Can Finservs Have Compliant Omnichannel Communication in 2023?

In today’s digital age, communication channels are rapidly proliferating. From email and instant messaging to social media and video conferencing, people have a plethora of options to choose from when communicating with each other. This trend has significant implications for regulated financial institutions, which are tasked with monitoring their employees’ conversations with customers to ensure compliance with various regulations. However, keeping abreast of all these conversations can be a daunting task, as regulators struggle to keep up with the constant influx of new communication channels.

A Petabyte Problem Across Endless Channels

One of the main challenges that regulated financial institutions face is the sheer volume of data that needs to be analyzed. According to a survey by Accenture, financial services firms are generating an average of 2.5 petabytes of data each day, much of which is generated by customer interactions. This data comes from a variety of sources, including emails, phone calls, chat transcripts, and social media posts. Analyzing this data in real-time is crucial for detecting and preventing compliance violations, but it requires significant resources and expertise.

Another challenge for regulated financial institutions is the fragmentation of communication channels. In the past, most customer interactions were conducted through a limited number of channels, such as phone and email. However, the proliferation of social media and messaging apps has led to a fragmented landscape, with customers using a variety of channels to communicate with financial institutions. This fragmentation makes it difficult for firms to keep track of all the conversations that are taking place, as they must monitor multiple channels simultaneously.

Regulators Demand Oversight

Regulators are also struggling to keep up with the proliferation of communication channels. In the United States, for example, the Financial Industry Regulatory Authority (FINRA) has issued guidelines for monitoring social media activity, but these guidelines do not cover all of the platforms that customers and employees may be using. Similarly, the European Securities and Markets Authority (ESMA) has issued guidelines for monitoring electronic communications, but these guidelines do not cover all of the communication channels that may be used.

Despite these challenges, regulated financial institutions are under increasing pressure to monitor all customer interactions. This is due to a number of factors, including a growing regulatory environment, increased scrutiny from investors and customers, and the potential for reputational damage in the event of a compliance violation. As a result, many firms are investing in new technologies to help them monitor and analyze customer conversations across a variety of channels.

Will New Technologies Solve This Challenge?

One such technology is natural language processing (NLP), which uses machine learning algorithms to analyze text-based data, such as emails, chat transcripts, and social media posts. NLP can help firms identify compliance violations, such as insider trading and market manipulation, by analyzing the sentiment and context of customer conversations. Similarly, speech analytics can be used to analyze phone calls and identify compliance violations based on keywords and phrases.

Another technology that is gaining traction is robotic process automation (RPA), which automates repetitive tasks such as data entry and analysis. RPA can be used to monitor customer conversations in real-time, flagging potential compliance violations for human review. This can help firms reduce the workload on compliance teams while improving the accuracy and efficiency of their monitoring efforts.

Keeping In Touch, Compliantly

Despite the challenges posed by the proliferation of communication channels, regulated financial institutions must continue to adapt and evolve their monitoring strategies to keep pace with changing customer behavior. By investing in new technologies and partnering with third-party vendors, firms can ensure that they are monitoring all customer interactions in a timely and efficient manner.

In conclusion, the proliferation of communication channels is a double-edged sword for regulated financial institutions. While it provides customers with greater flexibility and convenience in how they interact with financial institutions, it also presents significant challenges for monitoring and analyzing those interactions. As regulators struggle to keep up with the constant influx of new channels, so do compliance and risk managers who are responsible for the operational standards.