Banking Law

I spent a good portion of last Thursday in Las Vegas among bank marketing professionals and, as hard as it might be for some readers to believe, I found the experience refreshing. Perhaps because of what they do, but more likely because of the type of people who are drawn to the marketing field, many marketing professionals are pleasant and interesting conversationalists. At least, they're nice to your face, which in a world filled with snarky cranks like the author of this blog, is the best you can hope for.

The specific topic of the day's presentations was the use of social media to market a bank's products and services. All of the other presenters were impressive. I was able to speak at length with Jim Craig of 1st Advantage Federal Credit Union in Yorktown, Virginia and Shari Storm of Verity Credit Union in Seattle, and they were both engaging human beings, as well as knowledgeable and impressive speakers. Ms. Storm's also a published author, and I wondered, after hearing her speak and realizing what an active career she has, when she had time to have three children. Effective time management, I suppose.

I, on the other hand, was the wet blanket who told the attendees how many ways I, and my fellow demons from Legal Hell, could "what-if" their imaginative use of social media into a limbo of paralysis and eventual abject failure. Sure, it's a nasty, brutal job, but somebody's got to do it.

Actually, I find the legal risks of the use of social media to be overblown. It's true that, unlike the one-way communication of traditional marketing, where the bank "talks" to the customer or potential customer, in social media, the customer (or potential customer) "talks back" to the bank and, depending on how "social" the media might be, talks to other customers and potential customers. As I said to the audience, you're inviting strangers into your home, and you don't know whether you're getting a witty Oscar Wilde type or a Charles Manson who'll stick the cat in the microwave, pee in the punch bowl, and puke on the Persian rug. The apparent lack of control makes lawyers jerk and twitch like they've got a bad case of Tourette syndrome.

Nevertheless, the legal risks can be mitigated and managed, and it shouldn't be that difficult to do so if the bank makes an upfront commitment to do what's required. Mitigation involves having the right attitude, the right people, and the right infrastructure (policies and procedures, training and monitoring) in place to govern the bank's social media marketing activities. Those speakers and audience members with whom I spoke whose institutions have been in front of the curve in using social media marketing for a "long time" (in social media time, a "long time" is five years) haven't experienced any serious legal setbacks. Of course, the stories they told me indicated that when they confronted situations where things could have turned very ugly, they were able to deftly manage the situation and, in some cases, not merely lessen the potential risk but turn it to their advantage. In other words, they understand how to treat other human beings in a decent and transparent manner, as shocking as that may seem in an age when it's all about the "spin."

I think that much, perhaps most, of the concern about the legal risks of social media marketing by banks arises from the understandable fear of the unknown. The media is relatively new, banks are traditionally conservative, and lawyers are risk mitigators, not risk takers. Thus far, banks are experimenting with the media, and "the jury is still out." In other words, many banks don't yet "get it." Nevertheless, social media is the way through which much of the world is relating to one another, especially among Gen Y, and banks are going to have to learn to embrace the media if they want to effectively reach those who use it. Shari Storm displayed a picture of her three daughters, ages 5, 3 and 1, and told the assembled bankers that the challenge was how to make them and their older brothers and sisters their future customers. It's a huge group of human beings (larger than the Boomers) who are coming of age using social media as second nature.

Legal risks or no legal risks, banks will have to come to terms with it. Perhaps you don't have to be a hare to be in this race, but you sure won't be able to win it as a tortoise.