Archiving : Monitoring : Market Intelligence
Q & A with the CEO
Powered By Financial Industry Insiders, Arkovi Social Media Archiving Solutions Stay Close To Customers’ Needs
Regulated financial services firms tend to take their time to evaluate new communications approaches, and they prefer others to stress-test new technologies before they embrace them. However, a groundswell of interest is prompting broker-dealers, registered investment advisory firms (RIAs), asset managers including mutual fund and exchange-traded fund (ETF) providers and banks to review this new means of communicating and its appropriateness for their business.
Enter the enabler of financial services firms seeking to scale their use of social media: Arkovi, from Dover. Developed by the Ohio-based BMRW & Associates, Arkovi is the first to deliver a solution for archiving off-domain social media activity for purposes of supervision and e-discovery.
Arkovi is a robust technology solution developed by a unique collaboration of long-time technology and compliance financial industry insiders who, as they say, "grew up in the industry."
Co-founder Chief Executive Officer Blane Warrene is a former Chief Information Officer (CIO). Blane, who’s 19 years of industry experience started as a system administrator and has worked in senior management roles for ING, Pacific Life, and ValMark Securities. Co-founder and Counsel Carl Cline spent more than 10 years as an NASD (now FINRA) district supervisor. He then went on to establish himself as an authority on broker-dealer and RIA Compliance issues while working in executive roles with ING, Fifth Third, and JP Morgan Chase.
Acutely aware of the challenges that social media presents, Arkovi has made significant financial services industry experience a prerequisite for all team members. "Our objective is to ease financial services into social media," Blane explains. "There’s nothing more stressful than wondering whether a vendor has a firm grasp on your business."
In this Q & A, the CEO provides Arkovi’s unique perspective on how financial firms are evaluating the opportunities, working through the challenges, and identifying evolving needs for their social media adoption.
Q. Blane, how would you characterize financial services’ current interest in social media now that we’re at the end of the first quarter of 2011?
A. Interest is high across the board. Communications creators—and we’d also include financial advisors, marketers and investor relations—are dying to get out there. Most marketing people of any stripe understand the impact of community. They get it.
However, the regulations temper that interest, and Legal and Compliance professionals need a few assurances. One is that all activity is within the bounds of what can be done and that there’s an ongoing way to monitor that. The second concern is that all activity be archived and able to be retrieved for e-discovery purposes. At larger firms, IT is involved to be certain that the data collection is following best practices.
Our perspective on the industry’s pace of adoption is based on announced implementations, the conversations that are going on right now, and a significant amount of activity that’s happening under the radar.
The most openly active adopters have been RIAs subject to the SEC’s advertising rules. At this time, as long as advisors are archiving, have an established policy and governance procedures, they’re in compliance with the SEC.
FINRA-regulated broker-dealers have enough information to proceed with social media from FINRA Regulatory Notice 10-06. However, because there’s some ambiguity, they’re not going to talk about it in detail.
You may not be aware of all the broker-dealer activity because they don’t want to paint a target on themselves. In the past, FINRA has been known to retroactively fine firms for things that happened before there was a rule. Broker-dealers (BDs) are like elephants, they will remember that. BDs are largely holding back from being public about their social media activity and plans for that very reason. It’s also the reason that some firms continue to characterize what they’re doing as "pilots."
Finally, we know there’s some demand that’s pent-up based on our customers and prospective conversations. There are some firms waiting for more clarity before taking a first step.
Q. Tell us about how your customers are approaching social media.
A. More than anything else, we find that there’s a need for education; Education about social media itself and how to optimize the time that’s spent using it. We see that as we educate, the business grows.
And, because regulations do apply, there’s a need for education on what’s in and out of bounds. We also think the industry as a whole needs a rolled-up view to understand specifically how social media is being adopted. There are infinite opportunities, this is a moving target and firms need to pace themselves. A lot of planning has to be done before a firm jumps in.
Frankly, that’s where we think we add value, because we speak the language. It’s interesting because the focus is social media, so you might think that all the tire-kicking is done online. We find that’s not the case. We’re meeting as many people in person as possible. We’re at every major event because we think we can help with both awareness and understanding.
There’s a lot to this—a new way to communicate, a new technology requirement, and a constantly evolving landscape. People we talk to seem relieved that they don’t have to teach us their business. We lived in the industry. We understand what they do and we understand the regulators.
Q. You support the one-office RIA and the global investment management firm—what are the differences in what they need?
A. Advisors ask us, "What do I need to do to be able to sleep at night and know that I’m in compliance with the SEC rules?"
As for the SEC sweep letters, advisors have seen sweep letters for years. The SEC has swept on products, philosophies, approaches, investment styles, allocation theories, and FINRA has done the same thing. One year it’s equity-indexed, then it’s variable annuities for age groups. They’re very well trained in receiving sweep letters. Advisors simply want to insure they can use the right tools to meet compliance requirements and take care of their customers. We discussed SEC sweep letters recently on the Arkovi blog.
We see this as a process and workflow as much as a systems issue. Certainly our Arkovi’s technology provides a key component of the solution – yet it is also process. We are actively working with our customers to identify the steps in the process to identifying strategy, policy and tactics. Those are the keys to successful implementation.
With the compliance concerns out of the way, advisors then ask: "How can I be active in social media to actually produce results in ways that I can measure, besides just making noise?".
This is where our approach is valuable with our partner integrations that offer everything from integrated email and message archiving, content management solutions custom for advisors and analytics dashboards for measuring results.
Q. …and the largest firms?
A. At the larger firms, social media archiving is the linchpin. We enable the users, we provide assurances for the overseers, and we make certain that the archive is supportable by IT. It’s the classic complex business-to-business discussion that begins with the need to educate on a quickly evolving topic.
A persistent question from IT and Compliance is whether features can be turned off. The answer to that, of course, is no. Social features cannot be turned off – these are public networks and systems accessible from anywhere. That’s an unrealistic expectation and we worry that those who believe it’s possible are not thoroughly understanding that social media is beyond any one firm’s control. Social features can be turned off within a portal accessed from the workplace. However, what about other places and other devices?
A policy and guidelines approach—i.e., this is how we’re going to behave, these are the rules we’re going to follow and we have policies that address what we use—is what’s required. Teach your employees how to behave like adults, as well as employees representing a brand. That’s how effective firms do it. The reason you have a surveillance dashboard is in the event that you have a bad apple, you need to be able to find it. However, technology is no substitute for management.
The newness of the category and the emergence of startup providers can be a challenge for larger firms. Some of that is perspective. They look at data as data and they don’t distinguish between the value of the data. The value of back office data has to be absolutely secured with iron and put under lock and key. It requires a very technical, sophisticated roadmap to be able to manage that.
I remember early on when I was a CIO, I looked at all technology projects as the same and believed that each had to go through the same life cycle. Over time, you begin to recognize that there are very sensitive development lifecycles for the core of your business…and then there are the other projects….
Thus with social data – it is not about hiding the data under lock and key – it is about the value of the aggregated data and what business can learn from it. Social media content is extremely valuable to a brand. Arkovi, because we can move quickly and gather the social footprint, works efficiently to house all the social data to enable companies to participate sooner.
Our ability to offer content management workflow for both web and social content, analytics to measure results while preserving compliance satisfies this combination of data aggregation and return on investment.
Q. What’s the difference in the social media archiving evaluation that a small RIA will conduct versus what a largest investment company will do?
A. An RIA’s evaluation may take a four to six weeks start to finish, while a large firm may take many months. During that time, there will be multiple interactions by a Marketing team. Marketing tends to make the initial inquiry— then in conjunction with compliance and IT. There is generally an RFI (Request for Information), committee meetings, a pilot, four or five demos, more committee meetings and more tests. We have seen 2-page and 18-page RFIs.
However, we’ve been in their shoes and understand the responsibility as buyers and managers of enterprise technology. The cost of archiving for 5,000 users is not insignificant, but the investment is just a piece of what’s being contemplated. Significant preparation and, in most cases, cultural change, may be necessary.
Here’s an interesting note: The interest we see is from firms with fewer than 100 people and more than 1,000 people. Mid-size firms seem to be landlocked. In part, it may be paralysis by analysis, but it’s also out of fear that they don’t have the right resources, people or skills to pull it off. They’re not looking into it because they sense it’s out of their reach. It isn’t. Most important is the firm’s investment in and commitment to the development, publication and communication of its policy and guidelines.
Q. What can you tell us about your other distribution relationships?
A. Yes, well, what I’ve just described is our direct sales effort, but Arkovi’s capabilities are also available in other ways. As of April 2011, we have strategic relationships with Global Relay, Mailbanc, Marketeria, and MessageWatcher , which enable these firms to deliver Arkovi integrated inside of their offerings. We also have affiliate relationships with firms that want to offer social media archiving as part of a turnkey marketing solution for advisors. They include eRollover, Triplestop LLC and WiredAdvisor.
Q. Let’s switch gears now and talk about your technology. Given the dynamic nature of social media, how do you develop a roadmap that syncs with both user demand and the regulatory guidelines?
A. We started with archiving the “Big Three”: Facebook, LinkedIn and Twitter. When we launched we archived the public and private data for these platform accounts. Additionally, we added the RSS integration for archiving blogs, blog comments and a wide number of other social and web destinations used for monitoring and archiving. As platform expand their API’s (application programming interfaces – the plumbing that allows archiving of information), we continuously add this data to our offering.
Q. What are the differences you see in the way each is being used within financial services?
A. The majority of our clients are using LinkedIn, but that’s not where the volume is. LinkedIn is utilized as a networking solution and slowly emerging as a content distribution platform right now. It’s Facebook, Twitter and blogs that are more heavy in content volume.
Early on, people didn’t know they needed to archive. Two years ago, people didn’t think that their LinkedIn profile was social media. (Also see Arkovi Company History) We tried to explain to them that we weren’t trying to create the demand for Arkovi. It’s that they were trying to connect and that they were generating content that was off their firm’s domain which needed to be archived. That’s the nature of the beast. That lone status update has to be captured.
In 2009, many people wondered why they’d use Facebook for business. They’ve changed their tunes now that they’ve seen the engagement that’s possible.
Facebook is where business blends with the personal. One of our ongoing efforts to help the industry track adoption is our infographic series. In our first report, we showed that half of our users were using Facebook and that 60% of what we were archiving from Facebook was photos. Many of them are personal, but many are also from business events. A lot of folks archive the photo albums they put on their Facebook pages with photos from business get-togethers. Photos are effective ways to engage.
You know, there’s a subplot in the SEC sweep letter that hasn’t really been discussed. They ask about personal use of social media. Here’s why: I may work for a financial services company and have a Facebook profile that’s completely personal because I’m just connecting with friends and family and not posting work content. However, if I say I’m employed at Firm XYZ, I immediately attached my personal profile to my employer in the eyes of the regulators. I would need to either remove that or archive everything.
The minute you say you work for a regulated firm, the regulators want you to archive just in case you say something in the future about your work, your job, your manager. Just in case you say something in the future that could be potentially classified as advertising.
As far as Twitter goes, Twitter represents a significant volume of what gets archived, but by a smaller number of users. It’s a pretty graspable concept—it’s a platform for syndicating or sharing content.
Q. What about after the “Big Three”? How do you set development priorities?
A. Well, of course, we archive blogs and social and Web searches and other content tracked via RSS feeds. However, the needs have cascaded.
After Facebook, LinkedIn and Twitter, we look at the social media and web platforms where it makes sense to add the API. As of April 2011 we have several substantive releases coming around social, web and video content.
We are very much driven by the customer interactions we have and our support center seeks feature requests from the community. Some people are leery about posting ideas so they’ll feed them to our sales organization and sales will post on their behalf. We want to make these public, we want to encourage discussion and we want our customers to know what we’re up to.
We’ve received at least 25 requests in the past six months that have been added to the system. Our customers ask us to do all kinds of things with the system. Some we can satisfy, but others will come in time. We can’t afford to knee-jerk react. We have to think about executing on our long-term plan.
On the other hand, advisors’ requests were the reason we’re releasing Website archiving. They said, “You’re already getting the blog, Twitter, Facebook, LinkedIn and we’re tired of paying another supplier.” It’s not social media but we could do it, therefore satisfying our customers and remaining on our plan.
Q. What’s next for Arkovi?
A. As I mentioned, we have some excellent features supporting web, social and video content in the pipeline for the coming two quarters. Based on our experience and closeness to the community, our goal is to always be speaking with our customers as well as anticipating what will be needed next and build it.
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