In May 2021, compliance officers, RegTech vendors, and financial folks across Europe, Asia, and the USA gathered to debate the future of communications surveillance. For each group, a lot was at stake. Policies, processes, and tech all need to meet existing requirements – as well as consider future needs. The key to doing this was making the surveillance of individuals seamless, but without breaking any privacy laws.
Indeed, something very much easier said than done. It was apparent, communications surveillance was becoming increasingly challenging, and the attendees wanted ideas on how to optimize their ongoing efforts.
This article is Part A of a two-part series. Why? The discussions were so robust and so many ideas were shared, that I can’t possibly cover all the highlights in a single blog post. In this first part, I’ll zero in on the biggest challenges like integration and multi-channel surveillance. Next week, in Part B, we’ll highlight everything that’s different across financial firms from their definition of “real-time” to their success with artificial intelligence/machine learning, to who to monitor.
The Big Challenges
Let’s start here with the Big 3. One – personal devices and exploding eComms channels are today’s greatest challenge for surveillance. Two – everyone is in hot pursuit of efficiency and optimization. Three – as it turns out, surveillance integration of disparate third-party and in-house legacy solutions is not a one-and-done. Nor can it be done quickly: apparently, it’s evolved into a multi-year project that most firms are now adequately budgeted for.
WhatsApp users send 100 billion texts per day! WeChat is also on heavy rotation with 40 billion daily messages. Not to mention zoom and Team … that’s a lot of potential for nefarious activity where bad actors are now readily enabled to engage in fraudulent activity and transact illegal deals.
And brokers aren’t willing to give up their personal phones anytime soon. In fact, they’re deliberately using their own mobile phones to circumvent the rules for engaging clients. Arguably, brokers are often forced into the unenviable choice between engaging with a client on their channel of choice or not engaging with them at all. So, they use their personal phones and chat on various eComms apps.
This is where tech vendors come into play, for example, Symphony is attempting to sort out some of this multi-channel mess. How? They’re integrating WhatsApp and WeChat. This offers a tremendous step forward regarding compliance and helps meet consumers where they are – which requires communication with brokers on chat apps like these two popular choices.
Efficiency & Optimization
COVID essentially had everyone’s attention for the past year or so. There was no mental or employee bandwidth available to consider optimization efforts. Business continuity – at any cost – trumped any efforts to streamline operations and enhance performance. With the pandemic more-or-less approaching a manageable state (maybe?) given the tremendous efforts around vaccine development and deployment, compliance officers and IT professionals have had a bit of time to begin taking a fresh look at efforts to boost efficiency.
Collectively, their attention is now directed to metadata, specifically, finding ways to maximize how it’s used. Even incremental gains through the slight reduction of false positives offer financial firms, and their compliance officers, some of the time pressure and cost relief that is desperately needed today. Little tweaks, like adjustments to control parameters, surfaced as a common approach to optimization taken by many of the firms in attendance.
Machine learning (ML), although costly, is proving itself as a harbinger of efficiency. Its application is leading to expanded language coverage; in this way, bad actors who attempt to camouflage their wrongdoings are no longer able to hide behind the “switch-to-a-foreign-language-trick.” Another plus for ML is that it is handsomely keeping up with the proliferation of message and video chat channels. And its radically improved voice-to-text capabilities. In this way, the need to export e-Comms from one phonetic lexicon tool to another is quickly being eliminated which is making the detection of misconduct more efficient.
Bringing it all Together – Insights on Integration
For most of the firms in attendance (63%), integration is a work in progress; nobody was willing to declare victory – at least not yet. There was a lot of discussion around what to integrate and the budgets required to implement a solution that met both the contemporary need as well as began future-proofing existing e-Comms solutions for pending regulatory requirements. Only 54% felt that they had an adequate budget to keep up with the basic requirements; there’s no room for innovative solutions. Without increased funding, financial firms will be unable to expand existing systems by integrating tools that can augment workflows to reduce false positives. That also leaves the open question around building RegTech tools in-house or outsourcing them to the vendors who make the development of such tools their singular focus. This might be a good opportunity to evaluate your existing legacy solutions, some of them can be replaced with more advanced, ROI-positive ones…
In my second blog of our two-part series, I’m going to highlight how firms are approaching compliance around eComms in different ways. And how they’re getting different results depending on which approaches they’re taking. Experts voiced different opinions about who should be monitored and how those decisions will be subject to scrutiny in the context of privacy and employment laws. Be sure to watch out for the next blog where we tie all the findings together.