Whatsapp has taken the world by storm, with over 1.5 billion active users it has managed to revolutionize instant messaging for many. This accessibility of communication is changing the way people communicate, the speed at which people respond to one another, and consecutively the demands from the service providers that cater to this new generation.
Businesses are on a never-ending quest to seek out the ultimate customer experience for their clients. This means innovation in every aspect of the customer journey both in terms of the usage of the business’s service and in terms of customer service and interactions with the client. Furthermore, from a sales aspect, the customers are far more likely to interact positively with the business when are contacted via their preferred communication channels.
As we established, Whatsapp is becoming a standard for many in terms of their go-to communication channel, driving businesses to establish their own Whatsapp entities to allow better touch points with potential and current clients.
These can then be used to establish a far more personal relationship than what was possible before, communicating with clients on the platform they use for everyday communication. This, of course, has its pros and cons yet overall it seems that the younger generation has been found to enjoy the seamlessness of using a native communication system far more than the breach they feel in their privacy. This has been evident by the number of businesses citing Whatsapp usage as a driving factor in their increase in sales and improvement in customer experience. (a study that supports…)
As with many innovations (especially the successful ones), the market adapts to these innovations faster than the regulator and it often takes time for the regulator to catch up with the technology and refer to it with new regulations.
WhatsApp’s abilities that allow financial institutions to become far more easily accessible for their customers explain why Whatsapp has become such an integral tool in the FinServ toolkit. Yet one of the most compelling advantages to Whatsapp is also the reasoning behind its regulatory pitfall – Encryption.
Whatsapp is one of the only messaging services that allows for end-to-end encryption, coupled with the fact that Whatsapp is directly linked to a specific number makes for a highly secure service. So why is this a problem?
To comply with SEC regulations, financial services must document all interactions with the customers, be it voice, text, WhatsApp etc. into a documentation system. This means that Whatsapp communication must also be included in the interactions that are documented between the clients and the financial service provider.
The Securities and Exchange Commission (SEC) released guidance on the use of social media in securities offerings. The main focus of this guidance was to warn companies about potential violations of federal securities law when using social media to disseminate information to customers. At the time, many observers noted that the SEC’s guidance didn’t specifically mention WhatsApp, but it was clear that the agency would take a dim view of any company that used the messaging app to communicate with customers in an unauthorized manner.
Yet this hasn’t deterred several prominent Financial Institutions form turning a blind eye towards their employee usage of Whatsapp and even encouraging it since it benefited the company’s customer experience as we have covered – making financial services more accessible than ever before.
These institutions have begun receiving $200m fines for permitting and encouraging the unregulated use of Whatsapp. It is now obvious that the SEC is intent on dealing with this regulatory blind spot seriously and will crack down on any who decides not to comply with the regulatory demands regarding proper WhatsApp documentation.
However, there are strong limitations that make this far more difficult to execute compared to regular customer interactions – the use of personal WhatsApp. This means that to document the relevant interactions the company must document all of the employee’s personal WhatsApp thus violating employee privacy.
As it is now obvious that there is no parting from using Whatsapp as a key communication channel in the financial services sector many businesses now face the challenge of trying to comply with the demands of the SEC in an attempt to avoid high fines.
Although the technological challenge is clear there are several methods by which businesses can document Whatsapp interactions with clients and comply with the regulation. Stay tuned for our next segment regarding the recommended methods by which this is possible.
So, the question remains, how are we to answer this challenge. It is obviously compelling to utilize the advantages offered by WhatsApp in its business application yet can we overcome the technical difficulties that arise when complying with regulatory demands?