The institutional financial services world has been shy in adopting social media tools as it weighs the risks and rewards, finds a new report from Aite Group. The report looks at the use of social media in the financial services industry, particularly within the institutional marketplace.
While the advantages of social media tools are more apparent in retail financial services, they are gradually being implemented on the institutional side where social media is perhaps more relevant for the delivery of information than for socialisation. "Will this tool become a critical component of business-to-business communication? It’s still early to tell, however, there are cases where it is being utilised. Risks, of course, include communication overload, regulatory infractions, and the private nature of the institutional market," says the report.
Denise Valentine, senior analyst with Aite Group and author of this report, notes that social media still has many wildcards: individuals on the sites, their intent of use, interactions between members that may create an unexpected exchange, and a media that lends itself to human error through unplanned or spontaneous communication, all working in an industry with strict but sometimes interpretative regulation.
“It’s no surprise that many CCOs simply prefer to avoid the issue altogether. With time, however, the industry, aided by technological automation, will develop a means to accommodate behavior and intent through proper procedures and validation,” says Valentine.
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