Creative Content in a Regulated Industry
Opportunities to leverage social media are fast-growing and fast-evolving -- and yet, by and large, financial services’ firms have only just begun to scratch the surface of these opportunities. The reasons for this, as I will explain in this piece, are not so much atavistic as regulatory -- a slew of compliance issues place a considerably heavy burden for financial firms to monitor social media activity. However, in the same way that social media has transformed and even given birth to other industries, financial services may also benefit from social media, though I assert that firms must invest in a level of creative content production not generally associated with banking and finance.
The potential value of social media -- which I will define broadly as any web or mobile platform that allows for dynamic, real-time content creation and communication amongst users -- does not seem to be lost on most companies, particularly high-growth organizations. According to a recent study sponsored by Google, 81% of high-growth companies credit social media as having a “significant” impact on their growth and expansion.1 And this is to say nothing about the fast-expanding social media companies themselves-- Twitter added nearly 500,000 new users a day in 2011, and Facebook saw a 13.6% growth rate the same year.2 So why is it that a high-profile firm like Goldman Sachs sent out their first-ever tweet on May 24, 2012?
The lack of social media presence from financial firms is underscored in a recent report by Swedish consulting firm Assetinum, which asserts that financial services firms have “clumsily” handled their social media leverage. According to Assetinum’s recent study, the “majority” of banks are performing poorly in areas of social media that are par for the course with other industries: a third of all analyzed banks did not yet have an active Facebook profile, and only 13 banks “consider wealth management topics” in their Twitter accounts.3 Simply put, financial services are not making social media a priority, and those that do are not providing specialized, salient content of interest to consumers. Financial services may be excited about social media from an investment standpoint -- as evidenced by the bank battle to serve as the underwriter for Facebook’s now-maligned IPO -- but when it comes to actually utilizing the array of platforms at their disposal, ostensibly, very few seem to be venturing out of their comfort zone.
The obstacles behind this limited social media use, however, are as much external as internal. Private governing bodies such as the Financial Industry Regulatory Authority, as well as the governmental authority of the U.S. Securities and Exchange Commission have set forth fairly comprehensive regulations regarding social media use. A January 2010 notice from FINRA, Regulatory Notice 10-06, noted that firms are required to keep records of all business interactions made through social media, in addition to providing “training and background” for all employees. The notice also warns against external links, particularly those posted by third-party organizations; links that contain “false or misleading information” could potentially be associated with the hosting firm, and could lead to fines by FINRA.4
About a year and a half later -- during which time Facebook nearly doubled its user accounts -- FINRA released Regulatory Notice 11-39. The follow-up notice affirmed the previous memo’s contention that firms should have training for compliance and monitoring of employee social media use, as well as establishing a clear delineation between business and personal communications.5 With these dual notices, FINRA provided a fair amount of guidance for financial services wishing to use social media, while also setting forth a number of risk considerations and compliance mandates – inherently complicating any firm’s forays into social media.
On January 4, 2012, the Securities and Exchange Commission released a “National Examination Risk Alert,” which served to emphasize the points of the FIRNA notices while cementing social media’s effects on business as “landscape-shifting.” The “alert” suggests firms guide social media usage by providing a list of allowed social media sites, or certain uses of certain sites, as well as suggesting “real-time” content monitoring and requiring “certification” for use of social media.6
Though perhaps cumbersome, the regulations are designed to protect the firms as well as consumers, and highlight particular difficulties within the financial services industry; difficulties that other industries do not seem to face. Industries such as retail, technology and manufacturing have been left to their own devices to form social media guidelines as necessary, with little regulation from outside forces. Most companies have indeed been proactive about developing advisories for employees; these advisories could perhaps be summarized in a phrase from Microsoft’s “tweeting guidelines,” which exhorts employees to “use their judgment” when micro-blogging or using social media of any kind.7 This simple request is a far cry from the “registered principals” of social media that FIRNA suggests for financial firms. Financial firms, hence, run into risk with social media because of the sensitive nature of their products and services, which deal intimately with consumer assets in a way that other industries do not.
The path to social media leverage may be wrought with regulations and risk-management, but the benefits of social media infer that firms have no choice but to adapt. This is particularly true because the rise of social media happens to intersect a nadir in the reputations of financial services firms. According to a March 13 poll by Edelman, only 46% of international respondents claimed to “trust” financial services firms. This number is even a step up from the 2011 figures, when about 25 percent of respondents indicated they trust financial service firms.8 Consumer trust level for financial services is low compared to other industries across the board – even the auto industry, which saw a similar plunge in trust levels following the 2008 financial crisis, has managed to rebuild consumer confidence considerably.
Another 2012 survey may at least partially explain a way to overcome this entrenched lack of trust: the survey found that 82% of respondents “trust a company more” when the executive leadership engages in social media.9 That social media is a crucial tool for trust-building is no secret, and we may assume that financial service firms are not oblivious to the potential opportunities for brand redemption as well as customer engagement. To truly gain this trust, however, I argue that the form and style of content financial firms choose to post online will be just as important as the social media applications themselves.
Original “creative” content can increase brand awareness and engage consumers in a way that sponsored content, impersonal headlines or obtuse numbers cannot. This creative content can tell a story or illuminate an industry insight for consumers of all varieties, building more meaningful and impactful relationships in the process.
Financial service firms, of course, are not creative artists or storytellers. The job of actually developing the content – particularly the more interactive, targeted creative pieces – may necessitate hiring outside of the firm, or it may lead to expansion of job descriptions and creation of new positions within firms’ public relations departments. Regardless, social media has given every member of society – organizations in particular – the chance to create their own news and legacy, and the results justify money spent on marketing.
Additionally, leadership of financial firms can look to the rise of video within social media -- mobile phone users will consume 6.5 times as much video by 2016 -- as a sign that they must think across multiple mediums. A comprehensive, linked multimedia campaign is an inherently 21st-century innovation, and one that many firms seem to be experimenting with already. A firm can now provide a YouTube video of a community or family benefited by a firm’s charity, present the charity’s facts and goals on a corporate blog, summarize the initiative in a tweet, and broadcast the entire campaign across Facebook. Even beyond charities, firms can use original video content as a platform for high-profile spokespeople, as well as firm employees speaking on topics of interest to investors. Social media goes hand in hand with multimedia, and firms that are able to leverage both will be the winners in the race for consumer trust, at the very least, and in the long run, consumer dollars.
Tim O’Reilly, author of “The Twitter Book,” notes that “The biggest mistake we see companies make when they first hit Twitter is to think about it as a channel to push out information” – a bellwether that creative content trumps rote facts when it comes to social media engagement.10 Financial services firms – with their tremendous effect on culture, economies and livelihoods across the world – may be among the last to capitalize on social media’s power, but with a strong push forward, they may benefit as much as any industry.
- Rooney, Ben. “High-Growth Companies Embrace Social Media.” The Wall Street Journal. 15 May 2012. Web. 30 May 2012.
- Bullas, Jeff. “20 Stunning Social Media Statistics Plus Infographic.” Jeffbullas.com. 2 September 2011. Web. 1st June 2012.
- Manz, Benjamin. “Social Media: Banks Are Lagging Far Behind.” Assetinum. 8 March 2012. Web. 29 May 2012.
- “Regulatory Notice 10-06: Social Media Websites.” January 2010. Web.
- “Regulatory Notice 11-39: Social Media Websites and the Use of Personal Devices for Business Communication.” August 2011. Web.
- United States. Securities and Exchange Commission. Investment Adviser Use of Social Media. Securities and Exchange Commission. 4 January 2012.
- Microsoft. “Tweeting Guidelines.” Web. 1 June 2012.
- Welch, John. “Trust in U.S. Financial Services Still Low Despite Economic, Market Gains.” Edelman. 13 March 2012. Web. 1 June 2012.
- Stevens, Suzanne. “Social Madness: Social Media Savvy CEO’s More Trustworthy.” Portland Business Journal. 2 April 2012. Web. 1 June 2012.
- Poole, Bob. “Social Media is Not the Answer.” Bobpoole.com. 30 May 2012. Web. 2 June 2012.
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