Financial Firms – 5 Big Signs You Need To Rethink How You’re Supervising Your Communications (And Why)
25th October 2023 by Samuel Rossiter
To meet regulatory requirements, Asset Managers MUST monitor all electronic communications used to conduct business for regulated activity, to manage risk and ensure effective oversight.
But with the rise of hybrid and remote working across the financial industry, the process of communications supervision can be very complex. Nowadays, we use so many digital communications channels at work such as Outlook, Teams, Bloomberg Chat, WhatsApp, and more.
For Asset Managers and other financial firms, monitoring these channels on an ongoing basis with limited resources and manual processes is a mammoth task. Suppose your firm uses several communication channels, with dozens, hundreds or even thousands of employees or offices to monitor. In that case, you can see how it becomes impossible to rely on a small compliance team to supervise communications at scale, manually and with no help from technology or outsourced services.
With an endless sea of communications data to monitor, turning to regulatory technology and automation is the key to thoroughly, efficiently and cost-effectively supervising communications at scale. Does your firm want to establish an industry-leading reputation for good conduct and risk management? This is the place to start.
So, what are the signs that you need to rethink your current communications supervision process and invest in that regulatory technology? Is your process inefficient, heavily reliant on compliance manpower, and provides only a light-touch approach to risk management?
Here are five big signs to look out for:
- You’re Doing Nothing
- Data Access Issues – Searching Through Disjointed Systems
- Little Oversight – Random Sampling
- Invasive Searches – Not Complying With Data Protection Laws
- Manual Processes – Creating Reports Manually For Stakeholders Or The Regulator
1. You’re Doing Nothing
Method: You do nothing to supervise your communications and hope that the regulator doesn’t notice that you aren’t complying with their communication monitoring requirements.
Cons of this method: Operating a non-compliant business with high potential that the regulator will find out and fine or sanction your firm, with a big hit to reputation in the industry.
How does Regulatory Technology help? Even with limited resources and a small compliance team, RegTech can provide everything your firm needs to supervise electronic communications at scale on one unified platform, with all investigation and reporting tools included.
2. Data Access Issues – Searching Through Disjointed Communication Systems
Method: It’s likely your firm uses several communication channels to conduct business such as Outlook, Teams, ICE, Bloomberg Chat or WhatsApp. Many compliance teams still login and search through these systems for high-risk activity one by one to supervise communications. All activity found across these disjointed systems must then be standardised by your team for review.
Cons of this method: Time wasted logging in and out of systems regularly, getting permissions and login details to new systems, and getting verification codes for systems because of forgotten passwords. Hours spent bringing different sets of data into one system to manually search through and determine whether further investigation is needed.
How does Regulatory Technology help? RegTech can ingest all electronic communication channels through open API to be accessed in one unified monitoring system, with only one login needed. All investigation workflows and tools are included in-platform, so your team don’t have to waste time managing disparate data sets as all monitoring work is conducted in one place.
- Learn more about our communications monitoring platform.
- Download a free sample communications supervision policy for your financial firm, on us.
- Read more about the communication monitoring requirements from the FCA, ESMA, SEC and FINRA.
- Get in touch if you need help meeting communication monitoring requirements and managing the risk across your communications effectively!
3. Little Oversight – Random Sampling
Method: With limited resources and manpower, it’s impossible to search through all communications data for high-risk activity and review all of the results that come up. So many compliance teams turn to random sampling to help manage the process, using KPIs such as searching through 500 emails / 500 Teams messages every month.
Cons of this method: Using this method might monitor 5% of all communications, bringing a very light-touch approach to risk management with high-risk activity likely to go unmonitored. Not a thorough way of managing the risk or conduct within your communications at all.
How does Regulatory Technology help? Manually searching for high-risk activity is typically the most time-consuming part of the supervision process for compliance teams. RegTech can automate this process – automatically scanning all electronic communications for lexicons and search terms outlined by your supervision policy. Then, presenting each result in a concise ‘to do’ list for your team to review, with high-risk activity prioritised.
RegTech converts hours of supervision work into seconds, and ensures that all communications are thoroughly monitored to help your firm establish an industry-leading reputation for risk management.
4. Invasive Searches – Not Complying With Data Protection Laws
Method: Searching through communications using terms and lexicons can bring up lots of sensitive information not relevant to the high-risk activity you’re trying to find. Your compliance team will review results that include names, contact details and other sensitive information that does not protect the privacy of the individuals concerned.
Cons of this method: Searches are invasive and bring up sensitive information that does not protect the privacy of individuals. GDPR and data protection laws are not complied with.
How does Regulatory Technology help? RegTech can retract the names, contact details and sensitive information contained within communications data during initial searches for high-risk activity. Your team can then choose to unveil this sensitive information only when this is needed during later stages of investigation. This allows communications supervision to be conducted while still maintaining the privacy of your employees and abiding by data protection and GDPR laws.
5. Manual Processes – Creating Reports Manually For Stakeholders Or Regulators
Method: Your compliance team will have to create reports on a consistent basis (monthly, quarterly, etc.) to evidence their investigate work to key stakeholders, or your regulator. Hours will be spent collating all activity – evidencing searches and investigations across disjointed systems conducted by different team members at different times.
Cons of this method: Hours wasted creating reports manually to evidence disjointed investigative work on a consistent basis (monthly, quarterly, etc.).
How does Regulatory Technology help? RegTech can provide automatic reporting that evidences all work completed on one monitoring platform, which the system produces regularly when set up (monthly or quarterly, etc.). A few clicks on the system can set up automatic reporting in contrast to hours spent every month manually creating reports.
Does your current communications supervision process look like this? Full of inefficient processes with only a light-touch approach to risk management to show for it?
You might want to consider investing in RegTech to enable a much more efficient, thorough and streamlined supervision process for your compliance team. We provide a holistic communications monitoring solution that helps compliance teams excel in their monitoring work – providing everything needed for the monitoring process in a single, unified platform.