Six Ways Global Financial Firms Are Adapting Compliance Strategies for Virtual Workforces

January 14, 2021by Eric Young

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Challenges of remote work in financial services

We’ve all gotten used to minor disruptions that come along with working from home. But unlike a dog barking in the background of an online meeting or a weak internet connection, the trials of remote work are more complicated for the financial services sector. The regulatory environment means firms are on the hook to ensure continued message capture, supervision and surveillance for compliance — an already challenging endeavor.

Financial services companies are required to maintain electronic communications compliance of front-office teams, whether they’re in the office or working from remote locations. Market abuse, such as insider trading, manipulation or misuse, or disclosure of material non-public information (MNPI), is much riskier when work is conducted outside the highly regimented office setting.

Banks and other organizations face huge fines for not meeting compliance requirements, which is hard enough under normal business circumstances. For example, banks paid out $375 billion in conduct fines over a five-year period ending 2017, according to a report from FMSB.

Bringing the same level of employee monitoring into the home poses many struggles, from ensuring networks are safe to handling sensitive information. Workers at home may have to safeguard information from others in the home and report they are working in an isolated room.

Regulatory forces are also taking action to ensure companies are in compliance with workforce surveillance during COVID-19. The Financial Conduct Authority, the U.K.’s financial regulatory body, issued a warning to banks that companies need to maintain the same standard of surveillance for staff working remotely as they would if they were in the office. Any lapses in surveillance standards during the early days of the pandemic and work-from-home scenarios should be in the past, according to FCA Director of Market Oversight Julia Hoggart, who spoke at the City Financial Global event in October.

Working from home is likely to continue into the foreseeable future. A survey of executives and office workers from PwC revealed 83% of office workers want to work from home at least once a week, while more than half of employers (55%) expect most of their workers will do so beyond the pandemic. This approach to working from home underscores that banks and other organizations will need strategies for how they handle compliance for the long haul.

Tips for risk mitigation and regulatory compliance in the future

While adapting to a highly regulated, dispersed work environment poses challenges for financial services companies, there are ways to successfully conduct risk mitigation and supervision remotely. Most companies already have some established risk management methods for employees working in another location, such as corporate VPNs to provide secure networks. But the rigors of the financial regulatory environment require much more.

Over the coming weeks, I’ll explore several areas where financial organizations should prioritize their efforts, including:

Enabling a work-from-anywhere workforce
To meet compliance and e-discovery requirements, many organizations are stepping up their capture and monitoring capabilities, with the trade surveillance technology market soaring. While companies have taken their own approaches, such as recording video meetings and calls, the urgency to capture, archive and understand communications remains. Automation and natural language processing models have played a bigger role for banks in the global pandemic to ensure their employees are meeting the highest standards of conduct, with AI monitoring millions of daily messages. E-discovery, supervision and surveillance professionals partnered with Smarsh can capture and archive data from any communications channel and understand the context of human communications as your team collaborates.

Futureproofing as data collection expands
One clear lesson from 2020 and the changing workplace is that financial organizations must plan for resilience and efficiency. To achieve this, companies will need to invest in agile, flexible and cloud-native archiving solutions rather than calcified hardware systems.

Protecting a company’s customers, employees and reputation
It’s imperative that organizations start leveraging their data as an asset and not merely as something perfunctory to collect. Within the deluge of data, companies can proactively find both risks and opportunities. They can use data to safeguard the wellbeing of their customers and employees, prevent costly fines, and protect the company’s reputation.

Ensuring data privacy
As more and more data is collected, companies must find innovative ways to discern between work-related and personal communications. For instance, it’s not unlikely that employees could share sensitive, personal information while on a monitored device or channel. Employees should have the peace of mind to know that only work-related communications will be captured, archived and analyzed.

Training staff
Employees may also see an increase in training to ensure they are following regulations at home. Compliance processes for phone calls, printing and handling information have all changed in the home environment. This may require companies to regularly update employees with new and existing policies, as well as personal training. Training is also an area where companies can mitigate a culture risk from shifting to an entirely remote workforce. Loss of person-to-person contact can be a huge upset for employees, but training and use of online communication systems, where electronic communications monitoring can take place, helps employees stay connected and companies safeguarded.

Improving alert capabilities
The same alerts available in the office environment can be implemented across a remote workforce, though market volatility throughout the pandemic has made it more challenging. In the early days of the pandemic, a surge of alerts meant many were unable to keep up with the influx and meet regulations. In the months since, companies have recalibrated alerts and even used AI to clear a backlog of communications. The need to continue monitoring trades, orders and other communications quickly and accurately remains the same, but the complexities of the COVID-19 pandemic means companies need to adjust how they leverage alerts to identify potentially fraudulent activity.

Getting more from compliance technology

In order to succeed in the new norm and move beyond the status quo, companies will have to leverage a Communications Intelligence solution that will help organizations remember, understand and act on all of their human communications data.

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Eric Young
Smarsh Blog

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