New FFIEC Guidelines Highlight Importance of Social Media Management
For financial institutions wondering if it's time to venture into social media, here's something to think about: you're already there. Interactions about your institution are occurring on social media, whether or not you choose to be a part of the conversation. The challenge for financial institutions is engaging in a rapid-fire public conversation, while also maintaining effective messaging and compliance controls.
New guidance from the Federal Financial Institutions Examination Council (FFIEC) may help shed light on the issue. Announced on Dec. 11, the guidance is designed to help financial institutions understand how current laws and regulations for compliance and consumer protection apply in the realm of social. The new guidance also highlights areas where governance, monitoring, third party evaluation and fraud all play roles with social media.
… it's time for financial institutions to take a firmer grasp on managing their online reputation and customer relationships…
For perspective on the state of social media in financial services and the new FFIEC guidance, The Point spoke to Ben Pankonin, CEO of Social Assurance, a social media management company that helps banks, credit unions and investment advisors navigate social waters.
Pankonin's message: it's time for financial institutions to take a firmer grasp on managing their online reputation and customer relationships, and social media management tools can help them achieve these goals while embedding critical processes for risk, compliance and reporting.
Just five years ago, very few financial institutions were embracing social media. Why the change in attitudes?
Social media is an increasingly mainstream technology and a proven way of conducting and building business. More and more customers of all ages are using a social channel to engage with their bank or credit union, making social media a must-have component of a successful business strategy. A recent Social Assurance study analyzed nearly two million messages related to banks and credits unions on Facebook alone during a 90 day period.
Most banks and credit unions now have some sort of social media presence, but few have thought about the channel as a way to build and retain business. Gallup recently found that people who use social media to research a financial product were 18 percent more likely to become a customer or buy the product than those who used other forms of research. Even once-feared negative comments are now seen as important, timely feedback. The amount of communication on social channels is increasing day by day, and financial institutions that ignore social media as a business strategy are missing out on the trajectory.
How does regulatory compliance impact a financial institution's social media plan?
From a compliance standpoint, social media is fundamentally more difficult than other communication channels because the messages are often public. The new FFIEC guidelines emphasize the need for financial institutions to have methodologies for monitoring, responding to, and reporting on social channels in a timely manner. Who in your organization is responsible for social media? What's the approval process? How do you respond to a negative post, and what are your typical response times? Answering these and other basic questions is the first step to managing potential risks and protecting your reputation.
How and why are the goals and strategies for social media unique to financial institutions?
Compared to retail stores that are mainly focused on transactions and the volume of people walking in the door, banks and credit unions are building much longer relationships through social media. More often than not, social interactions are with a financial institution's current customers, offering a way to establish ongoing dialogue and validate relationships.
Success with social media involves more than just posting content – success means communicating about and connecting with the greater community. Financial institutions have been doing this well for generations, but now we're building relationships in a new and different kind of community and social media is at the center of it all.
For more analysis on the FFIEC final guidance on social media, read Ben Pankonin’s summary on the four core areas of the guidelines on the Social Assurance blog.