AI North America Regtech Thought Leadership

Symphony: Empowering Finance Through Technology – A Compliance Imperative

Encrypted messaging services are a double-edged blade. On the one hand, they’re great for consumers to feel like their messages are safe, but for businesses, it is a different story. With communications regulations extending to messaging services, firms are now turning to technology to ensure they remain compliant.

One technology that could massively impact the sector is artificial intelligence (AI) according to Ben Chrnelich, president and CFO, Symphony, the regtech. Diving into the reputational challenges facing firms, how tech can help with compliance issues, and how regulation can be improved, Chrelich says:

Empowering finance through technology: a compliance imperative
Ben Chrnelich, president and CFO, Symphony
Ben Chrnelich, president and CFO, Symphony

The financial sector is currently in the midst of a significant regulatory shakeup. Since late 2021, $2.5billion in fines have been issued to financial services firms, predominantly in the US. Not to mention executive pay deductions and staff dismissals. All have been the result of compliance failures in business communications. This raises questions about reputational damage and how communications technology can be deployed in a compliant and user-friendly manner.

The requirement for firms to ensure their employees’ communication meets record-keeping requirements now extends beyond in-person meetings, emails and telephone calls. In the rapidly evolving communications landscape, these fines have demonstrated the need for financial professionals to meet their clients where they are – more often than not, on video – in a way that meets regulatory standards.

Beyond the fines, the relatively new trend of senior leaders being dismissed or having their compensation impacted highlights the urgent need for firms to resolve this issue. Especially seeing as many will have invariably been unintended breaches.

Banks aren’t the only ones facing this challenge. The widening regulatory net cast by the SEC and CFTC now encompasses broader areas within financial services. It now covers asset managers and potentially insurers too. This expanding scrutiny emphasises that the time for firms to take proactive measures is now. Consequently, we’re already witnessing this shift beyond core banking institutions.

Protecting reputations

The use of unauthorised platforms like WhatsApp for sensitive financial communications extends far beyond financial penalties. Also, it casts a shadow over investor confidence and jeopardises these institutions’ capacity to operate as global financial hubs.

As the US takes a stringent stance on compliance issues, financial firms in other parts of the world are bracing themselves for increased regulatory scrutiny.

Neglecting this approach risks not only reputational damage but, more significantly, a detrimental impact on investor confidence that could divert business elsewhere. For firms outside of the core banking institutions, non-compliant messaging fines have a much larger impact.

Unlocking the technology solution

In the face of these challenges, technology emerges as a powerful solution. Financial institutions are increasingly turning to AI-powered tools to monitor employee compliance with regulations. These tools not only serve as a shield against unauthorised messaging but also provide employees with a means to protect themselves from the potential fallout of non-adherence, which could include job loss, compensation reductions, or damage to personal reputation.

Firms are increasingly offering a range of tech solutions to employees, ensuring that their communication remains compliant across various channels, from text chats to audio and video. This technology offers a win-win solution, enabling staff to communicate effectively and efficiently. They can continue with ‘business as usual’ while upholding regulatory standards. A key component to the success of this tech is data security; as more sensitive data is moved, maintaining that high confidentiality is of utmost importance.

Enhancing regulation

Recent fines in the United States underscore the fact that compliance is no longer a legal or back-office issue. Protection against information breaches and disasters is mission-critical for financial services firms, and while technology is key to the solution, we must turn to regulation to provide a clear path forward so that, as the communications landscape develops, so too does the technology and regulation that follows.

As regulators tighten their grip across the Atlantic, UK and European firms have a unique opportunity to strengthen their systems. Furthermore, they can empower staff to communicate confidently in ways that are both convenient and compliant. Striking the right balance is key to tackling this issue effectively.

Technology, in the form of AI-powered tools and compliance-focused communication solutions, provides a path forward. However, it must align with strong regulation that ensures transparency, accountability, and adaptability to evolving communication needs.

Institutions that recognise this issue promptly and work in harmony with regulations will be spared from the consequences. They’ll be poised for success – especially if they adopt the right technology solutions. Together, these elements can safeguard the integrity of the entire industry. Furthermore, they can foster liquidity and economic growth.

Going forward, compliant messaging will continue to be scrutinised. Especially, when it is used to mitigate against information breaches. This is a complex issue with global implications. It affects institutional reputations, investor confidence, and the very core of the financial system.


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