Social networking is serious business within regulated industries. Posts pertaining to finance, insurance and healthcare, in particular, require adherence to strict government and industry regulations. However, even with the rule-a-palooza, some companies in these industries have not only found ways to keep regulators happy, but have also made social networking a productive and key part of doing business.
That said, the phenomenon is still in fairly early stages. Only around 10% of the companies in regulated industries have a "truly social" enterprise where multiple social media tools have been integrated into general content consumption, according to Toby Ward, founder of Toronto-based Prescient Digital Media, a consulting firm for Fortune 500 companies.
"It depends on the organization and their level of savviness," he says. Companies where executives start their own blogs, for example, are more likely to use social media effectively and adopt it widely, according to a recent study by Prescient. "Almost all major banks have been in social media for at least a few years," Ward says.
Show Me the Regulations
Banks are embracing social media despite the fact that the financial services industry may be subject to the strictest compliance requirements and regulatory mandates. In just one example, in January 2010, the Financial Industry Regulatory Authority (FINRA) published guidelines for blogs and social networking sites that, among other things, outline specific record-keeping responsibilities and supervision requirements.
That hasn't stopped MassMutual, a Springfield, Mass.-based financial services firm, from using social media. "We developed our social media strategy by forging a partnership with key contacts in our company's legal and compliance departments," says Marie Politis, MassMutual's vice president of online experience. "Regulatory requirements are even more stringent when it comes to communications by individual members of our salesforce."
MassMutual is working with Actiance, a Belmont, Calif.-based social media consultancy, to roll out a pilot program that meets FINRA's requirement to review and archive initial, or static, social media posts. ("Static" is a term used by FINRA to describe initial posts; once the audience engages with the content, the resulting conversation is considered "interactive.") Another MassMutual goal for its pilot program is to monitor interactive communications, which must be reviewed.
The benefits of connecting with existing and potential customers through social media make the effort worthwhile, practitioners say. "Money is a highly sensitive topic," says Michelle Peluso, global consumer chief marketing and Internet officer at New York-based Citigroup. "One of the things social media allows us to do is to listen in to hear what people say about our brand, our competitors, our industry, products and services, and our people." Even given all those advantages, though, "we have to think hard about the regulatory challenges," she admits.
When customers have a bad experience with Citi, they may complain about it in the Twitterverse or on a blog. "We don't let the fact that we're a regulated industry dehumanize us," says Peluso, who has a team of customer service reps who are trained to help people who criticize Citi on social media.