The clock is TikToking, will firms get the message on off-channel comms?

It seems as though the realm of social media and the hyper-connected nature of the world we live in today is constantly growing and changing. With this comes a range of risks and issues. The findings of our 2024 Industry Insights report are a testament to this, where 55.7% of respondents claimed that they consider social media to be a compliance risk to their business. The report outlines that the main challenge posed by social media is the gradual proliferation of its use in a business context. Here, TikTok becomes another platform to add to the roster of social media’s impact on monitoring off-channel comms.

TikTok – not very demure, not very mindful

Just like its counterparts, TikTok is fast becoming another tool increasingly used for professional interactions, much to the dismay of financial regulators and compliance professionals. There are a host of threats that present themselves with the growing use of the platform, especially the relative lack of available monitoring capabilities. TikTok enables individuals and businesses to communicate with customers, prospects, and the wider market – but without an adequate capture or surveillance tool, these communications will go unchecked. Therefore, it is paramount that firms quickly implement native data connector solutions to ensure every message is captured and stored in the event of investigation or audit.

TikTok is notorious for its short-form videos, decreasing attention spans, and tampering with content permanence. Although a seemingly exciting new feature and trend for Gen Z to experiment with, it has troubled the compliance community as content cannot be deleted or retracted after being posted. Not only can this lead to the dissemination of sensitive and misleading information, it can also lead to poor investment advice or decisions.

The introduction of ‘finfluencers’ – in which influencers give (sometimes unsolicited or unsuitable) financial advice and tips – is of particular concern to the compliance space. The ongoing ‘finfluencer’ case bought by the U.K. regulator is a direct example of this. The Financial Conduct Authority (FCA) recently charged nine individuals for promoting an unauthorized foreign exchange trading scheme using their social media channels. Both the Securities and Exchange Commission (SEC) and FCA have been clear in reprimanding firms and individuals for misinforming consumers and advertising their products through hypothetical performance promotion. Given TikTok’s algorithm and the nature of its content, cases like this have the potential to become more common, and risk customers losing out financially.

Since its inception in 2016, TikTok has taken the world by storm and transformed content creation and human behavior. It is a highly unregulated social media platform, in that its consumer-centric and rapid output approach leaves little room for vetting or monitoring, especially during a time when regulatory and compliance oversight is critical. We have already seen the damage that fast-spreading information on social media can cause – the collapse of Silicon Valley Bank being one such example. Firms must leave no stone unturned when it comes to monitoring off-channel comms. Yes, TikTok is more heavily focused on user-generated content and consumption, but it may quickly become a route of communication to discuss business-related matters – especially if firms are using it as a platform on which to promote services. As individuals looking to trade information, without being caught, and attempt to source new avenues to do this on, could TikTok be their next venture?

Another day, another social media platform to monitor…

It is vital that firms are proactive in their measures to mitigate risks presented by the misuse of TikTok to communicate about business matters. Firms would benefit from implementing robust policies around the use of social media to discuss business issues, relaying this information clearly to their employees to ensure no confusion or possibility of violation.

Firms would also do well to explore technological solutions, such as native data Connectors, which ensure that all posts, comments, replies, and metadata are captured at source via a direct API, with no data loss. Here it is pertinent that data security and preservation become a priority for compliance strategies within financial services.