The ABCs of social media in financial services

Increasingly, banks and other finance firms want to use LinkedIn, Facebook, and Twitter to engage customers. They see more of their peers doing it but, in their own firm, they’re not sure how to get past compliance. “We want access to social media but we’re blocked. How do we get approval?”

To get to “yes,” you’ll need to answer 3 basic questions.

“Are we allowed to do it?” 

Firms typically have a policy (or are drafting one) that spells out who can do what using social media. (Here’s a fantastic compendium of such policies.)

Before your firm lets you post for business, they have to have a way to enforce their policy. Should posts be pre-approved? Can individuals use “Like” buttons? Are direct messages or comments allowed?

A few years ago, it was too difficult to pick and choose which functions people could use. So, the only choice was to block access except for a select few. Now, though, a range of software options from companies like Socialware and Actiance provide the kind of fine-grained control you need. By sitting between the user and LinkedIn, for example, they can present the user with only the LinkedIn features they’re allowed to use, and so enforce the policy in a very practical way.

“Before someone posts, can we review it first?”

The regulations largely center on preventing individuals from disclosing information they shouldn’t. (This brief paper from FINRA is a good starting point. It was confusing in a number of ways, though, so updates are being considered.)

All traditional recommendations and advertisements are carefully scrutinized by compliance before being disclosed to the public. And the same rules apply for much of the content published on social media channels. It’s hard to separate, for example, a research analyst hitting “Like” on a company’s Facebook page from outright recommending a “BUY.” And a broker’s profile on LinkedIn is seen as just another form of advertising.

We’ve had supervisory software from companies like Autonomy for years and now these products, as well as newer ones, are including content on social media. So, for example, when a broker updates her profile on LinkedIn, that update is routed to a compliance supervisor who can review it before it’s published.

While finding moderation tools may be easier, though, finding the people to operate the tools is the hard part. For most firms, having to review more content means having more people. Presenting a business case to justify such expense - and then fighting for headcount - is where you’ll struggle.

“Can we capture whatever people posted?”

This is the easiest question to answer. Every financial firm already has one or more digital safes. Used at first for email, then instant messages, these safes are now expanding to become the repository of all electronic communications, including those on social media channels.

All the tools already mentioned provide ways to capture content on the public channels and route that content to your firm’s repository. Then you can do routine reporting to check for policy violations or other issues. It's a matter of integration instead of innovation.

Now what?

The issue, then, isn’t about someone in compliance simply saying “yes” or “no.” It’s whether your firm has the capacity to enforce policy, moderate certain content, and retain records for reporting.

Though the tools and practices are still evolving rapidly, it’s increasingly clear that “we’re regulated” is no longer an excuse for doing nothing.

Now, once you get to “yes,” you can move on to the truly difficult part (covered in next week’s post): actually using your newly-approved social media access in support of a specific business objective.