Recommend a Social Media Marketing Strategy

MA R K E T I N G

the Land Mines of Social Media Marketing ---- by KI MBERLY L A N H A M ----

H e r e 's w h a t

e v e ry le n d e r

s h o u ld k n o w

a b o u t u s in g

s o c ia l m e d ia

to m a r k e t

m o rtg a g e s

to c o n s u m e rs .

e are in an age of constant connectivity, where much of what we learn about the world and each other takes place online. Nearly two-thirds of American adults use social media. That’s how pervasive it is, according to Social Me d i a Usage: 2005-2015, a 2015 study by Pew Re­ search Center, Washington, D.C. In just the past five years, the percentage of adults who use social media has increased by 41 percent to more than 180 million adult citizens. For those of us in the financial services

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industry, this connectedness offers the perfect opportunity to regularly be in front of our customers. With new, non-bank entrants into the mortgage banking marketplace, the need to build a unique, distinct brand and product has transitioned from a distant goal to an immediate priority.

Further, considering all of the competing advertising and 0 marketing messages that consumers face on a daily basis, we j£ must execute our branding and relationship building with the t utmost creativity and innovative spirit. Although this medium 5 of communication allows companies to enhance their business * like never before, social media also has compliance and risk 5 implications that must be identified and addressed on a con- 2 tinuous basis. <

“ What is social media and how can lenders leverage it? 1 Most people associate the term “social media” with the plat- a forms Facebook™, Linkedln®, TXvitter® and the like. Merriam- 5 Webster defines it as “forms of electronic communication (as f websites for social networking and microblogging) through

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which users create online communities to share information, ideas, personal messages and other content ([such] as videos).”

However, in the financial services industry, social media has a much broader definition. The Federal Financial Institutions Examination Council (FFIEC) defines social media as anything that can be considered a form of interactive online communi­ cation and sharing of content through text, images, video and/or audio.

While the FFIEC and other regulatory agencies have imple­ mented substantial regulation around social media, the ad­ vantages brought by these innovations to the financial industry far outweigh the costs, as evidenced by the increasing rate of adoption of social media marketing among financial institutions.

According to The Financial Brand’s digital banking report, 2016 State of Financial Marketing, banks and credit unions are continuing to increasingly leverage social media channels to market to consumers—and focus heavily on mortgage products. The report surveyed senior marketing executives at 257 financial institutions, which included national/regional banks,

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com m unity banks and credit unions. In th e fourth q u arte r of 2015, nine out of 10 institutions re­

ported using Facebook, w hich is up from less th a n five out of 10 in 2011. More th a n h a lf rep o rted they are now using Linkedln, YouTltbe™ and Twitter as well.

As far as w hich products these com panies will concentrate on m arketing heavily over the next 12 to 24 m onths, 64 percent of respondents selected m ortgage loans/refinancing products.

Unfortunately, very few respondents indicated that leveraging social m edia platform s for m arketing efforts was a high return

on investm ent, w ith only Facebook having greater th a n a 20 percent “very effective” score. This is w here social m edia strategy optim ization comes in.

W hen considering how to engage on social m edia channels, lenders have m any factors to consider: w hich platform s do m ost social m edia users frequent m ost often, w h a t days and tim es have the h ig h est u ser engagem ent, w hich sites do various target audiences visit m ost often and more.

W hat the numbers tell us Here are a few num bers, all from th e 2015 Pew Research C enter report, to help financial in stitu tio n s get started:

H i g h e s t n u m b e r o f u s e r s

■ There were 179.7 million social m edia users in th e United States in 2015. Out of th ese users, 90 percent were m ade up of Generation Y, Generation X and baby boom ers, which consti­ tu te th e prim e hom e-buying ages of 25-to-54-year-olds. ■ W ith 156.5 million users com prising approxim ately 62 per­ cent of th e U.S. adult population, Facebook h as th e largest num ber of social media users out of all social m edia platforms. ■ Instagram is the second-most-popular platform with 60.3 mil­ lion users (24 percent of the adult population), followed by Twit­ ter with 52.9 million users (20 percent of the adult population).

D e m o g r a p h i c s

■ Facebook and Linkedln h o s t th e h ig h est percentage of users w ith incom e greater th a n $75,000, m eaning lenders ta r­ geting luxury hom ebuyers would be wise to engage on these platform s. ■ Instagram and P interest h o st th e h ig h est percentage of users w ith incom e of less th a n $50,000.

F r e q u e n c y a n d e n g a g e m e n t

■ Seventy percent of Facebook users, 59 percent of Instagram visitors and 38 percent of Twitter users, respectively, frequent

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the platform s daily. ■ A m ajority of Linkedln and P interest users visit th e p la t­ forms m uch less often, w ith 46 percent of Linkedln users and 44 percent of P interest users, respectively, frequenting th e site less often th a n weekly.

As far as th e best days and tim es to engage on social m edia, the research is mixed.

Each platform has differing p attern s of activity, and social media marketing and advertising organizations publish differing findings. Thus, lenders should perform th eir own research on

the best days and tim es to post, and th e n continuously track engagem ent, click-throughs and other user activity to modify th eir strategy.

A nother factor lenders should consider w hen creating a social m edia strategy is w h at to post—and w h at not to post. Social m edia engagem ent would not be nearly as effective for financial institutions w ithout the use of co n ten t marketing, w hich is anything th a t entertains, inform s and engages audi­ ences. This could include blog posts, videos, infographics, reports, Mortgage 101 advice columns and stories about finding the perfect home.

The key to content m arketing is to m ake sure it resonates w ith the target audience and th a t it is crafted effectively. For example, content should always be optim ized w ith relevant hash tag s and keywords, so th a t it is easily found on Twitter, Instagram and Facebook h ash tag stream s and in Google™ searches. Hashtags are a type of label or m etad a ta tag th a t m akes it easier for users to find m essages w ith a specific them e, and they are heavily used on Twitter and Facebook.

Using these tips for an effective social m edia strategy can help lenders so long as these practices are kept in co n stan t compliance. W ith a thorough un d erstan d in g of borrow ers’ propensity to use social m edia and a creative approach toward executing an effective online strategy th a t works w ithin the confines of regulations, lenders can gain huge payoffs and reach a m uch broader custom er base.

Laws and regulations governing the use of social media In 2013, th e FFIEC published a recom m ended guide regarding social m edia th a t is m e a n t to help financial in stitu tio n s navigate com pliance intricacies w hen using th is co m m u n i­ c a tio n c h a n n e l (w w w .fdic.gov/new s/new s/financial/2013/ fill3056.html).

While the FFIEC’s guidance is not enforceable, it contains assistance in addressing a m ultitude of regulations and laws th a t m u st be followed by all financial institutions. The FFIEC

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nother factor lenders should consider when creating a social media strategy is what to post—

and what not to post.

guide, legislative actions and recent court rulings offer lenders a reference for ensuring com pliance w hen creating m arketing cam paigns, placing advertisem ents, publishing social m edia posts, requesting inform ation from potential applicants, reach­ ing o ut to borrowers and more. Here are several examples.

F air len din g law s: E C O A /F a ir H ousing A c t

The Equal Credit Opportunity Act (ECOA), which is im ple­ m ented by Regulation B, does not allow a creditor to discourage prospective applicants based on race, sex, national origin and o th er factors, according to th e FFIEC. However, creditors are allowed to encourage m em bers of custom arily disadvantaged groups to apply for credit, m eaning they can use dem ographic inform ation to m arket to those groups. Even though factors such as race can be used to encourage applicants, the fair lending laws prohibit th e req u est of such inform ation w hen considering an application.

The Federal Housing Administration (FHA) prohibits housing providers from discrim inating against consum ers based on race, religion, handicap, sex, color, national origin, familial statu s and other protected qualities w ith regard to th e sale, rental or advertising of residential dwellings; in th e delivery of mortgage broker services; or in residential transactions. Actions can be considered discrim inatory if they negatively affect the borrower w hen any of th e aforem entioned qualities are considered in the determ ination of the am ount, in tere st rate, duration and o th er credit term s of the transaction.

Thus, lenders should feel com fortable in encouraging cu s­ tom arily disadvantaged groups to seek out financing. However, they should be careful to never p ost a question asking if any of th eir followers are p art of said group. Additionally, lenders would be wise to m ake these kinds of posts on th e social

media platforms th at host the highest percentage of customarily disadvantaged groups during days and tim es in which the platform receives th e highest traffic and engagem ent.

TILA

The Truth in Lending Act (TILA), w hich is im plem ented through Regulation Z, is designed to protect th e consum er from m isleading inform ation and to ensure th a t inform ation is p resented in a clear m anner.

Specifically, TILA requires all information—w hether provided in p rin t or electronically—to include disclosures about loan term s and costs. Applications taken electronically or via social m edia are not exem pt from th is rule.

Regulation Z also provides a specific list of how things

m u st be presen ted in an advertisem ent. For example, several disclosure items are required, including the m inim um purchase or down paym ent, th e offer expiration date, an annual p e r­ centage rate (APR) th a t m eets accuracy tolerances and any product lim itations.

This rule is very im p o rtan t to lenders engaging on social media. Should a lender share any p ost th a t prom otes a certain loan product, it is crucial th a t it include all requirem ents. One of the b est ways to ensure th a t a p ost is com pliant is to create an advertising image—especially if it is published on a platform th a t allows followers to share th e post w ith th eir network. Thus, the followers who share th e image will not be able to remove any elem ents th a t are required for compliance.

R E S P A /R e g u la tio n X

The Real Estate S ettlem ent Procedures Act (RESPA) Section 8, w hich is im p lem en ted through Regulation X, prohibits various lending parties from giving or accepting a fee, kickback or any offering of value in reciprocation for referrals. RESPA also bars anyone involved in th e m ortgage loan process from partaking in fee splitting or garnering fees for a service th a t w as n o t executed.

The NewDay Financial consent order is a perfect example of w hat happens w hen lenders violate this rule. The Consumer Fi­ nancial Protection Bureau (CFPB) issued a consent order to NewDay Financial LLC, Fulton, Maryland, in February 2015 requiring it to pay a $2 million fine for engaging in kickbacks. The CFPB claimed th a t NewDay engaged in deceptive acts by not disclosing th a t it m ade paym ents to a veterans organization for steering its members to purchase NewDay products. The company also m ade kickback violations by paying the organization and a third-party broker company a fee for producing leads.

The lesson here is for lenders to ensure th a t they are not participating in any agreem ents th a t could be deem ed as kickbacks and th a t th eir p artn e rs are n o t engaging or sharing anything on social m edia th a t could be construed as such.

D o d d -F ra n k : U n fair, d ecep tive o r abusive acts o r p ractices The Dodd-Frank Wall Street Reform and Consumer Protection

Act prohibits all providers of consum er financial products or services from engaging in any unfair, deceptive or abusive acts or practices. In the social m edia realm, this m eans lenders should not m ake any posts or execute advertisem ents th a t could be deem ed unfair, deceptive or abusive.

All com m unication should be accurate, not m isleading, and consistent w ith any o th er inform ation th a t th e lender

enders should not make any posts or execute advertisements that could be deemed unfair,

deceptive or abusive.

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presents via electronic media. In order to be deemed misleading, inform ation m u st have language or lack of language th a t m is­ leads or is likely to m islead th e consum er.

Similar to th e advice relating to TILA, lenders m u st ensure th a t all of th eir social m edia posts include all required infor­ m atio n and th a t th is inform ation will be retained w hen these posts are shared by other parties. For videos, Linkedln SlideShare p resen tatio n s, GIF files and other non-static images, lenders would be wise to keep required inform ation clearly visible on

each oscillating image. Further, lenders should keep in m ind th a t social m edia users m ay be viewing these posts on all dif­ ferent kinds of technology, from a laptop to a sm all mobile device. Images should be optim ized to keep inform ation very legible ju s t in case a follower views th e len d er’s video or im age on th e sm allest sm artphone in th e m arket.

Fair D ebt Collection Practices A ct On th e o th er side of th e mortgage life cycle, there is legis­

lation, as well as court rulings, th a t provide guidance for cred­ itors attem pting to contact a debtor. Using social m edia as a m edium to reach debtors regarding the collection of debt pay­ m ents is fraught w ith risks.

The Fair Debt Collection Practices Act prohibits debt col­ lectors from p osting on a d eb to r’s social m edia profile about any debt th a t is due for paym ent. In a 2011 case involving debt collector Mark One Financial LLC, Jacksonville, Florida, th e collector w as ordered by a Pinellas County, Florida, judge to n o t u se Facebook or any o th er social m edia platform to co n tac t a d ebtor or anyone in th e d eb to r’s family and friend netw ork.

Mark One Financial h a d contacted th e cu sto m er by em ail and te x t m essages and th e n eventually began contacting h er fam ily and friends th rough Facebook to ask th a t they have th e cu sto m er call Mark One. The judge asse rted th a t the debt collectors violated th e d eb to r’s privacy and consum er- pro tectio n laws.

This ju d g e ’s order, however, did not m ean debt collectors can n o t use social m edia for inform ation gathering. Debt col­ lectors can use anything th a t has been posted for public con­ sum ption, such as a Facebook post, to find the debtor or to check w h e th e r th ere is fraud being com m itted.

Im p le m e n tin g s o c ia l m e d ia c o m p lia n c e m e a s u re s The b e st way for financial in stitu tio n s to avoid liability w hen using social m edia is to create and im plem ent a risk -m an ­ agem ent program using th e FFIEC guidance as a reference.

The team heading the m an ag e m en t program should be com ­ prised of th e m arketing, sales, legal and com pliance d e p a rt­ m ents. This m an ag e m en t program should correlate to the am o u n t of involvem ent the in stitu tio n h as w ith social m edia. The program ’s focus should be to prevent th e possibility of risks arising due to com pliance violations, cu sto m er confi­ dentiality breaches, creation of re p u tatio n al risks and o pera­ tional issues such as inform ation breaches.

The FFIEC explains th a t th e risk-m anagem ent team should

focus on m o n ito rin g social m ed ia a n d e n su re th a t th e com pany is in com pliance w ith all consum er-protection laws and regulations.

A successful risk-m anagem ent program will be m ade up of not only th e right team m em bers, b u t also th e policies, proce­ dures, oversight and p aram eters th a t will ensure effective ex­ ecution. Although th e FFIEC guide lays out several program com ponents, each com pany should tailor its program in a m an n er th a t b est m eets the com pany’s structure and culture.

P la y in g it s m a rt D isruption is all around us. If financial in stitu tio n s do n o t ac­ cept—or b e tte r yet, fully em brace—th e social m edia era, they will be left by th e way of th e dinosaur. New, independent, on- line-only mortgage com panies and non-banks are sprouting up nationw ide. As th e m arketplace becom es m ore and m ore saturated, financial services com panies m u st be able to stand out am ong th e com petition and reach p o ten tial borrowers. Only those lenders th a t are willing and able to face these challenges h ea d on and becom e digital pioneers will be able to compete.

On th e other side of th e spectrum , regulatory oversight of com panies in the financial services sector is also increasing. W ith an in crease in h efty p e n a ltie s for non-com pliance, lenders m u st be vigilant th a t th eir social m edia strategy is not ju s t effective, b u t also unfalteringly com pliant.

Although consum ers, technology and regulations will con­ tinue to evolve, sm art business will always rem ain th e same. Lenders m u st constantly innovate, adopting new strategies to reach th eir m arket and stan d out. Sure, th ese activities are full of risk—but the right team m anaging th e right risk -m an ­ agem ent program can and will ensure com pany com pliance and success. WB

Kimberly Lanham is s e n io r v ic e p re s id e n t, m a rk e tin g and c lie n t s e rvices, fo r D igital Risk LLC in M aitland, Florida. She can be reached at klanham @ digital risk.com.

f financial institutions do not accept—or better yet, fully embrace—the social media era, they will be

left by the way of the dinosaur.

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