Co-author: Stacey English, Director of Regulatory Intelligence, Theta Lake
Regulatory fines already exceed $2.6bn
Fines from US regulators for unmonitored communications and recordkeeping failures now total more than $2.6bn, with no signs of slowing. In fact the regulatory net has been cast even wider to include not only banks, but also brokers, investment advisers and credit rating agencies. The list of regulators taking enforcement action is growing too.
Despite the severe financial, reputational and operational consequences that regulatory penalties bring, the financial services industry continues to be plagued by recordkeeping and supervision breaches.
Digital communications governance is a paramount concern for leaders
In the latest independently conducted research for Theta Lake, more than 600 senior IT and compliance leaders from financial services firms shared exclusive insights into the challenges they face. The findings of Theta Lake’s fifth Digital Communications Governance, Compliance and Security Report for 2023/24 reveal the compliance pain firms are dealing with as a result of their existing tools’ incompatibility with unified communications and collaboration (UCC). It puts a spotlight on the need for an urgent, updated approach to compliance and security.
In an era defined by rapid advancements in the usage of UCC tools, the importance of digital communications governance cannot be overstated. Indeed, Gartner’s newly coined market category, Digital Communications Governance (DCG), acknowledges the need for an updated approach to compliance and security for the UCC tools that make up the fabric of the workplace.
Unapproved and unmonitored communications are escalating – creating more risk
Of particular concern is the three quarters (74%) of respondents reporting that it is likely that their employees are using unmonitored communications channels, up from 66% in 2022.
Ensuring compatible UCC and DCG tools are combined for effective capture and recordkeeping will be central to addressing this worsening issue. That includes using new DCG tools for UCC that can integrate and fill gaps for existing archives without disruption, while ensuring staff have appropriate functionality to drive engagement in monitored UCC tools, rather than being driven to use unmonitored channels.
Regulatory expectations to monitor communications likely to intensify
The overwhelming view of 78% of financial institutions is that regulatory expectations to monitor communications will increase. That will require firms to focus on all aspects of recordkeeping as well as the measurable and provable effectiveness of detecting, responding to and remediating risks. The volume of communications data is now such that firms will need to use an AI-enabled solution, as lexicon and manual approaches are simply too slow and inaccurate for the level of surveillance and risk management now required.
Communications compliance is now a board-level topic
The response to the challenges is far-reaching with over three-quarters of firms (77%) now revisiting communications compliance, with a further 17% planning to. Given the shift to cloud UCC, the upswell in migration to cloud voice, the changing preferences by customers for multi-channel communications, and the continuing trends in the digital workplace, UCC itself is already a board-level topic. The multi-billion dollar fines and associated regulatory scrutiny mean it’s likely no surprise that for 40% of firms communications compliance has become a board-level matter too.
In line with industry peers, revisiting communications compliance should be a priority. The first step will be to solve for the capabilities around capture, recordkeeping and reconciliation. Only then can firms move their strategic review onto search and discovery, which will enable the ability to undertake proactive compliance and supervision.
The need for an updated approach to compliance
The results underscore the urgent need for modern compliance and security technology. Traditional approaches have inherent gaps and are not able to capture, retain, search, retrieve and supervise communications across all platforms leading to inefficiencies, ineffective compliance and the disabling of key features, which exacerbates the risk of unmonitored channels being used.
Modern solutions for digital communications governance provide a seamless approach to compliance enabling the full use of UCC tools together with increased ROI, levels of employee engagement and reduced risks. That risk includes a significant likelihood of enforcement action and fines if firms do not heed the lessons from the latest U.S. fines. Regulatory patience has run out and firms are strongly recommended to join those that are revisiting their approach to communications compliance.
How Theta Lake can help and ways to learn more
Theta Lake empowers organizations to safely, compliantly, and cost-effectively expand their use of unified communication platforms by enabling capture, compliant archives, and acting as an archive connector for existing archives of record across video, voice, and chat collaboration systems.
- The full Digital Communications Governance, Compliance and Security Report 2023/24 can be downloaded here
- Learn more about how Theta Lake for RingCentral can help your compliances needs
Originally published Nov 29, 2023, updated Dec 22, 2023
