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For many organisations, social represents one of the most drastic changes in communications since the advent of email.
Savvy businesses now effectively use the power of social to interact with their customer bases, prospect for new business, deliver services and obtain customer and market insights.
Indeed, this shift in communication has led many large enterprises to employ teams of social experts, tasked with monitoring the social airwaves at all hours and in multiple languages.
Traditionally, the Financial Services (FS) sector is one of the earliest to adopt new technologies, especially those that can be deployed enterprise-wide.
The likes of contactless payments, commercial mobile payment offerings, cloud-based solutions and data analytics have been embraced and adopted ahead of the curve - however, the adoption of social has been markedly slower.
One key reason for this hesitance is that compliance legislation, which has become even stricter since the 2009 recession, requires financial institutions to be incredibly cautious with their communication with the outside world.
The FSA,SEC and FINRA recently issued new guidance for FS companies using social. Promotion and advertising, supervision and monitoring, and recordkeeping have all come under the spotlight, and FINRA now requires detailed recordkeeping to prove inappropriate claims have not been made to a customer or prospect.
Social also makes it incredibly easy for individuals to share confidential, sensitive and private information, accidently or maliciously violating privacy or other laws. The fear is that without archiving tools, record of social interaction can be lost, leading to eDiscovery, legal hold and evidence spoliation to name just a few compliance problems.
Additionally, an inability to link a social identity to a corporate identity can pose significant problems from a risk management perspective.
A number of financial sector organisations have taken small steps into social. Many have a burgeoning social presence on the likes of Facebook, Twitter and LinkedIn, helping them interact with customers to drive news and promote products.
In July 2012, Morgan Stanley announced plans to enable its financial advisors to communicate with customers via social channels, Twitter and LinkedIn. There was a very notable condition, however; the messages they share on these channels must be taken from a list of pre-approved content.
Other examples include, Zecco, the online stock brokerage which enables its customers to trade through Facebook; Ameriprise, the financial advisory firm, which offers an adviser search tool on LinkedIn; and both E*Trade and optionsXpress have launched social communities.
However, compared with other sectors’ adoption of social, FS businesses are trailing. Compliance is a huge issue, but further factors contributing to hesitancy include the fact that social opens up the organisations to criticism, abuse and lack of resources.
The proliferation of smartphones and tablets means that today’s consumer is digitally savvy, sees social as an inherent skill and expects to be communicated to in such a fashion.
The fact is, a business will not be considered relevant in the current economy if it fails to communicate where stakeholders – clients, investors, business partners, media and industry peers – are listening.
People and businesses now have a much larger arena to communicate in, voicing opinions in real time and a brand must be part of this conversation.
Social certainly brings compliance challenges for financial institutions, but there are simple steps a business can take to overcome them. For example, it is vital to educate staff to be aware that communication through social is subject to the same compliance laws as any other medium.
However, ultimately, the reduction in social risk boils down to the ability to capture and control the information flowing in and out of an organisation’s social channels. This involves logging all social interaction within a business, monitoring incoming and outgoing messages and archiving communication for compliance review.
Further, compliance laws require the monitoring of two-way communications between financial advisors, customers and potential prospects. This sounds daunting on paper, but the good news is that FS organisations should not fear these stipulations, as we are now at the stage where technologies are available to manage these processes while monitoring all outbound information through textual analysis, interpreting whether a user has communicated inappropriately.
It can also lock information for legal hold, allowing it to be passed on to appropriate authorities or opposing legal counsel, adhering to eDiscovery standards.
Social cannot be ignored and the banks, treasuries and insurance bodies that get to grips with it, in a compliant fashion, will reap the benefits.
It gives FS businesses the opportunity to create an online presence that can be heard amongst a large mass of people and company leaders an efficient way to deliver a company message, create transparency, and engage in a two-way conversation.
Communication has evolved and businesses that fail to embrace this new world order will get left behind as consumers’ social expectations continue to escalate. It’s quite simple – FS businesses must adapt to integrate social, or face being left behind as competitors seize the opportunity.
Image credit: mikebaird via Flickr