Financial Social Media: Will it Ever Live Up to its Promise?

Face it... decisions involving money are critical. Shopping for loans, credit cards, financial planners, investments and so on… involve much in the way of pondering and research. So why isn’t financial social taken off? Why aren’t more institutions engaged in financial social media programs? There are, however, exceptions. Morgan Stanley, Raymond James and Wells Fargo are experimenting with various forms of financial social media and the industry is watching closely. Let’s stop to consider some facts… Clearly social media has become a daily part of our lives. It has been estimated that more than 80% of the world’s populace is engaged with social media networks…, social media is now instrumental for brands, whether communicating with mass audiences or engaging on a one-to-one basis. Through social media, people are able to connect with friends and family, keep updated with news, and interact with brands that affect their daily lives. An interesting parallel exists with adoption of online trading. Surely, the public has embraced online trading; however, the financial services industry lags in the use of financial social media programs. By eschewing financial social media campaigns in favor on the tried and true vehicles such as advertising and direct market, these companies are missing out on key ways of engaging their clients and bringing in new ones. Not to mention the valuable market research that can be gleaned from financial social media efforts. Clearly, we are living a multichanneled world and companies should be utilizing Financial Social Media programs as a channel for multidimensional, real-time communication with their customers, this is particularly important given the turbulence that as roiled the financial markets of late. In such times, a bit of customer handholding brought about by financial social media can go a long way towards allaying fears and concerns. From a company’s perspective, engaging with customers on a one-to-one basis via financial social media enables a more in-depth understanding of individual customers to develop, increasing personalization and relevancy of products and services. So what’s the holdup? Regulation, of course… The financial services industry is one of the most heavily regulated industries in the world today… The guidance provided by various regulatory agencies is somewhat helpful however there is a long way to go… One of the chief impediments to the full scale deployment of financial social media activities stems from the need to keep meticulous records of everything that is said… That’s quite an undertaking for even the best compliance operations… Undoubtedly, we will see further advances in social media technology as well as its uses… It is hoped that some of these advances will make the adoption of financial social media programs more prevalent.