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Banks must remember regulatory compliance issues when interacting with customers via Twitter, says an expert.

Banks face regulatory risks when responding to customers through social media channels, a legal expert has said.

Technology law specialist Luke Scanlon of Pinsent Masons, the law firm behind Out-Law.com, said that the firms that do so should have a properly thought-through strategy for communicating through Twitter speedily.

"Following a strategy of allowing staff to quickly respond to customer queries by means of social media can bring to the fore a number of risks which all businesses in the financial sector, or otherwise, should be aware of and carefully assess," Scanlon said. "Businesses need to give prior thought to the way in which they seek to ensure compliance with general and industry specific advertising rules whenever they are pushing out information about their services and products through social media – especially where the communication is made in real-time."

"As Twitter limits the number of characters used to 140, a bank, for instance, would want to ensure that it has robust policies in place which seek to prevent staff from failing to provide sufficient product information to customers to enable them to make informed choices where required to do so. It would also want to mitigate the risk of creating unrealistic impressions of the benefits of its services which could be a consequence of the limitations imposed on the amount of characters that can be used and otherwise ensure that it is presenting information in a manner that does not mislead customers," he added.

The Virgin study revealed that NatWest responds to customers' Twitter messages within four minutes on average. HSBC recorded the second fastest response time, averaging 14 minutes to get back to customers, according to the study.

Co-operative Bank, with 11,500, has the largest number of 'followers' on Twitter. RBS has 1500 followers, Virgin said.

"Social media helpdesks are becoming common in industries where businesses interact daily with customers," Phil Stewart, director of customer services at Virgin Media Business, said. "They’re becoming like virtual stores. It’s really encouraging to see [that] the banking industry is taking a lead on this with every major high street bank using Twitter to engage with customers. On Facebook, banks have slightly more work to do. Our research found that just half of banks use their Facebook pages to speak to customers about personal issues."

"Social networking sites are a great way to engage with customers in real-time, but simply having a presence is not enough," Stewart said. "Organisations need to make sure they’re interacting with individual customers and responding to queries within an appropriate time from when they first get in touch. The hours in which the account is monitored should be made clear to manage customer expectations on when they’ll receive a response."

"NatWest’s ability to respond quickly to customers on a personal level as well as interact with their followers on a broader level can help build loyal, long-lasting relationships. Great customer service on any platform should be the rule, not the exception," he added.

Copyright © 2012, Out-Law.com

Out-Law.com is part of international law firm Pinsent Masons.

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