Social media regulation for the financial services is now a reality. But is this just another compliance hurdle, or does it offer several opportunities?
When you bring together decision-makers and regulators to look at how social media can improve trust and transparency, and create rules that provide clarity and consumer focus, it helps to foster a collaborative relationship between the regulator and the industry. This is essential for navigating a somewhat uncertain landscape. In fact, it is more helpful to liken social media to the experience of using email for the first time.
There have always been unfortunate information leaks and public-relations blunders via email, but few people suggest that companies should restrict the use of email. In fact, best practice and management tools have emerged, and as a result the majority of us have become skilled at using email. Social media is the same (sort of). The perceived technical “headache” is that it does not pass through corporate firewalls and filters, so monitoring and management is a bigger challenge.
We are six years on from the banking crisis, yet last year 40% of customers stated that they were losing trust in the industry, according to a survey by Ernst & Young. Social media gives both consumers and companies a voice, and research indicates that CEOs with an online presence increase their trust factor.
On social media, your consumer base is increasingly active, and you need to be as well. It is crucial that companies take the time to gain the skills to engage consumers authentically and appropriately. Social media offers the chance to reach out, not just to sceptical younger generations but also within organizations that have become constricted by departmental silos, making them less able to respond to changing customer demands and leaving them exposed to a range of conduct risks.
Companies that stop their employees using social media are ignoring the now almost universal penetration, in developed countries, of smartphones and tablet devices. The reality is that people will use social media both in and out of the office.
There is an opportunity here for companies to seize the opportunity and get ahead of the curve; to improve profitability and manage their reputational risks. This can be achieved by developing collaborative relationships through and around social media, and by policy development between firms and the regulator; between IT, marketing, compliance and the C-suite; and between companies and their customers.
Eldridge, Richard. “How Social Media Is Shaping Financial Services.” The Huffington Post. TheHuffingtonPost.com, 21 Jan. 2016. Web.
Image from: http://richardgrenell.com/wall-street-reform-and-the-presidential-candidates/