XLoD Global – London 2024: Key Insights and Takeaways from Smarsh
The Smarsh team was excited to serve as a Lead Sponsor at the 2024 XLoD Global in London. Surveillance leaders from the world's largest financial institutions gathered to discuss non-financial misconduct, regulatory compliance trends and emerging issues.
Below, Smarsh subject matter experts share their insights on critical themes addressed during the conference, including the challenges posed by data, the expanding use cases beyond financial conduct, and the implementation of advanced AI-powered technologies to enhance the future of communications supervision and surveillance.
Why it matters
Our team heard firsthand from several thought leaders and regulators about the trends and challenges shaping the future of unified communications compliance. As firms strategize for the future, their adherence to ever-changing regulatory requirements is critical to sustainable and uninterrupted success.
Mitigating non-financial misconduct
In recent years, alerting within surveillance solutions has primarily focused on identifying business-critical risks, such as market conduct, complaints, and changes in venue using unrecorded channels. However, the Financial Conduct Authority (FCA) has emphasized the need for financial institutions to address non-financial misconduct as well. A recent example is when the FCA banned a non-financial, senior manager for failing to inform them about a conviction and custodial sentencing while deliberately misleading them during phone conversations.
Smarsh offers solutions to help organizations detect these risks through its Scenario Catalog. The catalog includes scenarios like sexual harassment, rumor, and secrecy designed to identify risky behaviors linked to non-financial misconduct — which may be an indicator of a cultural challenge within the organization — posed as a risk by the recent FCA report Culture and Non-financial Misconduct Survey. Using machine learning models, the Scenario Catalog has enabled some of the world’s largest financial institutions to manage risks proactively before they escalate into significant issues.
Understanding data completeness
Several financial institutions present at the conference expressed concerns about data completeness, such as ensuring that all trading venues are being captured. But what exactly is data completeness? It refers to the extent to which a data set includes all necessary elements and observations for a specific purpose or analysis. Ensuring data completeness enhances data integrity, prevents gaps in understanding, and supports more informed decision-making. With the rise of AI-powered tools, data completeness is increasingly essential, allowing these technologies to reach their full potential. In the context of a surveillance risk assessment, data completeness is necessary to ensure that all communication channels are monitored, and that all data is present to guarantee accuracy. The Smarsh platform is designed as a regulatory system of record with advanced reconciliation to ensure end-to-end data completeness.
Examining voice transcription quality
Many financial institutions have observed significant increases in the voice transcription quality in communications surveillance. Firms are stating that the quality of voice transcription is solved, and they can expand capabilities beyond traditional use cases to non-financial misconduct per the FCA’s recommendations. If this is true, and voice transcription is solved, what’s next? Several banks mentioned that sentiment analysis through voice conversations will help uncover additional employee behaviors, like the level of stress and how they are communicating with customers. This may seem like a “nice-to-have” to some, but for most with concerns that they will create lots of false positives, this will be crucial for taking voice detection beyond risk alerting.
Implementing LLMs into surveillance frameworks
During the roundtable discussion on "Harnessing AI and Cutting-edge Technology for Enhanced Risk Detection," it became evident that some financial institutions are starting to adopt advanced AI technologies, such as early-stage large language models (LLMs), to help resolve alerts within their surveillance frameworks automatically. This approach helps reduce the burden of mundane and repetitive tasks.
There has been considerable debate regarding whether organizations should allow generative AI technology to take on this function, especially from regulators' perspective. Additionally, there is a general misunderstanding about the difference between an agent and a copilot. Both are generative AI-powered tools that serve different purposes. The critical distinction is that a copilot acts as a supportive assistant, enhancing the user's decision-making and efficiency without taking control. In contrast, an agent can take on delegated tasks and make decisions that align with the user's objectives.
Numerous communications compliance vendors claim they are working to develop these capabilities. In this context, Smarsh has continued to enhance its already impressive Intelligent Agent — a generative AI-powered product that emulates the functions of a Level 1 surveillance analyst, that will be released in 2025. The advancements in AI technology, exemplified by tools like the Smarsh Intelligent Agent, are poised to redefine the efficiency of risk detection in financial institutions, ultimately leading to safer and more streamlined operations, as well as provide the ability to widen the scope of surveillance without the burden of a significant increase in alerts.
Empowering communications oversight for the future
The 2024 XLoD Global highlighted the urgent need for advanced strategies to combat non-financial misconduct in the financial sector. As institutions increasingly adopt AI-driven solutions, they can enhance compliance and risk detection. Understanding the distinct roles of different AI tools while navigating regulatory challenges is essential. Financial institutions can effectively mitigate risks and pave the way for a safer, more efficient future in communications supervision and surveillance by focusing on data completeness, expanding voice transcription quality, and fostering a strong compliance culture.
Learn why Enterprise Conduct is the best choice for your communications supervision and surveillance needs. Benefit from a future-proofed solution and the stability and support of an organization with your best interests in mind, ensuring your company's readiness for the evolving data landscape. Don't compromise or settle for less — choose Smarsh as your long-term compliance partner.
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Scalable for organizations of all sizes, the Smarsh platform provides customers with compliance built on confidence. It enables them to strategically future-proof as new communication channels are adopted, and to realize more insight and value from the data in their archive. Customers strengthen their compliance and e-discovery initiatives and benefit from the productive use of email, social media, mobile/text messaging, instant messaging and collaboration, web, and voice channels.
Smarsh serves a global client base that spans the top banks in North America and Europe, along with leading brokerage firms, insurers, and registered investment advisors. Smarsh also enables state and local government agencies to meet their public records and e-discovery requirements. For more information, visit www.smarsh.com.
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- XLoD Global – London 2024: Key Insights and Takeaways from Smarsh - November 22, 2024
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