A Facebook official in blue jeans urged the audience at FTF’s Social Media and Compliance in Financial Services (SMAC) conference yesterday not to get “stuck in the gate” on social media. As the day progressed, it became clear that firms are actually overly cautious. It’s time, though, for firms to quickly weigh the pros and cons and get on with it.That’s not to say that it will be easy.
There will be major operational and political challenges that become clearer as more financial and insurance firms reach out via Facebook, Google, LinkedIn and Twitter, among others. Internally, there will be battles between the marketing and compliance staffs, and a lot of work has to be done to establish a decent working relationship between these groups.
Several panelists warned that firms must avoid the situation where marketing people are pushing for what they can get away with rather than crafting strategies that respect the spirit of the laws and restrictions from the regulators. Marketers should also, by the way, be mindful that they have to protect the firm from a lot of potential damage to reputation and client relationships. On the other hand, very conservative compliance staffs have to understand that social media is a phenomenon that firms ignore at their peril.
In addition, the governance and security challenges are immense and may forever be works in progress because the technology, access and privacy policies of the social media sites are ever-changing with drastic overhauls usually implemented arbitrarily. This will cause firms to constantly amend their internal policies and practices to keep up with the social media sites.
Firms will also have to be prepared fend off ever-higher levels of spam and malware especially if the social media strategies are successful and create the much sought-after attention and interactions. If the right tools and policies are not in place, hackers can effectively get in between a firm and its clients and slam the clients with egregious spam and cyber-attacks. Firms also need to keep an eye on the sensitive data that its clients may inadvertently (and stupidly) post on social media sites.
I think the good news is that the positives of social media outweigh the negatives.
In particular, there is the strong possibility that well planned strategies can boost the bottom line significantly. For those working in wealth management, just becoming aware of “life events” such as marriages, births and major moves can result in opportunities to eventually offer new financial instruments and plans. Insurance companies, for instance, can streamline their investigations of shady claims by exploiting the wealth of data available via social media sites.
Another positive is that investing in social media does not necessarily mean that firms have to hire an army of social media elves. Several panelists from end-user firms report that much of what they had to do was handled by current staff eager to get on the bandwagon.
These dynamic channels between the firm and its customers and the new links among employees are changing branding for the enterprise, overhauling the sales and marketing processes, enriching the customer experience, and ultimately laying the groundwork for a new competitive landscape.
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