22 October 2014

Gary Wright

Gary Wright - BISS Research

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Harnessing the risks of social networking in finance

02 November 2012  |  3557 views  |  1

Whenever I get into a conversation about social networking with someone from a financial services firm the discussion quickly turns to risk and then almost fear of a force out of their control. The natural reaction in most FIs has been to ban access within the firm and attempt to do the same externally. This is profoundly the wrong response to social networking, apart from the fact it would be hard to prevent or police, any attempt to ban it, will drive users underground.

The very first thing management has to do is to really understand social networking and how it affects their firm and business. This should include an honest appraisal of what is good and what is not so good. Upon an analysis of social networking and how it could impact your firm and business the next step is to have a social networking policy for staff and also a social networking policy for customers.

The staff policy should include allowing access by employees to social networks and actively encourage employees to comment. To enable this, training on the laws of liable and no go areas where the firm could be hurt or what would constitute a sackable offense, should be mandatory and on-going. Without this it’s a bit like giving a person a gun, but not teaching them how to shoot and how to ensure safety. The policy could for example be channelled through a corporate access to all the social networking sites and would encourage people to utilise the service that is being offered, as it would enable a two way dialogue between employees and their employers. Employees that voice any grievances should be reassured by their employers that their views will be noted and a reaction assured.

Customers of the firm should equally be encouraged to communicate views both good and bad via the firm’s social networking account. Responses to adverse comments should be made public and people will then see that the FI is taking its customers seriously and responding accordingly.

These policies should not allow any editing or attempt to artificially manipulate content. The power of social networking is huge and will continue to explode. By harnessing the risks and utilising the capability positively FIs will not only reduce their risk, but increase their reputation and I am sure their business and customer and employee satisfaction. 

Comments: (1)

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 05 November, 2012, 08:27

With the successful go-live of Actiance in NetSpend over a year ago, I'd hoped, in this post, "So, hopefully, the era of excuses will come to an end!" when it came to the use - or lack of it - of social media in banks and financial institutions. From your post, it appears that this hasn't happened! I agree with your list of do's and dont's of social media implementation in banks. Just wanted to add that, by now, even basic social media tools (e.g. HootSuite) support "maker-checker" functionality whereby posts prepared by the rank-and-file can be put through an approval process, so that only permitted posts get published. This further mitigates reputation and compliance risks in social media for BFSI companies. Customer service is a low hanging fruit for social media that has a clear-cut ROI as I'd explained here.   

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name

Gary Wright

job title

Analyst

company name

BISS Research

member since

2007

location

London

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CEO of B.I.S.S. Research, founder of the BISS Independent Accreditation for all systems and servi...

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