The concept of social selling is simple: it aims to do away with traditional cold calls/emails by personalizing the whole concept. With LinkedIn, Twitter, Facebook and analytic tools, you have potential investors, employees, colleagues, clients and most importantly, customers, literally at your fingertips.
Many industries have taken to social selling like fish to water, but the banking industry in particular is facing some challenges. The governing body for financial institutions, the Federal Financial Institutions Examination Council (FFIEC), has released a press release regarding this that’s got some banks confused.
Social media use is subject to virtually the same legal requirements as other forms of business-related media use; the only exception is social media occurs solely on the Internet. Because of this, financial institutions open themselves up to heightened risk by communicating on social networks, even if they don’t violate specific regulations. To safeguard against these risks, the FFIEC recommends institutions perform appropriate risk assessments (that take into account the institution’s size, activities and risk profile) and build a risk management program; the higher the risk profile, the more detailed the program.
This guidance is meant to help financial institutions identify potential risk areas to appropriately address, as well as to ensure institutions are aware of their responsibilities to oversee and control these risks within their overall risk management program.
FFIEC took out this policy to ensure that financial institutions mitigate risk related to social media is to have a clearly stated social media policy and to educate employees on the proper use of social media. The guidance was primarily intended to help financial institutions understand the risks involved with social media use, clarify existing compliance requirements and responsibilities and encourage the implementation of oversight, processes and controls. However, a lot of banks have interpreted it that FFIEC has prohibited/restricted the use of social selling.
That is absolutely not true. In fact, it has clarified that as long as an institution ensures that advertising and other communications comply with consumer protection laws, social media can be a powerful business tool for banks and other financial organizations and should be made use of.
The Guidance does not require a particular approach to employee personal use of social media. This final Guidance clarifies that training and guidance should be provided to employees regarding official use of social media —that is, when employees communicate officially on behalf of the financial institution.
While it may seem like the risks of social media are high, the opportunities it presents banks and other organizations are much greater. Even the FFIEC notes that “financial institutions are using social media as a tool to generate new business and provide a dynamic environment to interact with consumers.”
Conclusion: It’s been proven that social selling strategy generates 40 percent more qualified leads than cold calling and allows you to build genuine connections. Companies that excel at lead nurturing generate 50 percent more sales-ready leads at 33 percent lower cost. With risk assessment guidelines and a clear structure in place, there is no regulatory blockade to banks utilizing social selling for lead generation purposes.