Steve Hong, a social media analyst and Kairos Consumers contributor, explores whether - and how - social media is making an impact in the financial services industry.

Try this. Ask someone in the finance industry how they are incorporating social media into their business. Chances are, their reaction will range from indifference to utter confusion as to what relevance the medium would have in the first place. Case in point: Goldman Sachs only has 19,000 likes on their Facebook page but they’re still scraping by.

In May, I attended the Business Development Institute’s Social and Mobile Financial Services Communications conference to see what role these technologies were playing in the industry. Are apps and Facebook changing the way things are done on Wall Street? In summary, not really. At least not compared to the break neck pace at which social media is impacting how we communicate in our personal lives. Let’s look at some of the conclusions from the presentations to see where social media has the most potential.

Opening comments from Michal Shapira, the Associate VP of Digital Marketing at the Wall Street Journal Digital Network, suggested that the technologies had an impact on the personal news consumption habits of finance workers who were increasingly consuming news via iPad and also watching more video. As well, some of the network’s content had gone viral due to exposure on social networks.

The conference featured two presentations that centered on compliance; calling attention to the idea that heavy regulation of communication in the industry is at odds with the glibness usually associated with social media. According to compliance officer David Chung of ING, the SEC and other regulatory bodies were now defining social media but not putting forth any specific regulations around usage. The rule of thumb for the time being is don’t say anything you couldn’t say via any other medium. Some financial advisors have begun using social media to generate leads and communicate with their clientele. Indeed this makes sense as social media can alert FA’s to clients’ life events, which might require financial planning. Chung was careful to point out, however, that compliance departments should still approve all communication lest an offhand Twitter blast about a stock violate an advisor’s fiduciary responsibility for individual clients. Joanna Belbey, Social Media and Compliance Specialist for Actiance, spoke about her company’s enterprise solution for managing social media communications in a compliant manner and gathering metrics on that activity.

At this point, evidence regarding success in using social media by FA’s remains anecdotal. In addition to regulation and compliance issues, social media also faces other challenges, including: 1) financial advisory is a high-touch activity with rich, older clients who expect personalized treatment, not wall posts and 2) finance companies tend to make money without social media so why fix it if it ain’t broke?

The most compelling presentation of the day came from Scott Gulbransen, Social Media Director at H&R Block. He presented a case study on how he used social media, content advertising, and publicity to generate more interest among younger tax filers in the aging brand. While I won’t rehash the success story here (he used irreverent, satirical content marketing to revive the brand among younger tax filers via social networks, the end) his case study does bring to light two conclusions we might make, these being that: 1) social media’s greatest impact in finance right now will probably be in branding activities aimed at consumers, not B2B and 2) we’ll probably have to wait until Gen Y matures (along with their collective wealth) until we see wide spread adoption of social media and mobile in core communication functions of the industry.

Slides from these and other case studies presented at the conference can be found here: http://www.slideshare.net/bdionline. Attendees expecting examples of how social or mobile technology is making our capital markets more efficient would have been sorely disappointed. One reason: with market data desktops, electronic trading, and live news feeds, the markets in their current form already have all the communications solutions they need. Indeed functions of social media platforms seem to emulate functions that financial communications platforms have had for decades. For now, the most relevant applications of these technologies seem to be in consumer use, branding, and to some degree, Financial Advisory. But with the impending onslaught of Gen Y and the Millennials behind them, watch out for disruptive financial business models built around social and mobile technologies and get ready to check your Kickstarter portfolio on your Google Glasses.