There may be a good reason Snapchat hasn't caught on with credit unions

This story is the first in a three-part series in a special report on credit unions and social media. The other two articles can be found here and here.

Credit unions looking to integrate Snapchat into their social media strategy may consider thinking twice.

The social media phenomenon that launched in 2011 has come a long way, slowly evolving from an application used by students to one recognized and used by small and large businesses alike. While the majority of credit unions have adopted either Facebook, Twitter and other services, Snapchat isn’t as widely used.

What makes Snapchat different from other platforms is its ephemeral nature. People or organizations using the app can take photos or videos – also known as “snaps” – of their surroundings and send them to another user. But those transmissions have a time limit – generally one to 10 seconds – and once the recipient views the photo it vanishes from the screen unless users elect to allow the recipient to replay the photo or video.

More commonly used is the “story” option, which allows users to curate a day’s worth of snaps which can be viewed multiple times but expires after 24 hours. That’s the feature Neches Federal Credit Union focuses on, and the Port Neches, Texas-based institution recently won a CUNA Diamond Award for how it utilizes the service’s filters, or graphics that can be swiped onto a snap with details about a location, event or other information.

Neches FCU's overall Snapchat views for community festival filters

“We don’t expect a big ROI on it,” said Jason Duplant, vice president of marketing and business development at the CU. “We try to use our social media as content distribution and not necessarily as a sales channels.”

Duplant called the platform a fun option that “humanizes our brand long-term.” If the CU curates quality content on its social media channels, he added, its sales channels are likely to benefit.

A Neches FCU Snapchat filter

Neches FCU releases six to 10 filters a year for various events it takes part in, and it’s not unusual for the CU to reach up to 40,000 people, depending on the event. The expense for each filter varies according to its lifespan, as well as the geographic area a creator plans to target. Since filters correlate with location, costs go up as a filter’s geographic reach expands. Duplant said filters created for larger festivals meant for a few days can range in the $300 to $500 range, whereas a filter made for a quick football game could be just $50.

Caution: Compliance challenges ahead

Still, there’s a reason more financial institutions haven’t jumped on the Snapchat bandwagon, noted A. Stewart Rose, president of Truebridge, a content marketing firm geared toward financial institutions.

”For a credit union, it might have some issues,” Rose said, detailing the murky compliance waters CUs utilizing the service must navigate. “What I would caution is when you get into financial services, you're in a highly regulated industry.”

Chief among those regulations are 19 pages of supervisory guidance on social media that the Federal Financial Institutions Examination Council – which includes the National Credit Union Administration and Consumer Financial Protection Bureau – issued in 2013. While the social media landscape has changed mightily since then, that is still the most recent guidance available on the topic, and FFIEC details a variety of consumer compliance risks.

“The increased risks can include the risk of harm to consumers, compliance and legal risk, operational risk, and reputation risk,” the management guide reads. “Increased risk can arise from a variety of directions, including poor due diligence, oversight or control on the part of the financial institution.”

Marianna Shafir, corporate counsel and regulatory advisor at Smarsh

Marianna Shafir, a corporate counsel and regulatory advisor at the archiving firm Smarsh, warned that Snapchat and other platforms put financial institutions at risk of failing to comply with regulatory guidance.

“Any communication [used] for business communications – whether it be email, social media, text messaging – you have to capture and archive to meet compliance objectives,” she said. And if regulators or attorneys ask for records of those communications, they must be produced quickly.

And that’s what makes Snapchat tricky for CUs and other institutions. Because transmissions on the service disappear, credit union compliance departments could run into a headache in the event that an institution's Snapchat channel is breached and used inappropriately.

That’s not to say that Snapchat lacks utility within a credit union’s toolbox – especially since marketing firm eMarketer found U.S. adults using Snapchat tend to spend slightly more time on the app compared to some other platforms, including Instagram.

Still, comparatively few CUs have embraced the app. One reason for that may be that while many older consumers are on Facebook and Twitter, Snapchat tends to skew younger. According to Omnicore, 71% of the service's user base is under the age of 34, and 35% are between the ages of 18 and 24. Those are desirable markets for credit unions, but with many young consumers also on other, more popular platforms, some shops may be electing to stick with apps that cast a wider net when choosing where to direct their social media messaging.

One other credit union that has adopted the service is Wescom Central CU of Pasadena, Calif., which also focuses on filters. However, Wescom Central also exercises more caution with Snapchat than some other social media outlets it uses.

“You run the risk of [the messages] disappearing, so we as a credit union have not chosen to use Snapchat in that capacity,” said Tamar Atamian, VP of marketing. While the credit union closely tracks how long users interact with its stories, “There is no dialogue or commenting or product, it’s purely a filter where your logo is placed next to it.”

Atamian also outlined how WCCU makes decisions on which platforms to use for various communications, noting that while Facebook allows more in-depth interactions and linking back to various products, while Instagram lets the CU visually showcase its community involvement. Snapchat, she added, allows the CU to “highlight our brand a little more.”

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