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Three years after passage of the Dodd-Frank Act, many bankers are still anxious as they wait for some rules to be written and others to be implemented. Yet a new set of regulatory and legislative challenges looms.
September 23 -
With every action now being scrutinized in real time, banks don't necessarily need guidelines and mandates to know if they are doing right by customers and shareholders, Fifth Third CEO Kevin Kabat says at American Banker's Regulatory Symposium.
September 23 -
Social media proves more effective than phone calls or branch visits to spur buying of financial services products, a Gallup survey says. Some bankers remain skeptical.
July 29 -
Community bankers from Kentucky, Utah and North Dakota discuss specific ways they use Facebook, Pinterest and other social media to get to know their customers better and look engaged in their towns.
July 17
WASHINGTON Social media has given customers an even bigger megaphone to air complaints against banks.
Expanded social media use has amplified concerns. To tackle this issue, executives don't need to reinvent the wheel, panelists said during American Banker's Regulatory Symposium on Tuesday. Rather, they should rely on existing policies, such as online regulatory disclosures for customers, as a guide, they said.
"There is nothing new under the sun," Mercedes Kelley Tunstall, a partner at Ballard Spahr, said. "Just like you have to disclose online, you have to disclose on social media. You can't look at this as completely different."
The Federal Financial Institutions Examination Council released in January proposed guidance on how social media efforts fit into a financial institution's overall compliance and risk management systems.
The release of the guidance was not in response to any one specific problem, said Elizabeth Khalil, a senior policy analyst of supervisory policy at the Federal Deposit Insurance Corp. Rather, it was motivated by bankers' requests for help understanding the regulatory issues surrounding social media.
Executives at smaller banks, which often lack ample resources, are especially concerned about getting left behind if they ignore social media, Khalil said.
After receiving roughly 80 official comments, the FFIEC will likely publish final guidance this fall, possibly in October or early November, Khalil said. Most of the revisions are focused on details rather than "huge, wholesale" changes, she said.
Most of the guidance was in line with executives' expectations, though "there were some surprises to midsize and smaller banks that have not thought as carefully about social media," Tunstall said. The surprises usually "surrounded the amount of compliance that needed to be involved and in reviewing social media policies."
Bank of America's (BAC) social media presence on sites like Facebook and Twitter helps the Charlotte, N.C., company connect customers with the right employee to resolve complaints, said Jim Rau, B of A's associate general counsel. Most of this is done by humans, rather than technology, he said.
"There's always an opportunity to improve how humans interact with other humans," Rau said. "We recognize in order to be connected with our customers that we needed to be in that area listening."
Waiting to respond to criticisms can be risky with Bank of America potentially losing the opportunity to help shape the message, Rau said. Social media is a place where "it is very easy for someone who is very angry to type something very quickly and make a lot of people aware of it," he said.
Rau's comments echoed the message from Kevin Kabat, vice chairman and chief executive at Fifth Third Bancorp (FITB), who
Banks must evaluate the demographics of their customer base. Institutions that have successfully reached younger consumers must be more aware of social media, since this is "how they prefer to communicate," Tunstall said.
Besides handling consumer comments on social media, banks also need to consider policies for employees, the panelists said. This can become tricky as labor law comes into play, they said.
Tunstall often invites an employment lawyer to discussions with banks about their social media policies. If an employee says something on social media that reflects poorly on the bank, then the same policies that govern traditional outlets such as newspapers, should be applied, she said.
A bank's "social media policy shouldn't be viewed as something that chills discussion" for employees, Rau said. "You need to think about what employees can say in their personal lives. Can they say that they work there? I think in policy you need to think through those risks."
