Untangling Meta Threads for Financial Services

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By Robert Cruz | VP, Regulatory and Information Governance at Smarsh

By now, you’ve undoubtedly read about the wildly successful launch of Meta’s new alternative to Twitter, Threads. The path to 30 million users within its first 18 hours from launch is staggering. As of the most recently announced statistics, the platform bosts more than 107 million users. Even if some of the features, monetization strategy, and potential challenges from regulators are yet to play out, the potential market impact of Threads, given its direct leverage of Instagram’s 2 billion users, combined with Twitter’s change in fees required to access its API, bears close monitoring by financial services firms exploring how it might be harnessed for business purposes.

What shouldn’t be lost in that analysis is the dynamic nature of social media, fueled by a pace of innovation that is difficult to match in other areas of technology. Twitter and Facebook will give way to alternatives that drive greater engagement through more effective algorithms that seamlessly tie to other content of interest. Even TikTok, often cited for its superior engagement levels compared to other platforms, has seen a 28% drop in engagement in 2023. Threads will join an existing set of business use contenders, with the most recent candidates including HiveSocial (2 million active users), Mastadon (1 million), Tribel (400,000) and BlueSky (290,000). Those, when added to the more “established” TelegramSignal and Discord, all demonstrate signs of settling into specific niches around crypto and other areas of interest.

GenZs and the potential Financial Services Impact

So, what does this mean for financial services, particularly in light of recent regulatory scrutiny over using unapproved communications tools? Will firms pull back from using currently supported social channels or switch to others? The data here is giving mixed signals. On the one hand, Putnam Social Advisor Survey indicated that financial advisors had begun to decrease their use of all social media for business purposes since 2021 – with the noticeable exception of LinkedIn. On the other hand, 56% of US GenZs own at least some investments, led by crypto (55%) and individual stocks (41%), according to a recent survey by FINRA and the CFA institute. Where to they go to learn about investing and financial topics? Of the nearly half that use social media, 60% list YouTube as their first choice, followed by Instagram (44%) and TikTok (37%). At a minimum, Meta is faced with an intriguing investment opportunity to appeal to financial services firms to use Threads to tap into the massive Instagram user base.

What needs to happen to make Threads viable for Financial Services firms?

Many things, as Meta continues from its furious start to its initial goal of 1 billion users – including adding key features including direct messaging, hashtags, keyword search, and a desktop version that many businesses will require. As importantly, it will also need capabilities to be able to access and extract Threads content for firms that have regulatory obligations to capture and retain historical records of approved content sources (the adage that “the business can’t use what we can’t capture” is now more valid than ever before). Investment in a meaningful vertical industry partner program will also be an important pre-requisite to ensure that Meta can hear and respond to the specific regulatory and data privacy requirements unique to each industry and geographic segment they wish to pursue.

For firms beginning to consider Threads, a good starting point is to stay in sync with GenZ clients and employees to monitor how its usage patterns continue to evolve. Will they use it to learn about the basics of investing or how to save more money during periods of inflation? Will they see finfluencers they know and trust from other platforms begin to appear on Threads? Will they begin to spend more time on Threads and less on other approved tools, including Twitter, TikTok or Reddit? As we’ve seen countless times, market demand coupled with actions from content providers (and third parties) to address compliance gaps will ultimately separate the tools potentially suitable for use by regulated businesses from those not.

However, the success of the Threads launch over its first 18 hours should leave everyone with one lasting takeaway: the pace of innovation continues to accelerate, and a tool that can drive greater engagement with your customers versus your existing supported applications may already exist. The agility of your compliance processes to quickly assess and determine if you can untangle the risks of the next communications thread has never been more critical.