Economy, Business And Markets

How Social Media Affect Financial Services

Business & Markets Desk
How Social Media Affect Financial Services
How Social Media Affect Financial Services

T here is no denying it. Social media is changing everything, from how we find restaurants and book flights to how we gain access to news. Iran with its tech savvy, fashion conscious young population is fast becoming the battleground of rival apps. One of the most recent waves of tech disruption has hit the financial industry. To be more precise, it has hit the business news industry.

Traders and professional investors have taken up Telegram as their main communication rout from among the many instant messaging apps available such as WhatsApp, Telegram, Viber, WeChat, and Hike. News media, with their laggard performance, and double standards have been unworthy rivals.

Currently, financial professionals and investors are using Telegram to send information, talk about trends, and discuss investment strategies. There are groups with over 200 people, sharing news, insights and gossip about equities and investments.

Viber used to be a popular app among Iranian users, but recent interruption and slowdown in services have led to a general migration of users to rival apps. But why Telegram?

Telegram markets itself as a secure, encrypted platform. It has a feature called ‘Active Sessions’ to help a user monitor the devices he/she is logged in with. It also has a two-step-authentication feature – one of the only messenger apps with this feature – to bolster internal security. Add all this to Telegram’s users’ ability to sync their Telegram mobile messages with Telegram’s desktop and tablet apps – a feature attractive to business workers.

The security, quick delivery, and small size of Telegram have turned it into a favorite among Iranians, especially traders and financiers. The software has become so popular in Iran that eight percent of its users are Iranian. Earlier this year, the Germany-based company had more than 62 million monthly active users, cofounder Pavel Durov told TechCrunch on May 13. Currently around five million Iranians use Telegram, ISNA reported on May 23.

But the unregulated and unmonitored nature of instant messaging apps, like Telegram, has put some industry officials on edge. Some have asked for their filtering by the Telecommunication Company of Iran. “Social media are dangerous for bourse,” Securities and Exchange News Agency (SENA) wrote earlier.

 “Held Hostage”

Critics say traders can be conned using these apps as sources of information, meaning people will only divulge information that may be beneficial to them or their portfolios. “The stock market’s trades are held hostage by traders who are riding the waves of social media, especially Telegram,” the agency quoted a market analyst as saying. Critics also say rumors on social media can create shocks in the equity market. They cite spread of false rumors about Eghtesad Novin Bank as an example.

Eghtesad Novin came under gossip fire on Dec. 31, with rumors circulating on social media, saying the bank’s chief executive, Hassan Motamedi, had flown out of Iran. There was also talk of financial fraud. The news was attributed to Intelligence Minister Mahmoud Alavi, saying Motamedi had unexpectedly left Iran. Both the ministry of intelligence and Motamedi denied the rumors within 48 hours. The ministry announced that it would pursue the instigators.

Critics further contend that a source of information and communication about the stock market that is neither regulated nor censured by the Securities and Exchange Organization or the culture ministry should not be tolerated. They believe traders can post unsavory comments about market officials, but are not held accountable by anyone.  

But the social media has always been a buyer beware medium for information. Freedom of information and the press puts the onus on the listener. Any medium can be influenced by interests of its owner. It’s the competing interests and variety of sources that puts unreliable sources out of business. Telegram and other social media should be embraced as media of interaction that can increase the equity market’s speed and transparency.