companies are going to need to evaluate — stock trades by Twitter, anyone?

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