Social Media Expands to New Roles in Finance

Social media has matured into the enterprise in the last 12 months, say two top guns at Autonomy, a search, analysis and marketing company.

Andrew Joiner, co-CEO of Autonomy Promote -- a business unit that spans multi-channel approaches to customers and George Tziahanas, vice president of compliance at Autonomy, joined in a conversation about how its technology is being used to promote financial services and serve customers.

Social media has to be done carefully to avoid running into problems with regulators.

On the marketing side, research analysts can use all the friends they can find, according to Joiner .

An investment bank with star research analysts can use social media to promote them.

“Social media is a wonderful broadcast medium if you can maintain quality. Firms want to embrace the network effect to publish research and to have their research analysts have friends.”

Autonomy Promote’s innovative technologies make it possible to understand customers by drawing on everything from transaction history to cross channel interactions, user-generated content, customer and community behavior and third-party content to deliver content which is relevant content to each individual visitor, according to the company.

This new approach to marketing extracts the meaning from every interaction a firm has  with customers - even "unstructured" formats like web pages, social networks, phone call recordings and video. This permits taking strategic actions based on a deep understanding of customers, competitors, and markets.

Investment banks can also monitor social networks to create profitable trading ideas. Some hedge funds are creating portfolios of concepts across news sources like Twitter and other social media looking for early indications of personnel departures, management shakeups and changes in factory news to see if they can incorporate the information for an algorithmic perspective.

Tziahanas, who works the compliance side of social media, said that as banks are starting their foray into social media the lawyers and compliance officers are very aggressive because they are scared of the new communications tools. As a result, they are relying on canned messaging, which sort of defeats the point of social media.

At a New York bank, lawyers decided Tweets were mass advertising, so any Tweet required approval before it went out. Another used Twitter contacts to direct customers into another channel like email or private Twitter messages where they can be more open and communicative.

They see more action on the lower end of financial services, such as retail banking and retail brokerage as more involved in using social media.

Autonomy makes compliance easier by scanning outbound Twitter or Facebook postings much the way it performs compliance on email looking for potential compliance problems.

“Capturing interactions is something we have already been doing,” said Tziahanas. More than 400 million messages pass through its supervision and filter technology every month.

“The underlying technology is our ability to access and understand unstructured information,” he added. “We have a platform we can deploy against any number of sources to see patterns of what people are saying. We look for certain types of patterns such as harassment, suitability or front running -- a little bit of everything and we do it at massive scale.”

In an Autonomy whitepaper, “Social Media and the Shifting Information Compliance Landscape,” Tziahanas and Eric Crespolini, vice president of eDiscovery Technologies at Autonomy, cite three areas of compliance which organizations should look at: scope of discovery in social media, potential privacy and freedom of expression issues and specific regulatory requirements while warning that “...social media issues are not clear-cut and will require solutions that are flexible and can address sometimes contradictory requirements.”

When it comes to maintaining records as required by SEC regulations, it isn’t clear who can have access to Facebook records or who owns them. The whitepaper notes that Facebook has successfully fought subpoenas for discovery. Federal privacy rules for electronic communications provide strong protection for individuals and create risks for organizations that try to capture and monitor their employees’ use of social media since that may violate state or federal privacy laws. Employers who try to discipline staff for comments on Facebook can run into Federal laws, especially if the employees are union members and come under the National Labor Relations Act. Just because employees are using social media during company time does not necessarily justify monitoring what they communicating, the authors add.

Capturing content, including comments posted on a Facebook wall, can open a company to risks, they say. “...enterprises should be extremely cautious in purposely gathering non-business-related content, as capturing private and personal information may impose new obligations and create new risks to the firm.”

Hmm, that seems to contradict what they said in the interview about using Autonomy to capture all sorts of information about customers for improved sales potential.

They suggest separating business and private identities for social media to minimize the capture of personal or private information.

Autonomy can also check inbound messages because there’s nothing quite like solving a customer problem to create an opportunity for cross-selling or up-selling. The software works across channels, just the way customers do, but not always the way banks think of interacting with customers. Using Autonomy, a bank can apply the same policies to phone calls, web visits, email or a Facebook message.

“Customer interactions from the financial institution’s perspective will become more multi-channel,” said Joiner. “Customers don’t care how they reach you because they think of it as talking to the entity. You will increasingly see fragmented customer interactions and financial services firms will want platforms to engage with customers wherever they are. Social media will become an accepted communication channel because it is where your friends are and where your customers are. Firms that embrace it will be at a competitive advantage.”