Why data compliance risks posed by social media cannot be ignored
Looking over the agenda of the much anticipated FinTech World Forum, the omission of one particular area covered in the media with increasing frequency is glaring. With the current omnipresence of social media, as well as ever more stringent regulation imposed on the financial services industry, the data compliance risks posed by digital and social media must not be underestimated.
The contentious relationship between compliance and social media
Managing reputational risks and meeting regulatory compliance lie at the top of financial services senior executives’ list of priorities for 2017, according to an EY survey of 300 banks across the globe. This does not come as a surprise, given that a decade on from the financial crisis, the financial services industry remains the least trusted by the general public. Working to regain consumer trust and prevent all too familiar headlines of data breaches, such as the recent Equifax breach, which led to an 18% share price plummet, is therefore the primary concern of regulated firms.
Simultaneously, the financial services industry cannot ignore the growing necessity to incorporate social media, in the interests of customers, shareholders, and employees alike. With 56% of generation Y’s stating they would not work for a company that bans social media access, the question is: how can you prepare for the regulatory risks this social media activity poses, within a regulated firm?
Embracing the use of social media in the financial services sector is not just to appease younger employees. Social media looks to become an integral part of an organisation’s enterprise and is set to unlock a collective $1.3 trillion in value for businesses. This is roughly equal to Spain’s GDP, according to a McKinsey estimate.
So if social media is here to stay, how are banks to navigate the perilous landscape of legal liability that comes with this vast flow of information to the public? Given regulatory compliance is currently the primary concern of financial institutions and that with social media come a whole host of regulatory hurdles, social media compliance too sits within this top priority for finance senior executives.
The media is littered with examples where organisations have failed to navigate this. Netflix CEO Reed Hastings prompted an SEC investigation in 2013, after he celebrated racking up more than 1 billion hours of online streaming on his personal Facebook. Perhaps more alarmingly, just last year Morgan Stanley was fined $1 million for breaching the SEC’s so-called ‘Safeguards Rule’. Due to a seemingly minor mistake made by an employee, who saved data to his personal server, hackers were inadvertently given access to 730,000 customer accounts. The line between personal and professional use of social media looks to become ever more indistinct, yet the consequences of mistakes such as these ever graver. As regulation tightens, with the EU’s forthcoming GDPR placing a 72 hour deadline for organisations to report personal data breaches or risk facing a hefty fine, the need for a proactive approach to data compliance risks has never been greater.
Is there a solution?
To ignore the wealth of opportunities social media can afford to the financial services sector would be unwise, to risk breaching regulation pertaining to its use potentially dangerous to a bank and to the thousands of individuals whose information they guard. This is why our solution, a machine learning image recognition tool, which detects and moderates digital compliance and data breaches, ensures companies can identify, remedy and even mitigate compliance risks. We are used by some of the world’s biggest banks and regulators. Our algorithm was developed over two years and is the only one on the market which identifies images as well as written communication. It was built in accordance with global regulatory laws including the SEC Safeguards Rule, the FCA’s Senior Managers Regime, and continues to be updated in line with incoming regulation, such as the GDPR and MiFID II. As both digital media use and regulatory compliance become increasingly crucial for financial services firms, it is time to stop seeing these as mutually exclusive, confronting their evident crossover secure in the knowledge that there is a solution.