Social media and social networks are a part of our daily lives. They’ve now been accepted as more than just entertainment. It’s taken a while but the world of business has now realised that it can no longer ignore them (or the web) as a channel of communication to reach its customers and interact with them. Businesses are all rushing to find a way to utilise Twitter and Facebook, some are doing it well others are failing, but most industries are at least trying. One industry who’s finding it more difficult though is financial services.
Financial services companies such as banks, analysts, brokers, traders and insurers all have a duty under various laws to keep copies of all communications with clients, customers and counterparties (particularly when it comes to discussions giving advice). This paper trail is required to ensure there’s no bias, insider dealing, dodgy advice or plain lying going on. The problem is, social networks like Twitter and Facebook don’t allow these companies to archive and store their communications making it very difficult for them to become meaningfully involved in actual two-way conversations.
This is a recognised issue now in the industry and even regulators recognise the potential benefits of being able to properly engage online. FINRA (the Financial Industry Regulatory Authority) in the U.S. has set up a Social Networking Task Force (discussed at their annual meeting recently) to explore how regulation can embrace these of technological advancements rather than hinder their adoption.
Now, while I can understand the need for due diligence, archiving, transparency and regulation around financial services, surely the industry needs to grow up and realise it’s time to ease these shackles and allow the conversation to flow. The conversation is happening anyway; in phone calls, cafes, restaurants and bars financial industry execs meet with clients, colleagues and competitors and discuss exactly the kind of issues that generally should be on the record (this has been happening for ever). At least if these types of conversations happen online they will be archived by Google if nothing else. Surely the regulators need to accept that their industry will be dragged kicking and screaming into the sociable world of online media whether they like it or not? Time to adapt in order to adopt modern methods of social business communication! The benefits of allowing the conversation to happen far outweigh the negatives.
Of course the other way this could play out is that Twitter and Facebook provide a way for these types of companies to engage through special accounts which allow for archiving and provide regulatory compliance. Personally I don’t think that would be a good thing as it would place restrictions on their interactions and mould financial services use of social media rather than letting it grow and adapt organically. I’ve had many conversations with people from financial services on just this topic and they agree, they don’t want to be restricted and want to use social media as any other business would.