This guest post is written by Paul Reymann, CEO and founder of the Reymann Group. He is one of the nation’s leading regulatory experts and co-author of Section 501 of the Gramm-Leach-Bliley Act Security rule. He is also the author of numerous articles and papers on technology risk, transactional web sites, customer information, network security and other technology and safety and soundness topics.
I remember it like it was yesterday. It was the late 90s and Internet banking was the new rave! The new killer app. It was going to replace brick and mortar branches… yadayadayada…There was a lot of chatter (that’s face-to-face, we were not yet instant messaging or texting) about the power and risk of Internet banking. We were waiting in line to get an email account on our company computers to gain access to the Internet.
Social media in banking has this similar excitement about it, yet with several obvious differences. First – I have not heard any suggestions that it will replace brick and mortar operations. Although, I guess there is a chance that websites may become obsolete. Second – The chatter back then was face-to-face physical and virtual. I have to admit, I am still trying to figure out how to read some of the virtual chatter. I think Webster needs to publish a texting dictionary for us non-Gen Y folks. Third – Most folks use a cell phone, email, instant messaging, website, blog, text messaging, LinkedIn, or Facebook to communicate now.
Enough of the 90s.
Looking ahead – what are the implications of social media/networking for banks and credit unions? I presented on this topic recently at a banking summit that explored the future of risk management. It was exciting to hear how many of the attendees are embracing it even though they are struggling with how to move forward with social networking for their institutions. So many questions…What regulations apply, what is the value, what are the risks, how do we get started prudently, how much resources will we need to commit, what are the security implications, will Prosper and Zopa become a competitive threat, what will it cost, how do we control the use of it…..? All valid questions that need answers.
If you are exploring the next steps for your bank or credit union with social networking, I would value your questions and comments. Lets take the conversation physical and virtual. Feel free to respond here or if you were born before the Internet generation (like I was), just give me a ring.
Lastly, I invite you to listen in this Thursday to a brief webinar on the topic – Social Media Risk Management for Financial Institutions.