Harnessing the risks of social networking in finance

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.