Social Media: Social Influence in the Institutional Realm?

Report Summary

Social Media: Social Influence in the Institutional Realm?

The institutional financial services world has been shy in adopting social media tools as it weighs the risks and rewards.

Boston, November 29, 2010 – A new report from Aite Group looks at the use of social media in the financial services industry, and particularly within the institutional marketplace. It examines how various social media tools, such as Twitter, Facebook, and LinkedIn, are viewed by the industry and regulators, and discusses these new communication tools relative to the nuances of the institutional businesses of asset management and brokerage. New technology tools to support internal controls and regulation are showcased.

While the advantages of social media tools are more apparent in retail financial services, they are gradually being implemented on the institutional side where social media is perhaps more relevant for the delivery of information than for socialization. Will this tool become a critical component of business-to-business communication? It’s still early to tell, however, there are cases where it is being utilized. Risks, of course, include communication overload, regulatory infractions, and the private nature of the institutional market.

“Social media still has many wildcards: individuals on the sites, their intent of use, interactions between members that may create an unexpected exchange, and a media that lends itself to human error through unplanned or spontaneous communication, all working in an industry with strict but sometimes interpretative regulation,” says Denise Valentine, senior analyst with Aite Group and author of this report. “It’s no surprise that many CCOs simply prefer to avoid the issue altogether. With time, however, the industry, aided by technological automation, will develop a means to accommodate behavior and intent through proper procedures and validation.”

This 22-page Impact Note contains three tables. Clients of Aite Group's Institutional Securities & Investments service can download the report.

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