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Firms reluctant to tweet due to regulation

Monday 23 January 2012 – by [email protected]

Financial services firms are unwilling to use social media sites such as Twitter because of compliance issues and the potential regulatory backlash it could cause, according to new research.

A report from Cicero Consulting on social media and the financial sector found that firms are reluctant to embrace social media tools due to the stringent compliance and regulations that govern the sector.

The global report, released on Monday and based on 158 online interviews with senior decision makers in the financial sector, said that strict regulation and compliance means they are often limited in what they can say about their products.

Financial sector firms are wary of entering the social media space or increasing their current presence in this space for two reasons. Firstly, the tight codes of data sharing in the sector which means many companies ban the use of Facebook and Twitter in case of sensitive information leaks.

Secondly, financial regulators often have strict rules on the use of new media which firms are worried about breaking.

The report says: “Internal compliance procedures and ‘sign off’ processes have arguably stifled the eagerness of some financial firms to engage with social media.

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“Furthermore, the rapid speed at which social media flows means that a lengthy sign off process for online engagement can mean that by the time companies come to communicate, the issues has moved on.”

It adds: “With traditionally rigid compliance and regulatory structures inhibiting social media interest and development this has further held the financial services companies back.”

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