Why are banks resistant to social media?

As Market Rates Insight has been expanding its social media strategy with the launch of this blog andby becoming more active on LinkedIn,  Facebook and Twitter, it has been interesting to connect with other professionals in the banking community. There are an awful lot of credit unions on Twitter, and quite a few banks. And there are a few retail forums on LinkedIn, but it’s interesting to see an absence of participation by  bankers? What’s up? Don’t bankers have lives and activities they want to share?

I saw almost that exact question posted to the Banking and Credit Union forum on LinkedIn today by Mark Zmarzly at Haberfield Associates. He asks, “Why doesn't the banking industry seem to be adopting LinkedIn as rapidly as other industries?” Some of the responses from the thread were interesting,and included:

“B2B vendors love social media. Credit unions, who seldom compete with one another, love social media because they can swap shop talk and idea. Banks, who operate from a position of fear, secrecy and protectionism, are not usually receptive to an open exchange of information and ideas.”

“I am new to LI but am adopting all social media quickly as a resource for knowledge. As a bank marketer I will continue paving the way for our executive management and commercial bankers.”

“It seems as though many bank marketers approach social media with a lot of skepticism and fear, rather than embracing the potential opportunities it offers.”

It seems that so far, social media is being widely adopted as a tool for banks and credit unions to reach out to customers, but is slow adoption as a peer-to-peer discussion platform. Banks have always been secretive by nature, and trying to break that habit to embrace social media is an ongoing challenge. And it’s complicated by emerging regulations to control how financial professionals behave online. Organizations like FINRA and CUNA are drafting regulations for the safe and appropriate use of social media. For example, are financial institutions are now required to capture social media conversations as part of eDiscovery, and there are strict guidelines about what you can and can’t do online. Some new regulations indicated that a Facebook posting is considered and advertisement and a LinkedIn recommendation an endorsement.

Regulators (and those being regulated) are having trouble keeping up with technology and Internet trends, and as a result, the banking community is slow to adopt social media for B2B conversations. Those FI professionals under the scrutiny of regulatory watchdogs may still feel the risks outweigh the potential rewards. Still, we know they are out there, monitoring the online conversation. It’s only a matter of time until they determine the conversation stream is safe for them to wade in.