By David Clee, CEO and Co-Founder, MirrorWeb
The impact of the coronavirus pandemic is almost unimageable in terms of lives affected, with over two million people having contracted the disease and hundreds of thousands of families across the world now grieving.
And as well as the human health impact, many banks and other financial institutions are of course trying to work out what the longer term economic effects of the pandemic will be – not least as the hit to global GDP now dwarfs that of not only the 2008 financial crisis but also the Great Depression.
It is not unreasonable to ask, therefore, what might the post-pandemic global financial architecture look like? And moreover, how might post-pandemic financial regulation evolve?
But what struck me from a few recent conversations with regulated firms in banking and financial services, was that many were not aware of the scope of the existing regulation. Indeed, the FCA even made a statement when the pandemic kicked into gear reminding regulated firms that they are still bound by compliance obligations and that they are expected to have measures and processes in place to ensure they continue to fulfil these obligations.
And if there’s one area of existing regulation in particular that many firms don’t seem to know about, it’s often the obligations regarding their own websites – something that becomes even more important during the pandemic, when customers and clients are turning to online sources of information first and foremost.
Hence it seems an appropriate time to look at the risk associated with the online channels of regulated firms, as well as what firms can do to minimise it.
The world goes online
The growth of online banking and other financial services of course poses somewhat of a Catch-22 for regulated firms. If they develop an online profile, then they have to make sure they are just as diligent in ensuring compliance as they would be with other promotional materials. However, if they don’t have an online profile, then they might not be reaching existing and prospective customers and clients.
Hence some regulated firms decide to minimise their online profile and have very limited websites. But not withstanding whether this makes sense in terms of marketing and customer relations, even a very limited online profile might still be falling foul of existing regulations.
This is because traditionally, many regulated firms have been unable to say with certainty exactly what has been posted on their websites.
That might sound counter-intuitive, but just think of the number of times websites (and microsites) of regulated firms are updated to promote new products or services. Can firms always be sure, for example, that the fees or interest rates for various products or services were definitely what they were supposed to be?
So what can firms do to keep track of any potential regulatory breaches on their websites and online channels?
The solution is to have the ability to archive your entire online presence, and in so doing be able to know with greater certainty what has been said online, when and by whom – something especially important when seeking to rebut incorrect accusations of regulatory breaches.
For example, a customer might claim that they were miss-sold a financial services product, and allege that they were given incorrect information via a firm’s website. In such circumstances, having the tools to be able to quickly find whether the allegation ever appeared online becomes vital.
The tools to use
The good news is that there now exists a rich ecosystem of regulatory technology companies – “RegTechs” – which specialise in creating the software to ensure regulated firms remain compliant.
Indeed, many of today’s RegTechs were started specifically to help more established regulated firms, many of whom might not have traditionally invested as heavily in their online and social media footprints compared to some of the newer challenger FS firms.
Indeed my company, MirrorWeb, has worked with a host of established firms. In the US we have recently listed in the FINRA Compliance Vendor Directory, and in the UK and Europe we have for some time been working with the likes of Liontrust Asset Management, Tesco Bank and Zurich Insurance.
At the heart of this work is providing regulated firms with a platform on which to archive activity which takes place on their company websites.
And lest anyone be in any doubt as to the importance of this, it is this type of capability which enables such firms to comply with important regulatory requirements set forth by the FCA, SEC and FINRA.
Ultimately, this of course also empowers regulated firms – via retrievable records – to evidence fair treatment of customers.
As I touched upon earlier, post-coronavirus we’re sure to see regulatory changes, and in a world that’s been forced into becoming more digital it’s likely that the scrutiny of websites and online communications will become more focused.
Indeed, historically, regulations have tended to be tightened following any crisis. So the need to be vigilant when it comes to compliance looks set to remain.
However, regardless of how regulation might change, I would certainly advise regulated firms not to fear having an online presence.
For if there’s one thing that the coronavirus pandemic has taught us, it is surely the importance of being able to stay connected – especially with customers and clients, and especially when we can’t meet face to face.
The crucial thing, I would argue, is making sure you can always evidence what you said, so that you can have the confidence you’re not going to fall foul of regulatory standards now or in the future.