With 1.73 billion people now using some form of social media, including Twitter, Facebook and YouTube, banks and financial services firms need to be able to effectively manage these streams. There are risks involved though, and traditional approaches to risk management are not equipped to deal with the huge amount of dialogue and data generated from these sites.
Risks can include fraud and compliance and legal issues, as well as the varying regulations to adhere to. Understanding these different hurdles is the key to embracing and getting the most from the powerful tool that is social media, and we explore three important considerations below.
Governance is the first step to ensuring a successful strategy. Structures, policies and accountabilities are all needed and the development of acceptable-use policies for employees, contractors and vendors is important.
Make sure you build upon existing standards rather than starting from scratch. This is about process improvement, so add to your risk management strategies for media interaction, public communications and handling of confidential information. Balancing risk against reward needs to be assessed before you decide how much engagement to have with customers and the public in general.
Social media processes are very different to other types of risk processes, owing to the fact that such platforms are always on. As a result, firms need to establish roles and decide who is accountable before they begin to identify opportunities. When it comes to reputation management, effective monitoring is the best way of highlighting problems early. Web crawlers using sentiment analysis technology can find references to your firm on social media and report back quickly on whether the general consensus is positive or negative.
By using data mining and analytics, you can turn the apparent randomness of comments and posts into information to improve business intelligence, and therefore develop your services. Segmenting the information will also mean that better decisions can be made on business strategy and direct marketing, based on the hard or big data extracted.
Much still depends on people however, and your employees need to be knowledgeable and understand their role in mitigating risk when using social media. An integrated strategy can provide significant value to the business, and financial services firms can no longer afford to ignore the influence and pervasiveness of social media.
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