Brad Levy is chief executive of Symphony, a financial markets infrastructure and technology platform
The latest regulatory crackdown on unauthorised WhatsApps provides a timely reminder that this is not an issue which will simply drift away without action.
Since late 2021, $2.5bn of fines have been issued to large banks, predominantly in the United States, alongside executive pay cuts and staff dismissals – all due to avoidable compliance failures around communication.
The fines have forced the industry to consider how effectively it has adapted to changes in the world of work in recent years. Client meetings are no longer only held in person, and conversations between business professionals, including traders, take place on messaging platforms more frequently than in an office setting.
In this hybrid and distributed working world, it’s essential that financial institutions recognise that convenience and compliance are not mutually exclusive, and empower their staff to communicate on the platforms which are convenient for them — and their customers — without breaching regulations.
Protecting both sides
Looking beyond the latest fines issued by the Securities and Exchange Commission, compliance is no longer regarded as a back-office and legal issue. Regulation is a pivotal safeguard against potential financial breaches and disasters. The aftermath of the 2008 financial crisis was a stark reminder of the far-reaching impacts of irresponsible financial activities. Today, regulators require the ability to easily review communications within institutions, ensuring transparency and accountability.
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It is an area which requires adequate investment and monitoring systems to enable professionals to navigate client relationships and remain agile in their operations, all without adding unnecessary friction.
However, the challenge lies in ensuring that finance professionals have access to tools which provide the instant communication needed to do their job effectively in a way that does not risk penalties from regulators and satisfies customer demand.
What can UK banks learn?
Increased regulatory scrutiny is not limited to banks in the US. UK firms are bracing themselves for increased probes as regulatory bodies pay closer attention to enforcing the rules. They not only face the threat of reputational damage if the matter is not addressed, but also the challenge of navigating reduced investor confidence.
For the UK to retain its position as global financial hub, it is vital that institutions adopt a forward-looking, preventative approach to regulatory challenges. This will serve not only to eliminate any doubt around regulatory compliance, but will also reinforce the UK financial sector’s international standing, offering a blueprint to be replicated across financial districts in Europe and globally.
A proactive approach requires close collaboration between financial institutions, regulators and technology providers to work together to establish what effective compliance looks like.
Integrating compliance with technology offers a safe path forward. In a fast-paced, client-focused world, speed and ease are often prioritised by finance professionals — and there is no reason for this to compromise compliance.
READ Morgan Stanley hit with £5m penalty over traders’ WhatsApp use
Finance professionals recognise how technology can facilitate a safe operating environment while liberating staff and clients to have free, regulatory-compliant communication via their preferred channels.
Integrating tech platforms which ensure off-channel communication is recorded and archived injects transparency into communication processes, helping firms to efficiently monitor, report and respond to any compliance-related disclosures. Technology and trusted processes are the solution to these challenges.
