The Engagement Benefits and Compliance Risks of Short Form Video Content

By Gabriel Ruzin

In the digital age, it is more important than ever for businesses to attract potential customers by non-traditional means. Gone are the days of door-to-door salespeople or relying solely on newspaper advertising. Today’s new breed of customer is loitering on platforms that could never have been dreamed of a few decades ago. In the financial industry, lenders are increasingly leveraging short-form video content to engage with their audiences. But while this format offers substantial benefits in terms of engagement and outreach, it also presents notable compliance risks that financial institutions must carefully navigate. First, if you’re on the fence about whether to begin dazzling customers with short form video content, let’s look at some practical benefits that this method could bring your company.

Quick Bites: The Pros of Short Form Video Content

1. Increased Engagement and Reach

Short-form videos, typically less than 60 seconds, are highly engaging and easily consumable. Longer videos can turn off viewers, who may feel that 20, 10, even 5 minutes is too much of a ‘commitment’ when it comes to their valuable time. Platforms like TikTok, Instagram Reels, and YouTube Shorts have popularized this content type, allowing financial institutions to reach a broader audience quickly, with snappy, fun, and intriguing videos. The concise nature of this format aligns well with the reduced attention spans of modern consumers, making it more likely for content to be viewed and shared widely.

2. Enhanced Brand Awareness and Customer Trust

By creating informative and visually appealing videos, financial institutions can build brand awareness and establish trust with their audience. For example, videos explaining financial concepts, market trends, or investment strategies in a less formal setting than a stuffy boardroom or conference can position a company as an expert or thought leader in the industry, while also portraying an aura of camaraderie and empathy with potential customers. This semi-formal, but educational approach helps demystify complex financial topics, making them more accessible to the general public.

3. Cost-Effective Marketing

Producing short-form videos is often more cost-effective compared to traditional advertising methods. Not only are most viral videos much cheaper to produce than a round of pricey advertising, they’re often more likely to spread like wildfire. With the proliferation of smartphones and user-friendly video editing tools, creating high-quality content is more accessible than ever. This allows smaller financial firms to compete with larger institutions on a relatively level playing field, maximizing their marketing budgets.

4. Real-Time Communication

Short-form videos also enable real-time communication with customers. Financial institutions can quickly address current events, market changes, or new product launches. Is a fun trend resonating online that could be utilized to point towards your customer base? Make a quick video about it! This immediacy helps to show that your business understands the importance of social media relevance and keeps the audience informed about the latest developments, fostering a sense of connection and responsiveness.

Tread Carefully: The Risks of Short Form Video Content

While the above benefits do have the potential to take your business’ marketing reach to new heights, the internet is no longer the wild frontier that it may once have been. Financial regulators have the means and the ability to monitor a company’s online videos and scour them for rule breaking like any other advertising method. While short form video content is proven to be extremely efficacious if utilized properly, there are serious risks involved in overstepping the law. Here are a few to keep in mind:

  • Regulatory Compliance

The financial industry is heavily regulated, with strict guidelines on advertising, communication, and data protection. Short-form videos, like any other means of marketing, must comply with regulations set by entities such as the SEC, FINRA, and the FTC. These regulations include requirements for disclaimers, disclosures, and record-keeping. Non-compliance can result in significant fines and reputational damage.

According to the FDIC's guidance on social media compliance, institutions must ensure that their social media activity, including all video content, complies with all applicable laws and regulations​. This includes adhering to Truth in Savings Act (TISA), Equal Credit Opportunity Act (ECOA), and Fair Lending laws, among several others.

  • Data Privacy Concerns

Short-form videos often involve collecting and processing user data, which must be carefully handled in accordance with data protection laws such as GDPR and CCPA. All financial institutions must ensure that they obtain proper consent from users and implement robust data security measures to protect personal information.

The compliance risks associated with social media highlight the importance of training employees on responsible use and monitoring for potential violations​​. Clear guidelines should be established regarding what constitutes appropriate content and ensure that all video communications are analyzed and approved by compliance teams before publication.

  • Intellectual Property and Copyright Issues

Using copyrighted material in short-form videos without proper authorization could lead to protracted and costly legal disputes. Financial institutions must be cautious whenever incorporating music, images, or third-party content in their videos. Ensuring that all content is either original or properly licensed is crucial in avoiding intellectual property infringement.

  • Misleading Information or Errors

One of the easiest traps of short form video content to fall into is that the brevity of short-form videos could lead marketing teams – whether intentionally or not – to oversimplify complex financial products or services. It is essential to provide accurate, clear, and complete information to avoid any possibility of misinterpretation. All claims therein must be substantiated and it is also a good rule of thumb include appropriate disclaimers to cover all the bases.

  • Monitoring and Archiving

Financial institutions are required to monitor and archive all social media communications, and this necessity includes short-form videos. Doing so ensures that complete records can be provided, should there ever be a regulatory audit or investigation. Implementing automated monitoring and archiving solutions can help manage this process efficiently and ensure compliance with regulatory requirements.

Best Practices for Mitigating Compliance Risks

1. Develop Comprehensive Social Media Policies

Establish clear policies that outline the acceptable use of social media and short-form videos. These policies should include guidelines on content creation, approval processes, and compliance requirements for any team member involved in the video content process. Ensure that all employees are trained on these policies and understand the potential risks to themselves and the company, should regulations be violated.

2. Implement Robust Monitoring and Archiving Solutions

Utilize technology solutions to monitor and archive all social media communications. Employees need breaks and days off, but today’s technology can keep an eye out 24/7/365. Automated tools can help detect non-compliant content and ensure that all communications are properly archived for regulatory purposes.

3. Provide Regular Training

Regularly train employees on compliance requirements and the responsible use of social media. This training should cover the latest regulatory changes, data privacy laws, and best practices for creating compliant content. Training should also be updated to reflect the current regulatory landscape.

4. Collaborate with Legal and Compliance Teams

Ensure that all video content is carefully reviewed and approved by legal and compliance teams before it ever sees the light of day. This cross-team collaboration can help identify potential risks and verify that all content meets regulatory standards.

5. Use Disclaimers and Disclosures

Include any and all appropriate disclaimers and disclosures in your video content. Snappy, kinetic, and flashy videos – while fun and entertaining – run the risk of not telling ‘the whole story’ and running afoul of regulators. Disclosing all necessary info helps manage expectations and ensures that viewers are aware of the limitations and risks associated with the financial products or services being discussed.

In conclusion, while short-form video content offers significant engagement benefits for financial institutions, it also presents substantial compliance risks. By implementing robust policies, monitoring solutions, and regular training, financial institutions can expertly leverage this powerful medium while ensuring full and proper compliance with regulatory requirements.