Understanding Compliance in the Clubhouse Era

By John Holland, SVP of EMEA and APAC Sales

The ways that people work and interact online is changing. It is no longer clear what differentiates a professional platform from a personal one, creating a blurred line for how people communicate and how companies mitigate risk.

We have seen this complexity with collaboration platforms like Zoom and Teams. In the absence of physical offices over the past 18 months and more, these tools have made it possible for a remote workforce to continue to serve clients and be productive while working from home. These same tools have also been used widely to keep in touch with family and friends.

This blurred line has been exacerbated by the way that social media platforms have evolved. Take LinkedIn, for example, which is used by companies and individuals to build and manage their own reputations. With its shift to a rolling news feed, encouraging people to like, comment and post in their own name, it is now much more than a simple networking tool and location for your resume.

Risk management in a Clubhouse generation 

This topic is a particular concern for the financial services industry which needs to have stringent regulatory requirements dictating what their employees can and cannot discuss, whether it be on messaging apps, collaboration platforms, social media or online forums. In cases where employees have broken these rules, businesses have faced punishments and fines, and employees have been fired.

The simple fact is that companies need to be able to monitor these channels, flagging any risky behaviour. The difficulty facing the heavily regulated industry now is the speed at which new communications channels are evolving.

Changing trends have seen people drawn to innovative apps like Clubhouse whose audio-only model offers a new and exciting experience. Clubhouse was successful at being a platform for a wide array of personal interests and hobbies, but it is particularly well known for attracting high calibre business leaders such as Elon Musk shortly after it launched.

Despite the clear popularity, Clubhouse and other audio-only platforms pose a substantial risk for financial services companies as the audio structure makes it difficult to know if employees are having conversations on the platform that must be monitored for compliance reasons. Audio cannot be tracked like typed-in keywords can be, so the ease at which you can join a discussion on your phone from the comfort of your own home and make a seemingly innocent comment in a chatroom to huge audiences is an issue for companies.

This raises important questions: what makes a personal channel different from a professional one? And what should companies do to ensure they remain compliant?

Companies are playing catch up

Another example of the blurred line between professional and personal that poses a risk to financial services is GameStop. This episode played out on Reddit which is traditionally a forum for personal use but it became the epicentre of a movement that led to the inflation of GameStop’s stock price and companies were caught out in what felt like the blink of an eye.

Online content in forums such as Reddit can influence and inform investment decisions, and this needs to be taken very seriously. Wealth management firms therefore need to make sure that their employees are not on these platforms sharing sensitive information and to understand whether employees use these channels for research purposes.

Businesses are just now waking up to this threat and they are making progress in some areas. Even so, a survey earlier this year revealed that of the 83% of firms that allow conferencing tools, only 22% have established retention and oversight programs for the resulting communications content. There is clearly still some way to go.

But the real challenge is that the ways in which people communicate is continuously and rapidly evolving. As GameStop brought to light, businesses will encounter significant risk if they do not have compliance solutions in place. And as we have seen by the sheer speed at which audio-first social media platforms like Clubhouse become popular, people’s habits are changing faster than compliance can keep up. With the amount of voice data so vast and growing exponentially, a financial services business should be asking itself how it can manage that risk.

The world of communications is changing

To stay ahead of the curve, companies should be investing in next-generation, scalable compliance technology that enables them to react in an agile and rapid manner to new communications methods. And to accompany the technology, they should have clear, firm-wide policies that explicitly address what is expected of employees. This is critical because the line between personal and professional use is surely going to become even more blurred over time as people’s digital footprint gets ever broader.

No team of humans can possibly keep up with monitoring all the keyword, audio and video data being generated every day now and into the future. But with the right investment, training and mindset, companies can set themselves up in the best possible way to mitigate against the risks of today and be prepared for what comes tomorrow.