Upside potential in Exam Council’s social media guidance?

The Federal Financial Institutions Examination Council’s (FFIEC) proposed social media guidance for banks, released back in January 2013 and still in that state, as written presents financial institutions with numerous new challenges for which they are unprepared. [Editor’s Note: ABA itself filed a long comment letter pointing out many shortcomings it saw in the proposal.]

The proposed guidance would move social media from a marginal, optional activity to a mainstream focus involving the entire organization in a holistic fashion. Banks and other financial institutions will need to transform to a new way of business: social banking.

Banks, which often have siloed organizational structures and disconnected work teams, are not ready for the internal restructuring that will be necessary to make such approaches work. When the final version of the guidelines come out, possibly by the end of the year, banks will also face managerial challenges if they are to respond to social media compliance requirements in a timely way.

The positive in regulating social

Yet for many institutions, the guidance will push them to move forward. The fact that the FFIEC, the Exam Council, is addressing social media validates that it is a form of communication relevant to financial institutions and will encourage some slow-to-adopt financial institutions to stop ignoring social technologies. Most importantly, the document provides recognition that social media must be taken seriously as part of current regulatory mandates to protect financial institutions from risk.

To address the FFIEC guidance, banks may initially look to new technological platforms for help with compliance, and these platforms may propel them toward collaborative business and doing banking the social way. Banks may ultimately adopt some of the social media platforms, modalities, social sharing and collaborative policies they started out trying to police. This is a good thing.

Banks and other financial institutions are, at their core, relationship businesses, but the way that they continually build and maintain relationships with their customers is changing.

Social media is no longer a millennial generational matter, but increasingly the way of our era.

Not having a presence where customers are having a dialogue renders an institution obsolete. Keeping up with customers results in customer loyalty and opportunities to upsell and can even ignite higher levels of engagement and communication to future-proof an organization’s business.

As one might infer from the extensive guidance proposed by the Council, leveraging social media is not a simple task for a bank, but it might be an imperative. The release of the final guidance will bring increased pressure to change, because virtually all departments in the firm need to be organized to be “in compliance.” Those functional areas now included are the Board of Directors, Senior Management, Human Resources, Operations, Call Centers, Public Relations, Sales, Audit, Finance, Marketing and Social Media—even Accounting.

Thinking beyond the tweet

Social banking is more than technology or a customer communication strategy. It requires cross-functional collaboration across a bank, including management, marketing, communications, compliance, and field representatives.

Adopting collaborative work methodologies that we observe other industries embracing is a key step. One obvious—and relatively simple—way that technology can bring the banking organization together is in creating a single destination to work on satisfying all the compliance reporting requirements. This simplifies data collection, maintenance, updating, and ultimately reporting.

The proposed guidance makes it clear that, as financial institutions get started on social media, they will need to implement technology to monitor activity and ensure compliance with company policy. Technology also can help secure privacy settings, establish a recordkeeping system to archive activities, distribute approved content, enable a monitoring and approval workflow, provide analytics to measure the effectiveness of social media initiatives, and help retrieve content for audits.

Social propose inter-silo piping

Beyond getting high marks for being “in compliance,” technology-enabled social business platforms can transform a firm’s internal networks. For instance, interactions between strategic constituencies and internal groups might be restructured to break down silos, whether they are on the same floor, in the same building, or across continents in other countries.

The ease of web-based communication will create productivity and effectiveness gains and a new focus on priorities and on reaching goals, collaboratively. Opportunities for sharing ideas, eliminating unnecessary efforts or costs and opening up innovative approaches will emerge because employees are more empowered.

Making banking more social will make banking better. Idealistic? No, it’s social, which is, in fact, the core of banking!

About the authors

Cornelia Levy-Bencheton is a marketing strategist and business consultant specializing in financial services and all things digital. She is co-chair of the Strategic Marketing and Communications Committee and board member of the Financial Women’s Association (FWA) and Social Media Chair of the Data Warehousing Institute (TDWI). She proactively develops communities involved in financial services, analytics, big data, predictive analytics, and business intelligence.

Yasmin Zarabi brings over 13 years of corporate legal experience spanning private technology startups and public companies. Before joining Hearsay Social, Yasmin was Senior Corporate Counsel at TIBCO where she was responsible for negotiating licensing transactions, providing advice on data privacy and implementing data privacy compliance for the company’s SaaS business. Prior to TIBCO, she served in a variety of roles including General Counsel and Associate General Counsel for companies such as Gracenote, a division of Sony, and Versata, now Trilogy Software.