I guess you could call me a homer—I root for the home team when it comes to expectations about where financial innovation can come from.
For example, the reaction to last week’s announcement about Intuit opening up the APIs to its financial data service (underlying Quicken, QuickBooks, Mint and FinanceWorks) was irksome to me. The news was framed in terms of the opportunity it represented for start-ups. Why just start-ups and newcomers? I think there are plenty of innovative-minded types within financial services companies today looking to create something new out of what they know.
Enabling Regulated Firms' Participation
All of which I mention by way of easing into today’s post, which acknowledges the work and success of a few guys who were inside financial services and saw an emerging business opportunity: Namely, that regulated firms’ use of social networks would require a permanent archive to retain the records of communications of what the firms and the employees said on others' platforms.
That’s what dawned on a JP Morgan Chase compliance officer and two tech guys in early 2009, prompting them to leave their corporate gigs in favor of building a social media archiving business called Arkovi. You can read the whole story on the Arkovi site.
Social media archiving as a category didn’t really exist until three years ago. Arkovi was one of the first firms out there, needing to educate their prospects before they could even hope to sell them anything. I became acquainted with Blane Warrene and even did a little work for Arkovi in the early days. At that time, Blane was doing everything a startup CEO should do—engaging with people online, giving away trial memberships and generally supporting what was a fairly small investment industry active on social networks, predominantly Twitter. Blane was an early supporter of my work with AdvisorTweets.com, for instance.
Yesterday, it was announced that RegEd, a leading provider of technology solutions for compliance for the financial services industry, has signed an agreement to acquire Arkovi. After having been launched as a standalone solution for broker-dealers and money managers, Arkovi is destined to become a core component of the RegEd solutions. RegEd already provides a comprehensive suite of workflow-driven automation for financial advisor compliance. With this acquisition expected to close in early October, the start-up has run its natural course.
When I learned the news, I thought Blane might be open to looking back at the journey of the last three years. Via the exchange of a few emails, I asked him to provide some perspective for you regarding the maturing social media archiving space, how it’s evolved to this point and where it’s going.
Q. Blane, you’ve been an evangelist for using social media, let alone social media archiving. So, do regulated firms “believe” yet? Where would you put them on the skepticism spectrum?
A. Regulated firms definitely see the picture a bit clearer now. A lot of the skepticism in the past was due to limited regulatory guidance—especially on the FINRA side of the spectrum. Regulatory guidance has been more clear. See FINRA 10-06 and 11-39, SEC guidance in January 2012 and the forthcoming FINRA 12-29 for February 2013. Also, we have had the opportunity to work with customers for three years, helping with best practices on process, archiving, monitoring and more.
I would suggest that the meter—on a scale of 1 to 10—has tipped past 6 to the positive, and firms are specifically mapping out strategies this year and for 2013.
Firms are seeking to be collaborative and enabling and not "preventers" of broadening opportunities for advisors. Advisors land in a couple of quadrants on how they use social. The most common uses are:
- To educate clients
- To position themselves as thought leaders, in essence driving the narrative on topics of which they are expert
- To tap as a channel to develop new relationships. Social media strategist Jay Palter calls it social capital that often leads to strong influencers and prospective customers as trust builds in the online relationship.
Q. How has the evaluation process changed since you first started calling on firms?
A. The questions have evolved most definitely. Initially, they were driven by “Should we even be doing this? Why? How will it benefit us?”
Now the questions are very specific: “Do you support Google+?” “Can we save the source videos before they are published?” “How can you plug into our compliance workflow?” This really tails back to the first question—[broker-dealer] firms have been observing on social, talking with peers and considering strategies for brand, advisor and more. They are ready to map out a plan for social, to leverage the technology and knowledge to get it done right and to measure its performance.
Q. A lot has changed in terms of functionality. Today you support many more platforms than when you first started. What’s your perspective on how archiving is evolving, the affordability of archiving and the management of it from an enterprise perspective?
A. The key is to keep the big data of social simple for customers. One of my most treasured goals is to show someone how to use Arkovi and have them say, “That’s it?”
We get millions of records on the fly and tame the firehose, so to speak, so social data can be explored and reviewed in an intuitive fashion. When looking at the dashboard, the user wants to be able to see each network, the types of public and private data, and easily conquer the data with search and analytics.
This data extends and accentuates the enterprise, and the value found in the data far outweighs the cost.
Q. I yearn for someone to come along and map the social media archiving space, including the solutions and providers that focus on regulated investment firms. How has the space changed since you wrote your piece “How to Choose the Right Social Media Archiving Strategy” for Advisor Perspectives in August 2010?
A. Familiar names remain that I noted in my Advisor Perspectives article. There are two clear philosophies in social media archiving, the proxy approach and the API approach. It is really a philosophical decision to build one or the other.
Arkovi is an API solution that has enabled us to aggressively pursue numerous social networks, adding Google+, YouTube, Pinterest, blogs and more to our original Facebook, LinkedIn and Twitter. The API approach allows for much more creative and flexible handling of the data for customers, either through integration or in providing analytics and reporting. Likewise it is largely hassle-free when deploying to large groups of users, especially considering mobile, tablets and the work-from-anywhere habits we are seeing in the modern workforce.
Q. Your firm is the first in the space to be acquired. Is this the sign of a very young category maturing?
A. We largely pioneered the social media archiving space in 2009 and numerous startups followed in subsequent years. We take the acquisition as a sign that the market has validated our solution (as well as model and approach).
In my view, social is a component of the online strategy that includes websites, blogs, digital marketing and other activities. This move to join RegEd enables us to present a truly comprehensive suite to the industry—compliance, marketing, sales and how-to.
Q. Can we still expect to see you online in all the old familiar places?
A. Without a doubt, I will remain my regular self on social. Admittedly, Twitter is my personal favorite (@blano). However, Google+ has captivated me with the flexibility of Circles and my now regular use of Hangouts. I continue to spend more time on Plus. I plan to continue podcasting as well as it has been well received.