As financial institutions continue to adopt digital marketing strategies in a complex and shifting environment, they’re beginning to run into more compliance challenges.
By Doug Wilber
Compliance regulations are the bedrock of the financial services market, and for good reason: They are the gateways to gaining customers’ trust. In today’s increasingly digital market, however, compliance comes with unique challenges. How can an institution position its brand honestly online?
How can it effectively engage with customers while still maintaining strict compliance standards? As financial institutions continue to adopt digital marketing strategies in a complex and shifting environment, they are beginning to run into even more compliance challenges.
Take J.P. Morgan Securities’ recent settlement over record-keeping violations, for example. U.S. regulators fined the company $200 million for failing to archive communications as employees conducted business over WhatsApp and other personal devices. The result was a significant penalty by the SEC and a reminder to digital marketers throughout the industry that compliance matters. As financial institutions dive deeper into social media marketing and become active on new platforms, teams need to be vigilant and nimble.
Two trends are essential to watch. First, the digital rules of the road are changing: Government agencies are modernizing their financial marketing oversight. Though it took six decades, the SEC gave its marketing regulations for financial advisors a much-needed overhaul in 2021. The updated SEC playbook dictates how advisors can advertise, and these new rules are under enforcement as of Nov. 4. In addition, the updated rules signal that regulators are evolving to meet the demands of the current digital landscape.
Disciplinary action is also on the rise. Existing rules are being enforced at a record pace as regulators “lace up their gloves.” For example, the Financial Industry Regulatory Authority issued 60 percent more fines in 2021 than in 2020, despite fewer overall cases. FINRA’s increase in “supersized” penalties serves as a reminder that regulators won’t tolerate marketing and communications noncompliance.
Every financial institution is on a unique marketing path. Still, smart marketers are expanding their channel sets, increasing social media volumes, and growing the number of associates engaged in social selling. If your institution has not already, it is time to take a fresh look at compliance in the digital age.
To stay ahead of the regulatory curve, it is essential to create collaboration among relevant departments, adopt supportive technology, and bring your teams along with updated training. Here’s how to do it:
1. Open the lines of communication between marketing and compliance teams.
Digital channel expansion shows no signs of slowing down. Marketing and compliance teams must work together if they want to adopt new channels and marketing tools at the same rate. Though financial institutions cannot control the evolution of the digital landscape, both marketing and compliance can and should control how institutions navigate it.
Marketing and compliance teams should work together to find compliant approaches to new digital communications. There’s a lot to juggle in this process, including adapting to meet customer needs and expectations, keeping an eye on regulations and researching channels. Early and frequent communication is key.
One way to improve that communication is by offering ongoing compliance education to the team. The right technology can help compliance send that feedback to marketing as the teams compliantly adopt new modes of customer communication.
2. Adopt tech tools to help manage the change.
Marketing teams need the right tools to manage effective digital marketing strategies. Social selling, which leverages associates to build relationships on social media, is a perfect example. The strategy is a great way to build organic reach, but financial institutions need to closely monitor associate activity to ensure posts are on-brand and compliant. In other words, financial institutions must ensure that posts are vetted to protect the institution against risk—no matter who posts or where posts appear.
How can banks be certain that associates only post compliant marketing materials to their social media networks? Manual review is one way to monitor content, but it is inefficient and unscalable. Not to mention, it creates bottlenecks and delays in the review process. Smart software solutions can streamline content approvals and provide compliance protection at scale.
In an ideal state of omnichannel marketing, a financial institution is posting to brand pages, targeting paid social advertising, empowering producers to social sell, responding to direct messages, and employing many other tactics. To be scalable—and avoid drawing attention from regulators— institutions need to consider how all these tactics are reviewed, approved and archived.
3. Train associates to understand the part they play.
Education remains a powerful solution to preventing problems. One of the best ways financial marketers can set themselves up for success is by sharing that knowledge with their peers and co-workers.
Every associate needs to understand their unique role in digital marketing compliance. It’s a good practice to empower everyone through education on compliance-related topics, such as how to respond to direct messages, get approval for outgoing content and ensure all communications is archived.
No matter the author or channel, noncompliant marketing materials should not see the light of day. It was true for Facebook posts five years ago and it’s equally relevant for TikTok videos today. The digital landscape will continue to change, but this industry truth will remain steadfast. By opening up communication, adding the right tech to your tool belt and empowering associates, you can continue engaging with your customers online without compliance getting in the way.
Doug Wilber is the CEO of Denim Social, a social media management software company that provides tools to empower marketers in regulated industries to manage organic social media content and paid social media advertising on one platform.
