March 25, 2010
Credit Union Management’s Web-only “On Compliance” column runs the fourth Thursday of every month.
Today’s Web-based society gives the credit union movement an entirely new set of legs, but the core philosophy remains the same: superior commitment to member relationships and service.
Executives should give themselves a pat on the back for evolving Web strategy far beyond online accounts to proactively exploring social media tactics, and for having done so rapidly. These activities present unique business opportunities for credit unions in regard to marketing, community outreach and service. However, credit union leaders must be mindful of maintaining compliance with National Credit Union Administration Web standards and with other federal regulations.
Of course, blogs, social media and other Web 2.0 activities are not bound by the same requirements as a credit union’s Web site. These sources are intended (and allowed) to be a more conversational, and less-restricted, means of communication. Some are developed to provide a personal glimpse of the executive team; others encourage member interaction with contests and open-ended questions. Various social media channels such as Twitter and Facebook fan pages are acting as filters for consumer complaints as well, enabling a real-time, two-way dialogue between institution and member to solve problems.
Credit unions remain aware of record retention concerns and management of promotions when running their own Web presence, in addition to ordinary compliance issues such as those presented in Regs Z and DD, FHA, non-deposit retail investments. Most institutions even have standard processes and procedures in place for the review and archival of any changes to the site. When it comes to social media, however, there generally are no processes, no reviews and no guidelines. And while these activities are all well intended, compliance officers and NCUA regulation experts generally do not have the time, or the resources, to filter every outgoing message.
From a compliance perspective, the industry is far ahead of the regulatory bodies regarding the Internet. Technology and its uses evolve so rapidly that much gets left for interpretation. A case in point, the most recent Federal Financial Institutions Examination Council interagency statement on compliance for the Internet is actually dated 1998, more than 10 years ago.
Using widgets that display blog postings, tweets or even Facebook messages directly onto a credit union’s Web site makes these messages susceptible to all of the formal regulations that the NCUA-regulated site must uphold. Surprisingly, this is a common practice among credit unions – and a big mistake. Credit unions can leverage social media in many ways to be a “friend” to their members, but they must be careful to either not parlay these channels on their Web site or limit the purpose of the communication. A great rule of thumb is to keep social networks to social conversations and never use them as a way to inject advertising such as today’s rates or other incentives. Doing so makes them an advertisement on behalf of the bank and would need all of the disclosures and retention of any other Web or offline advertisement.
Social media activities flourish because of their convenience and speed, two factors that do not make compliance an easy task. For instance, though many credit unions tend to promote sales and new products or offer financial advice on behalf of the institution, these statements--delivered via some social media channel--may not accurately reflect every situation, nor provide the context for disclaimers. Additionally, in making such comments it becomes difficult to avoid terms that are sure to trigger a response from various regulatory bodies.
A credit union should not say that an offering is “free,” has “no cost,” or can have “fees waived.” There are simply too many factors involved in such services as “free checking” to offer a broad blanket statement like that. And what about overdraft fees? The most common way to deal with social media from an examination perspective is to consider such offers as advertising, and to treat it as any other form of advertising in the credit union’s lifecycle.
The challenge goes beyond terminology. Incorrect or outdated information can also pose a threat to compliance, even if it is from old postings or comments. Bloggers will often reference a previous story, pulling all of its [dated] information to the forefront of a current entry. Logos also need to be maintained and kept up to date; the list goes on.
The resolution to this issue is not to cease and desist all social outreach strategies. Maintaining compliance and a social media strategy is as simple as building additional Web sites to host a blog and keeping Twitter and Facebook messages exactly where they belong--on the Twitter and Facebook sites. Remember to keep social media social, and the Web site more for core business. Only then will credit unions harness the power of social media.
Of course, a progressive online marketing campaign needs to be fully integrated, so credit unions should post “follow us” links and blog links that lead to an outside site. The link should include a disclosure notice that members are leaving the protected site. Conversely, credit unions should also engage in discussions with new and existing members about what makes their institution great. If there is ever a time to promote an offer or make a recommendation, use the Web site as a knowledge base and link back to it. This not only drives people to the site, but also keeps all communication in compliance.
Wade Arnold is founder and CEO of T8 Webware, a provider of strategic Web development, management and hosting services that caters specifically to community financial institutions. The company provides progressive, non-template-driven, mobile-enabled Web sites to more than 150 banks and credit unions.
