The current situation
Initially financial services brands and institutions were reluctant to use the various social media tools and technologies available on the market, largely because of the stringent rules and regulations that govern the industry.
Financial services brands have strict codes of conduct when it comes to data sharing. It's often the case that external sites like Facebook and Twitter simply cannot be used or accessed within the firewall of a business for fear of information inadvertently being leaked out.
With the Financial Services Authority (FSA) asking firms to apply strict advertising rules to more informal communications like Twitter, forums and blog posts in order to stay compliant, it's no wonder financial services brands are less keen to adopt new technologies - it's just another area they can fall down on.
However, with large banks and institutions like American Express, ING Direct, Bank of America and HSBC all using social media in one way or another, it seems that financial services brands are starting to realise they can use social media as long as the activity is well planned and uses a pre-defined, fully developed social media strategy to ensure that risk is managed effectively and that regulations are adhered to.
What does the future hold?
With more and more financial services organisations adopting social media it will become an inherent part of the industry's online infrastructure. As long as businesses have a pre-defined, robust social media strategy, with clear processes in place, then both FSA regulations and other guidelines will remain intact.
Proactive identification of compliance and the possible business risks from online conversations will also help financial services brands use social media in a way that aligns with industry standards.
Similarly, each business should develop a social media policy for employees. The policy should form a standard part of all employment charters and contracts and should determine social media activity both internally and when representing the company externally. Again, this will ensure that rules and regulations are not broken. This policy should be updated on a regular basis to keep in-line with changes to the social media landscape.
Our next post will look at resourcing social media in financial services businesses.