Credit unions need to find the risks versus rewards balance when using social media, mobile and web communications.

"It is the intersection of those three things that is really going to change the game from a compliance standpoint," said Mike Pagani, senior director of product marketing and chief evangelist for Portland, Oregon archiving and compliance solutions firm Smarsh.

Financial institutions employ social media to help generate new business and present a vibrant interactive consumer environment. "Competition is forcing every firm to use social media. They know it is no longer an option," Pagani emphasized.

However, social networks such as Twitter and Facebook battle constantly to keep their own sites secure, so unsurprisingly the problem extends to companies that allow their usage. An effective policy involves all stakeholder groups to work together to safely manage use.

"The problem is as effective as a means of communication that it is. It is difficult to manage in cases of auditing and compliance or to use the information to defend the organization in a potential litigation event," Pagani asserted.

Smarsh, which has been in the archiving business since 2001 primarily for financial service, claimed credit unions have been an interesting market segment because of the transitioning regulations. The lending industry, to a large degree, used social media without having heavy guidance from the regulator and/or enforcement, Pagani maintained.

The Federal Financial Institutions Examination Council, in its guidance released in December 2013, cautioned financial institutions need to manage potential risks by ensuring risk management programs provide appropriate oversight and control. "There are a lot more requirements and enforcement being handed down from the FFIEC," Pagani added.

Pre-approval of social communications can mitigate risk, but that influences the timeliness of the communications. Supervision of social media communications with real-time monitoring and automated policy checking using The Archiving Platform from Smarsh can strike the right balance of appropriate governance and control, combined with sufficient business agility, Pagani suggested.

CUNA Brokerage Services, for example, selected the Smarsh platform because it needed to find an efficient and innovative archiving solution to help it keep pace with emerging technologies, and meet the demands of an ever-changing regulatory landscape.

"We are proactively archiving and checking for policy violations on the frontend and then leveraging on the backend with the amount of indexing that we apply to all of this," Pagani said.

Smarsh looks at some 40 different content types, including all the most popular ones such as Twitter, Facebook, LinkedIn, and Pinterest. "Social media land is completely unstructured data. We are bringing order to the chaos by indexing it, keeping web pages and social media content in its original format."

The system allows organizations with an unlimited view of social media communication captured with the ability to apply policy to it in an automated fashion with a structured review process. Pagani said, "They are taking the risk out of social media because we are proactively managing it at the time, within minutes of it going out. Even if a regulator has an issue with it [social media] the credit union can say we have a system in place."

Organizations get into trouble with social media because they do not have a plan or policy in place, Pagani advised. In addition, there is a tipping point that happens with regulators. "Once they realize there are solutions available to these firms, they will start to enforce a lot more than guide."

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Roy Urrico

Roy W. Urrico specializes in articles about financial technology and services for Credit Union Times, as well as ghostwriting, copywriting, and case studies. Also: writer/editor of a semi-annual newsletter for Association for Financial Technology since 1997 and history projects funded by the U.S Interior Department, National Park Service and Warren County (N.Y.).