Since the early days of the COVID-19 pandemic, remote communication has been a necessity for financial services professionals. As a result, regulators have taken note and increased scrutiny of that activity. A series of high-profile enforcement actions regarding electronic communications have prompted compliance leadership to rethink resource allocation, but the constraints are prompting firms to mature in their approach to risk reduction.
But what makes a mature compliance team in the financial services industry? Maturity refers to the sophistication and comfort of a program around systematically addressing compliance issues and concerns throughout the organization. This can mean leveraging existing resources and converting them to scalable models, as well as partnering with internal stakeholders to make decisions while managing risk appropriately. It is also imperative to apply technology strategically to overcome compliance challenges, especially as compliance teams are asked to thin as well as oversee new communication channels.
not there… still
One of the most exciting technologies to be developed in recent years has been artificial intelligence, and many expected it to have a huge impact on compliance reviews in financial services organizations – especially pre-reviews of social posts and text messages. Regarding posting. -Review. This can potentially save time and manual labor, enabling electronic communications to proceed at an even faster rate to positively impact customer relationships, and ultimately the bottom line. This is not happening now. Why?
Regulation follows innovation, and in the case of AI, the rules have not caught on. Current regulations state that certain types of electronic material must still be pre-reviewed by a registered (human) principle. This does not mean that AI is of no importance to Finserv compliance teams; It’s only being used differently than imagined – at least until the rules support its application for pre-review.
Many mature and forward-thinking organizations are using AI-based solutions to create content versus suggested content. Content created by the consultant. These solutions can help guide potential posts prior to manual review, which can enhance workflow and get the content in the hands of registered representatives much faster.
Additionally, natural language processing techniques can also be of considerable value in terms of factoring in terms of specific words used within posts or messages. This type of technology can reduce items in a work queue that a simple glossary review would flag, moving only the pieces that need a closer look, ensuring the right alerts are the right ones at the right time. being directed to the queue.
In fact, a recent NAVEX Global survey found that automated workflow routing is a main focus area for compliance teams to increase efficiency. These reforms are a sign that compliance teams are – by necessity – becoming more mature in their efforts to handle their regulatory obligations. Additionally, NAVEX indicated that 41% of compliance programs in the financial services industry plan to be automated over the next 12 months.
So, while it’s still absolutely maximizing to move content from a pre-review stage to a post-review stage early in the game, where the content is more interactive, mature compliance teams can accelerate the process and help some Using them to reduce Why stress? With fewer items in the queue, content can often receive more diligent reviews as well, which goes a long way in reducing a firm’s exposure.
Not all communication channels are created equal, but mature organizations have compliance strategies to deal with them
Mature organizations make accessing their registered representatives an important part of their oversight model. They are asking their people what digital channels they are using for business purposes and what they want to use, so that they can adapt to modern channels.
Much of the assessment of how to deal with a given communication platform comes down to the data and how much access the compliance teams have. Most communication technologies were not designed specifically with financial services in mind, which means that industry regulations have not been a factor in building their business. Platforms, such as LinkedIn, which was built for business, are much more open to sharing their APIs than Snapchat, which has not yet been optimized for business use. Thus, it makes it increasingly difficult to document the required level of compliance.
Of course there are solutions. For example, in the case of TikTok, a compliance team may require a script or a pre-review of whatever will be recorded. A representative interested in doing the video can write down exactly what they are going to say, pre-record it and send it for review. Then, after it’s posted, someone compliantly watches the video and makes sure it aligns with what’s expected—and that all of these steps are documented. While this takes away some of the spontaneity of TikTok, it shows that it is still possible to use and supervise this channel accordingly.
Mature compliance teams move away from the check-box mentality
With an evolving regulatory environment, mature teams know they cannot move forward simply by checking a box. They must establish procedures throughout the organization that document all possible forms of communication; They must have control over providing evidence for review, and it must be explainable to regulators. Otherwise, they are looking at big fines and changes in compliance functions. The last thing companies want is to be caught not monitoring something.
Mature firms are initiating active compliance, going out and trying to determine what regulatory changes are coming and how they will affect the firm. With the landscape changing so much, compliance teams are investing in learning more not only about how new communication technologies can be used, but what technologies can help automate and document supervision processes. Huh. With increased regulatory burdens, companies must find the tools to stay ahead, and always test that they will pass controls and enable them to monitor communications in a more efficient manner than ever before.
Although it sounds like a complicated process (because it is), it is a cost of doing business today. What is clear, however, is that the most mature firms have invested in the technology and taken an active compliance role. These firms have been left untouched by big negative industry trends, and this should be proof that the effort is paying off.
Bill Simpson is the Compliance Principal at Hershey Systems
