Why Social Media Matters in the Financial Services Industry
November 20, 2013 by Erik Johnson
Marketing your products and services effectively and maintaining your corporate image is vital to your ongoing success in the competitive marketplace. The social media environment offers new opportunities for your company to reach potential clients, build brand loyalty and gain insights into client needs and concerns. However, these same social networking venues can present serious risks to your company’s reputation and compliance with regulatory requirements in the financial industry. Managing these risks while deriving value from social media websites can help your company achieve a greater degree of visibility and positive communications in these venues.
The Value of Social Media Marketing
Word-of-mouth advertising has always been an important element in successful marketing strategies. Social networking sites represent a technological analogue to this practice and can provide the same benefits as face-to-face recommendations for your firm. Sites like Twitter, Facebook and Google+ provide the tools needed to create a valuable dialogue with your clients and to boost the effectiveness of your branding strategies to a considerable degree. Remaining responsive and positive in these online venues can enhance your corporate reputation and provide public relations benefits for your company. As these social media sites continue to grow in size and popularity, your company can’t afford to overlook the value of social networking in the modern marketplace.
Social Media Is Too Important to Ignore
Social media use can deliver significant benefits for your financial firm. Failing to take advantage of these sites, however, will not reduce or eliminate your corporate risks and may foster an environment in which employees interact without restraint or oversight in these public communications areas. In the financial industry, it is essential to monitor content produced and disseminated by employees on an unofficial basis, as well as official social media communications, and to retain all business-related social media posts and records as required by federal regulations governing these types of correspondence.
Risk Factors for the Financial Industry
Social media strategies are not without risk. Some of the most commonly encountered social networking risk factors in the financial industry include the following:
• Unauthorized release of confidential or damaging information
• Compliance issues due to lack of proper employee identification in these venues
• Failure to retain business-related communications made through social media
• Added exposure to malware and computer virus threats
• Damage to corporate reputation from inappropriate posts and tweets
Establishing a consistent and enforceable set of best practices in the field of social media communication can provide some protection against these risks and can offer added guidance to employees regarding the company’s expectations for their behavior when interacting in these modern communication settings.
Four Steps to a Comprehensive Social Media Plan
Establishing a set of standards for social media activities is essential to maintain your corporate reputation and to remain compliant with federal regulations governing communications with current and potential clients. Avoiding even the appearance of wrongdoing can go a long way toward ensuring your company’s positive reputation in the arena of public opinion. These four steps can help you create workable best practices and standards for your company’s social media interactions.
Take Stock of the Current Situation
Developing an understanding of how employees use social media in their personal interactions as well as in the corporate environment can provide you with added insights into the best ways to monitor and oversee these uses. It is neither feasible nor desirable to scan all personal communications by your employees in the social media environment. However, general knowledge about the ways these websites are used by your staff members can provide you with added clarity in creating standards for your workplace. Assessing the use of social media by marketing teams, human resources and legal departments, compliance and sales personnel can help you manage these activities more effectively.
Institute Risk Management Analysis of Current Uses
Identifying areas where your company may be at risk of regulatory violations, financial losses or damage to your corporate reputation can provide you with a more informed motivation when establishing best practices in social media settings. A comprehensive risk assessment of all current and potential uses of social media in your corporate environment can provide you with a clearer picture of possible risks in these communications venues.
Focus on Positive Practices in Social Media
Creating a consistent and comprehensive social networking policy can offer your staff members the guidance they need to use these venues responsibly. This can significantly reduce your risk factors when utilizing social media to disseminate information or to promote your company’s financial products and services. Proper education and enforcement of these social media standards can provide protection for your company from the darker side of these online communities.
Put Technology to Work to Ensure Compliance
Modern software packages can block access to some sites from work, provide improved security, monitor outgoing social media communications and create an automatic archive of posts, tweets and other correspondence conducted through these websites. Taking advantage of these functions to track and control social networking within your organization is an ideal way to ensure optimal benefits from these marketing venues while reducing the corresponding risks to compliance, corporate reputation and security.
A comprehensive set of best practices for social networking can provide your company with a clear path forward in using these websites and online communities more effectively. Your social media policy is an essential part of your overall risk management and compliance activities in the modern financial marketplace.
Does your organization currently have a social media policy in place? If not, please tell us what factors are prohibiting the adoption of an enterprise social media policy.
