Using Analytics to Empower Your Bank’s Monitoring Function

Social Media Risk is No Longer a Black Swan Event

For banks and other financial organizations, social media can be a green field of opportunity and a dark forest of potential threats—all at the same time. The Gamestop stock price run-up, led by Reddit’s WallStreetBets chat forum, led to a leap in the value of Gamestop shares almost overnight, helping revive a failing company. The recent failures of Silicon Valley Bank and Signature Bank have starkly illustrated the other side of the social media coin. For those institutions, social media helped fuel runs on bank deposits, rapidly decreasing available liquidity.

The question for financial institutions, in particular, is “How do we manage and monitor activity on social media platforms that may affect our organization? Most importantly, how do we monitor social media, identify actionable items, and initiate a strategy to resolve the issues timely enough to not be outpaced?“

Banks are required to have contingency funding plans in place, and these plans should establish early warning indicators for liquidity. A prudent indicator to consider is negative press, or threats to reputation. As we saw with Silicon Valley Bank and Signature Bank, social media can be used to spread negative press. But smart mining of social media can also be used as an effective tool to quickly assess risks of a funding or liquidity event.

Banks can improve their monitoring and accelerate their ability to respond to these social media opportunities and risks by taking these steps:

Automate Analytics. Social media can move at the speed of thought. Newer technology tools, like natural language processing and sentiment analysis on near real time activity on social media platforms, can serve as a filter and help you better understand your organization’s social media profile.  

Leverage Your Customer Experience Platform. Many customer experience platforms are already integrating social media analytics that you may already have implemented to support your call centers and physical locations. Tools like Qualtrics aggregate the data across many different social media platforms and can enable you to not only access feedback in another channel for your existing customers but also understand how your organization is showing up in social media.

These approaches will help your organization find out about social media concerns earlier so that you can begin taking steps to address any problems before there is a negative impact. These may include taking proactive steps to assure depositors of the bank’s safety and maintain deposits or taking proactive steps to initiate the bank’s contingency funding plan.

If you need assistance in using data analytics to manage social media risk for your institution, contact us. We are here to help.