By Michael Edberg
“We’ve always done it that way” is a sad and risky excuse for not taking advantage of powerful new data-driven intelligence afforded by social conversations.
Consumers, especially millenials and gen-X’rs, demand an authentic and emotional connection as a condition of doing business with any brand or company. It’s not just about the transaction.
So what does that mean for banks? The one-on-one relationship with the local bank manager is a thing of the past, and banks are commoditized. They are competing on pricing, where flexibility to differentiate is limited.
Most banks are (uncharacteristically) leaving millions of dollars on the table – by failing to recognize the massive opportunity to leverage a powerful and valuable new “Big Data” trend: Getting to know and engage their customers (and would-be customers) on social media.
It’s the highest impact and most cost-efficient way to differentiate and win – inspiring consumer loyalty and engagement and generating new business.
But many banks see risk in democratized conversations they cannot control. They worry about legal risk, operational risk, and reputation risk. Sure, change is scary. But it’s not something that any of these banks can stop: Avoiding social media is like saying, “No, we’re going to stick with the telegraph”.
There is no reason to fear social media, when risks (real and perceived) can be managed with the development of best practice policies and strategies informed by the best intelligence, education of staff, use of reliable technologies, and professional oversight.
Guidelines written in 2013 by the Federal Financial Institutions Examination Council’s (FFIEC’s) define social media to be any form of ‘interactive online communication in which users can generate and share content through text, images, audio, and/or video’.
FFEIC’s guidelines state:
1. Financial institutions should have a program that allows them to identify, measure, monitor, and control the risks related to social media. The program should be tailored to each institutions needs and should include input from compliance, technology, information security, legal, human resources, and marketing.
2. The board of directors or senior management should ensure that social media use is aligned with the financial institution’s strategic goals and a mechanism should be implemented to ensure proper C-suite oversight of social media use.
3. Banks should have a due diligence process for managing third party service provider relationships related to social media, such as software contracts and marketing services. Banks may need to document how vendor decisions are made and how vendor services are monitored.
4. Employees should be trained on the proper use of social media, including the separation of personal communication and work related social media.
5. Banks must monitor anything posted to third party social media sites. There are a few software solutions where rules can be programmed and any social media post will be blocked if it violates the rule.
6. Audit and compliance functions must be developed to ensure ongoing compliance with all applicable laws, regulations and guidance.
7. The board of directors must periodically review the effectiveness of the social media program to determine if it is achieving strategic objectives.
Social media is a powerful tool, proven with best-practice use to generate profit growth.
And like any method of communication and interactive marketing, there are proven ways to mitigate, even eliminate risk.
One of the best ways to eliminate risk is to use technologies to listen to your customers, their needs, tastes, choices and interests. In those social conversations, opportunities and trends reveal themselves, and so too do threats. Isn’t it better to know, and moreover know earlier than your competitors? Social listening and understanding significantly reduces business risk.
Listening and learning from relevant social conversations also enables a bank to get to know its customers, so when it comes time to connect and engage it is possible to do so in a precision-targeted and cost-effective manner.
So, don’t fear the risks!
Policies can be developed holistically with input from the financial institutions’ internal stakeholders and staff can be trained. Service providers can help you manage your social media campaigns, or help you develop compliance policies and train your staff.
What sets Verifeed apart is our ability to offer a full suite of social media solutions – from listening and learning to leveraging the information and intelligence to assure profitable outcomes. Verifeed can help financial institutions develop social media programs that meet FFIEC guidelines, and using social intelligence and business ‘Big Data’ analytics, we can help financial institutions meet their strategic objectives.