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Why Financial Firms Should Embrace Social Media, Not Fear It

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Written by: Paula Taylor | Econnexx

Social Media Is For Everyone, Including Financial Firms

For many organisations, social represents one of the most drastic changes in communications since the advent of email.

Savvy businesses now effectively use the power of social to interact with their customer bases, prospect for new business, deliver services and obtain customer and market insights.

Indeed, this shift in communication has led many large enterprises to employ teams of social experts, tasked with monitoring the social airwaves at all hours and in multiple languages.

Traditionally, the Financial Services (FS) sector is one of the earliest to adopt new technologies, especially those that can be deployed enterprise-wide.

The likes of contactless payments, commercial mobile payment offerings, cloud-based solutions and data analytics have been embraced and adopted ahead of the curve – however, the adoption of social has been markedly slower. 

Risk Management

One key reason for this hesitance is that compliance legislation, which has become even stricter since the 2009 recession, requires financial institutions to be cautious with their communication with the outside world.

Baby steps

A number of financial sector organisations have taken small steps into social. Many have a burgeoning social presence on the likes of Facebook, Twitter and LinkedIn, helping them interact with customers to drive news and promote products.

In July 2012, Morgan Stanley announced plans to enable its financial advisors to communicate with customers via social channels, Twitter and LinkedIn.

Other examples include, Zecco, the online stock brokerage which enables its customers to trade through Facebook; Ameriprise, the financial advisory firm, which offers an adviser search tool on LinkedIn; and both E*Trade and optionsXpress have launched social communities.

However, compared with other sectors’ adoption of social, FS businesses are trailing. Compliance is a huge reason, but further factors contributing to hesitancy include the fact that social opens up the organisations to criticism. 

The opportunity

The proliferation of smartphones and tablets means that today’s consumer is digitally savvy, sees social as an inherent skill and expects to be communicated to in such a fashion.

The fact is, a firm will not be considered relevant in the current economy if it fails to communicate where stakeholders – clients, investors, business partners, media and industry peers – are listening.

People and businesses now have a much larger arena to communicate in, voicing opinions in real time and a financial brand must be part of this conversation.

Embracing social

Social certainly brings compliance challenges for financial institutions, but there are simple steps a business can take to overcome them.

However, ultimately, the reduction in social risk boils down to the ability to capture and control the information flowing in and out of an organisation’s social channels.

Further, compliance laws require the monitoring of two-way communications between financial advisors, customers and potential prospects. This sounds daunting on paper, but the good news is that FS organisations should not fear these stipulations, as we are now at the stage where technologies are available to manage these processes while monitoring all outbound information through textual analysis, interpreting whether a user has communicated inappropriately.

Social cannot be ignored and the financial firms that get to grips with it, in a compliant fashion, will reap the benefits.

It gives FS firms the opportunity to create an online presence that can be heard amongst a large mass of people and company leaders an efficient way to deliver a company message, create transparency, and engage in a two-way conversation.

Communication has evolved and businesses that fail to embrace this new world order will get left behind as consumers’ social expectations continue to escalate. It’s quite simple – FS businesses must adapt to integrate social, or face being left behind as competitors seize the opportunity.

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