Social Media — Banking.com

Social Media Regulation – Part I: Adapting to New Policies

March 12, 2013 By Banking.com Staff Leave a Comment

This is Part I of a two part post on American Banker’s “Banking Regulatory Update: New Social Media Rules” webinar. You can view Part II here.

Last week, the Banking.com team sat in on American Banker’s webinar, “Banking Regulatory Update: New Social Media Rules,” which detailed the current policies around social media use by financial institutions. Moderated by American Banker’s own Penny Crosman, the panel of presenters included:

Mercedes Kelley Tunstall, Of Counsel, Ballard Spahr
Carl Pry, Senior Director, Treliant Risk Advisors
Jonathan Foxx, President and Managing Director, Lenders Compliance Group

With content ranging from how to establish a corporate social media policy, general best practices for social media, and analyzing the FFIEC guidance and call for feedback on social media regulation, we wanted to take a deeper dive on the content and connect with some of the experts ourselves. We first spoke with webinar moderator, Penny Crosman, editor in chief of Bank Technology News and technology editor of American Banker.

Q: What social media policies have you seen banks and credit unions using that you think are effective?

Most of the social media policies I know of are dry, legalistic, and boilerplate. The policies drafted by large banks and Wall Street firms seem to be draconian – many don’t allow employees to even access social media sites (except for a few people who work in customer service and marketing). One reason for this is SEC rules that require banks to archive all emails – messages stored on social networks are difficult for a bank to monitor and store. The employees of these companies sometimes use their personal smartphones and tablets to access the sites. I know of Wall Street executives who have Twitter streams under aliases and protect their streams from being viewed by any but their close friends. Commonwealth Bank of Australia last year came out with a harsh policy that insisted that employees report “inappropriate or disparaging content and information stored or posted by others (including non-employees) in the social media environment” or risk being fired. These are examples of going overboard. Banks and credit unions need to find a way to comply with the necessary rules, yet encourage natural, positive engagement on social media. Citi, for one is finding success using software to identify and catch potential rule violations and route those to its legal group, while encouraging its customer services people to maintain friendly and helpful conversations with customers on Twitter and Facebook. I think more banks will turn to software to handle policy compliance, rather than expecting employees to keep all the rules in their heads.

Q: Do you think banks and credit unions are quickly learning how to adapt to these regulations?

Banks and their compliance departments are keeping a close eye on these regulations and are sure to have their own policies in place when the FFIEC publishes its final rules. They are already used to complying with the many existing consumer protection laws the FFIEC cites in its guidance. What some of them may end up doing is freezing all social media activity until they get their policies finalized and employee training conducted.

Q: What would you recommend as the first step for banks to develop social media policies and practices?

I think the logical first step would be to canvass all current social media activity – review all social media pages the bank maintains and ask employees what they’re doing on their own. The second step would be to hire or consult with a good lawyer who can parse out which aspects of the rules apply to the bank’s activities and help create a policy that would enable compliance.

Q: How do you think upcoming Facebook payments capabilities will affect banks’ interactions with social networks?

I think banks may eventually get involved with payments over social networks, but they may be the last to the party, largely because of the regulations they need to be careful of, such as the Electronic Funds Transfer Act. There are also security issues with social media payments, as social passwords are pretty easy to game. Authentication will be tricky and important. I expect banks will be very cautious about this.

Interested in hearing more? Check out Part II with our interview with Carl Pry, Senior Director, Treliant Risk Advisors who spoke to us about how he counsels financial institutions on their social media activities.

Filed Under Industry News, Social Media Tagged With American Banker, Facebook, FFIEC, payments, Penny Crosman, policy, regulation, social media

Social Media Regulation – Part II: Creating Your Social Media Policy

March 12, 2013 By Banking.com Staff Leave a Comment

This is Part II of a two part post on American Banker’s “Banking Regulatory Update: New Social Media Rules” webinar. You can view Part I here.

Mercedes Kelley Tunstall, Of Counsel, Ballard Spahr
Carl Pry, Senior Director, Treliant Risk Advisors
Jonathan Foxx, President and Managing Director, Lenders Compliance Group

Much of the content of the webinar dissected the implications of the FFIEC’s proposed guidance and how financial institutions can comply. As regulators are looking for feedback on the guidelines by March 23, we spoke to Carl Pry, Senior Director, Treliant Risk Advisors, to hear how FIs are currently reacting to the guidance.

Q: What have you seen as the number one risk management issue for financial institutions on social? Can you elaborate on a way to avoid this situation?

The most critical risk management issue for banks regarding social media is the lack of awareness and oversight. Many institutions are taking a wait-and-see approach when it comes to social media, to their detriment. Institutions that don’t address this issue in the present are missing an opportunity to connect with a demographic we all want to reach: the young and technologically capable. But the risk comes when taking a hands-off approach results in the illusion that the institution is simply not participating in social media. Chances are that you are – your employees are – using social media every day. Without a clear social media policy and procedures, without guidelines on what can and cannot be said, you may be violating certain laws and regulations without even knowing it.

Avoiding this situation means getting ahead of the curve by formulating and implementing clear company-wide policies and procedures addressing social media. They should be comprehensive and deal with both company and employee usage of social media. Also, set clear guidelines for consumers and your customers who utilized your bank’s social media sites, as well.

Q: Do you think banks and credit unions should use Twitter and Facebook as customer service channels at all? Why?

Absolutely, although within limits. These are channels your customers are already using in their everyday lives, so why ignore them? They have the advantage of providing more immediate responses than snail mail, that’s for sure. But be aware of the limitations of social media, such as the 140-character limit of Twitter. Can you say what you want to say within 140 characters? For customer service usage, also understand what different social media sites do. You might not want to broadcast specific responses to the masses. Know the way these channels operate and coordinate your responses accordingly.

Q: Do you have any tips for HR policies or training for employees using social media?

Most importantly, make clear to employees what the parameters of usage are. Not how much time they spend on social media, but content of postings. If an employee is posting anything on behalf of the bank, make sure it is subject to the same control and review mechanisms you’d employ for any other sort of communication (such as email). But also be clear as to the expectations of employees posting things on their own accounts regarding their employment or the institution’s products and services. They should know the limits of what not to say, and that if they discuss the bank’s business, all appropriate legal and compliance requirements likely apply.

To hear more, check out Part I and our interview with Penny Crosman, editor in chief of Bank Technology News and technology editor of American Banker who shared her thoughts on banks adapting to new guidelines and regulation.

Filed Under Industry News, Social Media Tagged With American Banker, Carl Pry, compliance, FFIEC, lawyer, policy, regulation, social media, Social media Policy, Treliant

Anti-Social Media Hacks

February 22, 2013 By Banking.com Staff 1 Comment

Burger King and Jeep have nothing to do with financial services. But both banking professionals and the customers they serve would be wise to keep a close eye on the fast-food retailer and the automaker as they seek to recover from high-profile hacks this week. It could just be a sign of things to come.

As has been widely reported, both companies this week had their Twitter accounts hacked and, in different ways, defaced. There’s already been wide speculation regarding the perpetrators, but at this point that’s almost less important than the fact that the hacks occurred at all. The primary motive seems to have been to cause mischief, but most such intrusions have a more malevolent intent.

The news of these high-profile Twitter hacks comes shortly after the granddaddy of social media, Facebook, revealed that it was the victim of a “a sophisticated attack. . .that occurred when a handful of employees visited a mobile developer website that was compromised.” Facebook didn’t identify the developer site in question, though it has been identified named elsewhere.

So what does all this have to do with banking?

The reality is that this where many aspects of the financial services industry are headed. And unlike fast food or even cars, this is a practice fundamentally built around private information that needs to be kept secure. The most recent data breaches make it clear that we’re far from that level of security.

Most institutions are already active in the social media sphere, but the current initiatives mainly revolve around marketing and messaging. It seems only a matter of time before at least a few brave organizations make the leap into trying to develop Facebook into a transaction platform and transmit private information via channels such as Twitter.

In some ways, it’s a throwback to the early days of the Internet. The Credit Union National Association reports that a third of all credit unions now offer mobile banking, and all of the rest will have joined the fray within the next two years. That’s nearly twice the adoption rate for online banking when it arrived, which means that we’re already entering the second generation of mobile banking capabilities.

When social media is thrown into the mix, as seems almost inevitable, the growth rate will likely be even more accelerated—there’s an entire generation primed to enter the workforce that has a problem remembering a time before these technologies were fully integrated into every aspect of daily life.

The question is not whether social media channels need to become more secure; the focus should be on how to make them more secure, and who should lead the effort. We already have best practices in place for consumers, but it’s fair to think few will heed the advice. It’s up to us.

There’s no single constituency that can do everything related to security. The banks, the social media providers, the government, commercial and technology vendors—everyone must be involved. We need expert working groups, industry standards and new technologies. And we need them now.

Filed Under Industry News, Social Media Tagged With Facebook, hack, social media, twitter

Social Media Statistics: By-the-Numbers, November 2012

November 16, 2012 By Banking.com Staff Leave a Comment

Below are some interesting statistics on social media usage. Feel free to share your favorite social media statistics in the comments section or Tweet @bankingdotcom.

31,000,000: The total number of Tweets sent on Election Day 2012. (Source: Twitter)
40: The percentage of time spent on Facebook’s newsfeed; only 12 percent of time is spent on profile and brand pages. (Source: comScore)
4,000,000,000: The number of stories that have been read on the Pulse mobile platform since it launched in May 2010. (Source: Pulse)
3,000,000: The number of tweets published along with #sandy and/or #hurricanesandy during the first 24 hours of the storm making landfall on the East Coast. (Source: Topsy)
604,000,000: The number of monthly mobile users for Facebook in September 2012. (Source: Facebook)
175,000: The number of new LinkedIn profiles created each day as of September 2012. (Source: LinkedIn)
584,000,000: The number of active daily users on average for Facebook in September 2012. (Source: Facebook)

LinkedIn introduced Thought Leader pages in October. Curious who the most followed thought leaders are? Read LinkedIn’s blog here.

Filed Under Social Media

Intuit Financial Services’ Innovation Conference: Mobile Trends, Technology Transformation, and Personal & Small Business Finances

October 15, 2012 By Banking.com Staff 2 Comments

In early October, Intuit Financial Services hosted its annual user conference, the Intuit Innovation Conference, in Nashville, Tenn. The conference brought together industry leaders from banks and credit unions across the country, and discussed key topics affecting the financial services industry. To provide a broad spectrum on issues, Intuit hosted an array of esteemed keynote speakers included Steve Forbes, Chairman, CEO, and Editor in Chief at Forbes Media; Tom Kelley, General Manager of IDEO; and, Dan Ariely, behavioral economist and author.

The Banking.com staff got a chance to pull key tidbits from the event, which focused on mobile trends, technology transformation, and personal and small business finances. Below are some top tweets and highlights from the conference:

Mobile:

Tablet users touch their financial institution (FI) 30 times per month across multiple devices (tablet, phone and PC) not including text banking touches.
Smart phone remote deposit users deposit approximately 2+ checks per month at an average of more than $420 per deposit. Cost savings to FI – $3 each deposit over using a branch.
30% of customers now factor mobile solutions into why they choose their primary FI.
Average mobile phone user now spends 12 minutes/day on the actual “phone,” two hours/day doing other things.
Mobile is the primary way people interact with their FIs today and growing; mobile banking up 63% to 57 million in 2011.
10% of online banking users are now using their tablet.

Technology Transformation:

Web and mobile is eliminating intermediaries like traditional editorial process. Media model of last 150 years has been blasted away.
Mobile is changing the media model again. Everything in marketing must be customized to the individual. There are more specialized segments than ever before.
Contingent workforce will be 40% in few years (following passions, seeking work/life balance). This offers a new set of financial complexities that financial institutions will need to consider.
Digital trends shaping future behavior:
- World without borders
- Participatory networks
- Mobile first & only
- Humanizing the data
- Reputation rules
“The Digital channel has increased engagement 3x to 32 times/month” – Intuit Financial Services General Manager, CeCe Morken

Personal & Small Business:

2/3 of personal businesses don’t track their mileage for tax time or they track it incorrectly.
50% of small businesses use manual methods (pen paper) to manage finances.
Average value of personal business to an FI is $5,000 in revenue per year. Consumer value is $500.
Personal small business market segment is growing. Forecast is 32 million by 2018.
Personal businesses take longer to make buying decisions than consumers and larger businesses.
“74% of #smallbiz owners aren’t wowed by their FI”-Christine Barry of @AiteGroup

A recurring theme of the conference was mobile in the banking industry; how important is a mobile presence to you? Does your FI meet your needs with its mobile solutions? What do you expect from your FI’s when dealing with mobile? Leave us a comment below.

Filed Under Industry News, Social Media Tagged With #IFSNC, Intuit Financial Services, mobile, mobile banking, tablet banking, twitter

Satisfaction With Social Media Interaction

September 26, 2012 By Karen Licker Leave a Comment

Guest post by Karen Licker, Social Banker & Content Contributor (Independent) at J.D. Power and Associates

Social media, a non-traditional method of customer interaction is clearly becoming increasingly important for banks to understand.

It’s no longer just a vehicle for customers to vent about poor experiences, praise their bank for exceeding expectations, or read about other customers’ positive or negative experiences—it has now become a legitimate service channel!

Social media sites not only allow customers to interact with their bank, but also provide another medium to converse with representatives, get questions answered, and resolve problems. For example, data from our 2012 J.D. Power and Associates US Credit Card Customer Satisfaction Study shows that during the past 12 months, 5% of credit card customers have contacted their issuer through their social media site to ask a question, resolve a problem, or make a request.

Although many questions or problems may need to be handled outside of the social media site that was the initial contact, it is important for banks to show they are listening to their customers’ “pain points” by providing an actual response to the social media posting.

Did you know that only 60% of customers who contacted their credit card issuer via social media received a reply?

Needles to say, the impact of replying to a posting on overall satisfaction is profound, as Interaction satisfaction among customers who have received a reply to their social media contact is notably higher than among those who did not receive a reply (802 vs. 748, respectively). Findings from our recent study also revealed that optimizing customer satisfaction with their social media experience does not end at merely responding to the request, but that issuers should continue to focus on the following:

Resolving the initial issue at hand
Offering additional assistance
Thanking the customer for their business

When each of these best practices are met, Interaction satisfaction increases to 839, which is 91 points higher than when they are not met.

Source: J.D. Power and Associates 2012 US Credit Card Satisfaction Study^SM

The Bottom Line:
With the continued advancement of technology shifting the way customers interact with financial institutions, it is vital for banks to proactively respond to the changing demands of their self-service channels and understand the importance of being responsive to feedback posted on social media sites.

Filed Under Social Media Tagged With credit cards, customer satisfaction, J.D. Power and Associates, social media, statistics

The Klout-Influenced Credit Score Would Give Credit Where It Isn’t Due

August 22, 2012 By Willy Staley 4 Comments

*This post originally appeared on MyBankTracker

If you’re an insufferable person who speaks on social media panels with any degree of regularity, you’re probably more aware of what your Klout score is than you are your credit score. After all, you can check your Klout score all day — you can only check your credit score once a year from each bureau. Who has the time? You live an active social media lifestyle, and retweets probably matter more to you than your mortgage rate. You are pretty terrible. Well we’ve got good news for you: at Movenbank, your social media influence might soon influence your credit score — a terrifying thought!

Movenbank, a soon-to-launch financial services company, launched something called the CREDscore in private alpha. It is comprised of a number of different factors: your actual credit score, your personality and, yes, your social media influence. Strange as it sounds, Movenbank might actually make business decisions based on your Klout — or something a lot like it.

First, Movenbank puts you through a financial personality quiz to better understand your relationship with money. You’re assigned a “type”: salesperson, professor, accountant, rockstar, entrepreneur, officer, artist (wouldn’t want to get that one!), breadwinner or trader. For now, this is just filler, but it might factor into your score in the future.

The CREDscore also takes into account actually important financial information like annual income, how much you save per month, how much you have saved up, and your FICO score. So there is hard data factored into the score.

But users can also connect their Facebook, Twitter, LinkedIn or Google Plus accounts to give Movenbank a better sense of your social media influence. The company explains why in a blog post that describes different credit profiles that a CREDscore could benefit. Here’s Ashley, someone who has fallen on hard times, but has a lot of LinkedIn contacts:

Then there’s Ashley. Ashley’s a bit older than Matt and Jessica, but he lost his job a few years ago. Then he lost his house. Ashley’s suffering. The bank foreclosed and now he can’t get any opportunity to get new things started.

But he has an idea. He wants to launch a new business that makes funky trainers that tweet and check-in on foursquare as you run.

Sounds stupid, but don’t be fooled. According to LinkedIn, Ashley has a heavy influence on some potential investors who are sniffing around the ‘Tweener,’ as he calls it. The only thing is he has a problem. The mainstream financial service providers don’t want to know him.

Here at Movenbank though, we love Ashley.

We love Ashley because we can see he’s on the cusp of a breakthrough. But we can’t just give Ashley all the things he wants, so we offer him a deposit account and a limited loan facility to get the business started. The loan facility increases over time, as his Klout increases.

One reason why underwriters typically rely on hard data when assessing credit risk, is because dangling lots of money in front of people who need it desperately can often make them less than honest. Low-documentation and no-documentation loans are called “liar loans” for very good reason: if you’re self-reporting income to qualify for a mortgage, it’s easy to fudge it upward a bit, especially when your mortgage broker encourages you to. Despite what Movenbank would like to think, it’s very easy to fake social media influence — it’s just a pathetic and humiliating experience most of us would readily avoid. Unless we really wanted a loan from Movenbank, perhaps.

This sort of thinking only makes sense if you’re constantly surrounded by tech entrepreneurs all day, as they network and jockey for money and influence. Most of us never need business loans for shoes that integrate with social media. Our financial needs are personal: saving for our first home, retirement, our kids’ education, a vacation, whatever.

But in its defense, CREDscore addresses these issues, too. A higher CREDscore might mean better terms for customers on their accounts: higher savings rates, lower borrowing costs, or lower fees. Strangely, the range is not yet public; those who have been given CREDscores have not been told whether it is good, bad, mediocre, anything. Just: here’s a number, it might mean something later.

Movenbank will launch to the public later this year. And people with parody Twitter accounts might get a better rate on their savings account than you do. It’s strange, because one might reasonably suspect that introverts might have better financial habits than people who tweet every thought or joke that pops into their head. Being impulsive online is different from being impulsive at Macy’s, sure, but being freed of the rigors of a social life would likely cut 40% of the spending out of my monthly budget.

Klout is likely as good a measure of creditworthiness as waistline. Sure, I can infer a lot of lifestyle differences between the man with the 44 inch waist and the man with the 30 inch waist, but just because one probably spends more of his income on cheeseburgers, it doesn’t really tell me how likely he is to pay back a loan — and it definitely doesn’t mean he’s worthy of lower fees or higher savings rates, or vice versa.

But the CREDscore is still in its testing phase. It’s quite possible that none of this will come to pass. So you can stop spamming LinkedIn VC groups — you might end up burning bridges.

About Willy Staley: Willy is a 25-year-old writer, and as a native San Franciscan, he is unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.

Filed Under Industry News, Social Media Tagged With Bank 2.0, banking news, banking services, Brett King, CRED, Facebook, Future of Banking, klout, MovenBank, social media

Social Media Statistics: By-the-Numbers, November 2012

Intuit Financial Services’ Innovation Conference: Mobile Trends, Technology Transformation, and Personal & Small Business Finances

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Source: J.D. Power and Associates 2012 US Credit Card Satisfaction StudySM

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Source: J.D. Power and Associates 2012 US Credit Card Satisfaction Study^SM