Extracting business value from regulatory compliance; the importance of effective information management

Andrew Fawcett, product manager at TeleWare 

The financial services sector is having a tough 2018. MiFID II came into force on 3rd January and the sector is gearing up for the impact of the General Data Protection Regulation (GDPR) on 25th May. Both regulations have a direct impact on how firms need to manage information relating to personal interactions and communications.

Since the introduction of MiFID II, communication surveillance requirements have increased massively. Firms trading with or within the EU are required to timestamp, report and store all communications relating to trading transactions for at least five years.

MiFID II stipulates that firms must take reasonable steps to record, store and make available as required all ‘relevant communications’. These include all internal and external telephone conversations including conference calls, SMS and Instant Messages and video calls across both fixed and mobile lines. Monitoring, recording and storage of employee communications now provides risk mitigation and evidence needed for compliance purposes. And,as well as safeguarding the client, also protects businesses and their employees in the event of any regulatory investigation.

GDPR, on the other hand, in some ways contradicts MiFID II by putting power in the individual’s hands over what firms are allowed to do with their data. It supports an individual’s right to privacy and stipulates that consent for the storage of personal data must be freely given, specific, informed and unambiguous. Personal data should only be kept for as long as necessary. And only recordings specific to a transaction. This may prove problematic for firms needing to comply with MiFID II.

Importance of effective information management

At the heart of both MiFID II and GDPR compliance is the importance of effective – and appropriate – information management. Whilst mitigating operational risks in relation to information misuse and misplacement in the workplace.

A recent survey, conducted by 3Gem on behalf of TeleWare in April 2018, of 2,000 UK employees revealed mass frustration with regards to information overload leading to misplacement of information in the workplace. Over a third (36%) of employees admitted they have wasted a lot of the working day attempting to resolve an issue when they have forgotten valuable information. A similar number (34%) explained that forgetting information has led them to deal ineffectively with customers, suppliers or clients. Whilst around a quarter have missed important deadlines (26%) or let their colleagues down (25%) due to not having the necessary information front of mind.

Based on this, unsurprisingly all employees agreed that there are business benefits to be had if employees could record and recall information more effectively. It is therefore important for business to look to technology to address the dual challenges of compliance and effective information management.

Alarmingly, the same survey revealed that 40% of employees in financial services firms do not have such a process in place to capture, record and consequently retrieve information relating to business communications. Leaving them open to regulatory penalties but also missing out on significant business benefits. Employees agreed that if they could record and recall information more effectively, then they could enjoy: improved customer experience, better customer service, improved employee productivity and increased collaboration across the business.

Extracting business value from contradictory regulation 

Cloud technology is virtually ubiquitous in financial services and offers the flexibility that firms need to comply with regulatory requirements. Cloud-based solutions exist for communications recording, with recent advancements allowing employees to opt in and out of recording, ad-hoc, in line with policy. App-based recording solutions can separate out business and personal calls by providing a dedicated recorded number for business calls. Thereby considering the need for private as well as business use-cases, satisfying both MiFID II and GDPR.

 Through having to comply with increasing regulation, financial services firms have had to innovatively adopt new technology. Ironically, whilst slower to adopt cloud and mobile technologies than other industries, finance firms have advanced significantly in other areas such as data analytics, robotic process automation and visualisation. As a result, businesses are reaping additional business value off the back of this, including greater agility and flexibility, reduced capital expenditure and overall cost effectiveness.

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