Let's see if I can complete a post that no one will request be taken down for at least 24 hours...
As if the daily news wasn’t enough to drive a “normal” person to reach for the Zoloft or the Jack Daniels (or both), the consensus among attorneys for various state and national bank trade associations who spoke at last month’s Texas Association of Bank Counsel conference in Austin was that due to the increased compliance burdens placed on community banks by the Dodd-Frank Financial Reform Act (notwithstanding certain trade associations’ crowing about all the exemptions they secured community banks), it will be difficult for banks under $500 million in assets to afford to meet that burden. Community banks of all sizes are going to need as much help as they can get from technological solutions, because most of them won’t have the financial resources to staff the “human capital” that larger banks have access to.
I was thinking about this problem the other day while talking to Scott Brown (no, not the Senator from Massachusetts, the CTO and founder of Kronovia). One of the areas in which I have an interest is social media, and during and following my presentation at the Austin conference on the use of social media by banks, community bankers who might otherwise give social media “branding” efforts a shot made it clear that one of the roadblocks in the way of their willingness to engage in social media is concern about how to manage the risks. Although many bankers describe the risk as “compliance” risk, it’s really more accurately described as concern about all the potential legal risks of social media.
Scott participated as one of the panelists in a recent BankLawStuff webinar on social media governance issues for banks, and I wanted to follow up with him to see what the technology solutions were all about. My inner geek is sometimes difficult to reign in. There are other businesses in the same “space” as Kronovia, but since I knew Scott, I assumed that he was a good place to start, and he was kind enough to share his views with me.
Kronovia’s approach to managing social media risk is to provide a technology solution that’s akin to the methods banks and other financial businesses currently use to manage their e-mail communications risk. In fact, he said that a community bank can leverage e-mail scanning tools that it is already using in order to scan and monitor social media activity by the bank's employees. The technology acts as a “social media pipe” that gathers all of your employees social media “chatter,” and archives it. Just as important, it also compares the bank’s social media policy to what employees are actually saying via social media and kicks out potential violations based upon key words or other “triggers” the bank would choose. The bank would require that any employee who talks about the bank in social media must register the media in the bank’s “pipe” (system) so that such scanning can occur. If you don’t register it, you can still use it, but not to discuss anything about the bank’s business.
For community banks, a critical factor is going to be affordability of a solution. Scott conceded that banks need to be careful in choosing a service provider, and that while Kronovia and others are charging on a fee-per-user basis, some providers are trying to get the bank to invest in substantially more technology than they may need, as compared to others who will work with the bank to use as much of the bank’s existing technology infrastructure as possible.
One “hole” that concerned me in this technology was that caused by renegade employees, those who, notwithstanding the bank’s policy that requires employees to register social media through which they will discuss the bank, go “off the reservation” and start talking about the bank’s business on unregistered social media sites: people like Arvest Bank’s “One Hot Party Girl” (who, although I misidentified her in my Austin speech as “Hot Bikini Girl,” was pitching loans to people via a picture of herself in “a small bikini” on her own Facebook page). Scott pointed out that there are numerous free “listening tools” like these twenty profiled on Digital Marketing Mercenary’s blog. Certainly, using such free tools would make more sense for banks who aren't able to afford three full-time employees who do nothing but scour the Internet for discussions that mention the bank’s name.
At some point (which may have already arrived), banks aren’t going to have the option of doing nothing. Social media use by employees is proceeding at a rapid pace, and social media governance policies are a wise idea, whether or not the bank is going to jump into the use of social media itself. Not having any policy to govern the use of social media by employees in ways that could adversely affect the bank, or, having a policy in place but not adopting effective tools to monitor and enforce it, might be considered to be unsafe. As a recent client alert from Norris McLaughlin & Norris P.A. points out, the SEC and FINRA are already focused on social media sites and the risks they pose to the businesses they regulate. While the federal banking agencies are currently otherwise occupied, banks should take the trend seriously and be seriously thinking about social media governance.