Legacy software solutions come up short
Data management has become a critical component of day-to-day operations for regulated firms, but collecting, validating, standardizing, and integrating different types of data is a technologically challenging task. Many regulated financial companies rely on processes that simply collect these pieces of information and dump them into large drives. While these legacy software applications were among the best options commercially available a few years ago, key limitations have emerged that are causing many firms to look for other solutions.
Those solutions have proven functional in flagging and recording information required by applicable regulations. However, these software applications isolate different types of digital data – voice, text, and graphic data in its various forms – and store it separately. This archived data is often difficult to access and analyze after it is collected, and as a result created a huge load of data silos.
New communications channels emerging daily
People are constantly looking for better ways to connect with each other, and tech companies are innovating new ways to meet these needs every day. New communications technologies are allowing financial firms to connect both internally and with their clients in increasingly effective ways, which has improved quality of service. However, the new communications channels emerging every day are raising new challenges for regulatory compliance. Compliant communications monitoring systems must extend beyond phone and email systems to include social media platforms, teleconferencing software, and communications sent via instant messaging.
Modern financial institutions are responsive to their employee’s and clients’ needs. Traders are communicating using new smartphone apps and web platforms in order to improve customer experience. However, the increasing breadth and variety of data collected in the course of regular electronic communications surveillance is raising technical challenges for large financial firms. Compliance is becoming more difficult for firms as they embrace new electronic communications channels, and in today’s challenging regulatory environment this added complexity can have a real impact on a firm’s bottom line.
New eComms channels emerging daily
Increasing regulatory complexity affects e-communication
After the financial crisis of 2008, regulators passed a suite of new rules aimed at preventing fraud and other improper financial practices. These regulations cast a wide net, requiring financial services companies to collect and store countless pieces of customer and transaction-related data. However, the collection of such copious amounts of personal and financial data also raises increasingly significant privacy concerns.
Digital privacy is a growing policy initiative across the United States and Europe. The General Data Protection Regulation (GDPR), a major piece of EU legislation that came into effect in May 2018, requires regulated companies to protect the personal data they are required to collect. The Regulation’s extensive consent and privacy protection requirements are making it harder and harder for financial firms to manage electronic communications in an effective and compliant manner.
Financial services are growing increasingly digitized by the day. Trade-related and customer data collection policies initiated by regulators nearly a decade ago have proven effective in boosting transparency and fairness in financial markets. However, as financial firms manage a growing number of electronic communications in various forms, compliance officers are finding it more and more difficult to ensure that all regulated communications are monitored effectively. Further, even if all required electronic communications are captured and stored in compliance with applicable regulations, current software applications standard in the financial services industry make it difficult to connect related pieces of data.
Connecting and analyzing different types of electronic communications can provide the type of insight and analysis modern financial firms need to compete in today’s financial services markets. The regulatory and technological challenges facing today’s regulated financial services company demand innovative solutions.
This is where AI-based solutions will prevail.