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MANAGING COMMUNICATIONS COMPLIANCE IN A LITIGIOUS WORLD  

Financial services organisations need a communications compliance recording solution that is both future-proofed and able to work with multiple formats. Not only will this mitigate huge risks but it will mean serious competitive advantage, according to Richard Mill, MD of Business Systems (UK) Ltd

 

Trust and credibility are central to the success of financial services organisations. Product mis-selling or unauthorised trading can destroy public trust and an organisation’s reputation overnight, not to mention dramatically denting its bottom line. To diminish the chances of such events actually happening, financial organisations must keep robust, thorough and immutable records of all their dealings and communications. Any voice recordings must be simple to find and easy to play back in the event of an audit or investigation.

 

Richard Mill

This is an enormous challenge in itself for any organisation. Financial services organisations have amassed various solutions over time utilising very different call capture protocols, leaving them with disjointed data silos and records that are problematic to access. This can make it difficult to track down data in a timely manner. Data coherence across business operations is paramount to achieving common compliance goals.

 

At the same time, regulations are set to increase and become more burdensome. Knowing where your data is and being able to quickly access it will help you to speed up efficiencies and processes in the long run.

 

Accelerating response

 

In today’s litigious and strictly monitored market where financial organisations must adhere to MiFID II, KYC and so forth – and must be able to produce records at short notice this is an expensive and laborious task. In addition, these records can span decades, which means that some recordings may well be on legacy solutions no-longer supported.

 Be warned: it may not be all it seems

If you look carefully you will find that all vendor’s software comes with proprietary elements. It is therefore fundamental that financial services organisations must take steps to ensure they can transfer data from alternate or incompatible systems. A key point here is that this preventative action costs far less that corrective action in the future.

 

But, just as content management platforms enable organisations to search and access a plethora of unconnected documents, there are solutions available that can extract and manage data from a disparate range of capture and storage solutions from multiple vendors and offer it up in a single easy-to-consume central management portal. This shows how technology can be used effectively to support compliance reporting and monitoring.

 

One single central management portal that gives legal teams an efficient self-service capability, eliminating the heavy lifting that IT departments were previously required to carry out.

 

By taking this approach, organisations can be far more proactive with their data across multiple departments, conveniently and effortlessly extracting voice recordings so that data can be analysed for trade reconstruction. Voice recordings (on multiple systems, across multiple locations) that fall outside of retention periods can be identified and deleted, eliminating risk and reducing storage costs.

 

Legal teams will no longer have to laboriously go through recordings to pull out relevant interactions and their time can thus be employed on more business-focused initiatives.

 

In our digitally connected world, which by its very nature has created a far broader communication trail including the web, email, SMS, Skype/VoIP and WhatsApp amongst others, financial services organisations must be able to manage diverse content in line with customer usage and expectations. From a compliance perspective this means the ability to hop across communications channels from a dialogue that may have started out via telephone and progressed to social media. As these channels continue to expand and the volume of data flowing in and out of organisations grows, it is paramount financial services companies have the flexibility and scalability in their solutions to adequately manage this.

 

The practical answer for managing the immense amounts of data that will continue to arrive is through a central, vendor neutral portal. One that can pull recording data from a host of systems, from multiple vendors and locations – be they legacy, live, cloud-based or on premise. A single point of access from which all authorised users can view, manage, replay, extract and run reports as required.

 

As data volumes continue to escalate and the regulatory vista expands and becomes ever more demanding, it is essential that financial services organisations take a smart approach to their data to stay in control and meet communications compliance requirements.

 

The author is Managing Director of Business Systems (UK) Ltd, a specialist for 30 years in providing call recording and workforce optimisation solutions for investment banks, city trading floors and insurance companies.

 

 

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RISK VS REWARD: IS AI TAKING OVER?

Xavier Fernandes, Analytics Director at Metapraxis

A study by Oxford University academics into “The Future of Employment” in 2013 prompted apocalyptic headlines which stated that in the future 40% of jobs will be automated thanks to advancing technology.

The researchers subsequently claimed that the truth was in fact a little more prosaic; rather than facing complete automation, the research found that 40% of jobs faced some aspect of automation in their activity. So with new ‘AI processes a likely reality for almost half us, what does that mean for our current roles and should we be worried?

 

The fourth revolution?

The first industrial revolution saw machines replacing muscle, both human and animal. The second and third saw electrical power, mass production and computerisation revolutionise the job market. Now, with daily headlines of AI as an employment superpower, there is some concern that AI is bringing a fourth revolution, and with it, unknown circumstances.

This ‘fourth industrial revolution’ is defined by replacing brain power with machines. Our thinking capacity is what inherently sets us apart from other species, so it’s not surprising that any encroachment on it triggers some existential angst.

 

Xavier Fernandes

Evolve to reap the rewards

While many businesses still don’t fully understand the capabilities of AI, those who fear its development are, instead of embracing it, missing all the benefits that it can bring to the workplace. Businesses that utilise AI appropriately are seeing vast improvements across their entire value chain; better customer experience, reduced costs, and more insightful analysis to support management decisions.

AI is particularly useful for supporting tasks with repetitive activity, for example, performing financial checks and assessing large sets of data within financial services firms. AI performs particularly well within this context, spotting outliers before a human expert would notice them, allowing impending problems to be flagged and avoiding costly mistakes.

There is also an increasing focus on maximising customer lifetime value through the use of AI. Being able to predict existing customers’ needs as well as track trends in their financial circumstances is supercharging the old cross-selling approach with testable, predictable outcomes.

With potential benefits like these on offer, management teams of innovative financial services are increasingly relying on AI to help them with some of the heavy-lifting of analysis. Using advanced data capabilities and learned behaviours, AI analyses market trends to provide predictions of future performance. This insight is invaluable and allows management teams to change direction and  correct any problems accordingly. This offers a huge advantage over those that have not adopted such tools.

 

Supporting the workplace

Algorithms and AI are typically ‘smart’ at doing one, tightly-constrained task, but they can be less helpful with many of the activities that humans find straightforward. In most white-collar jobs, automation tends to replace certain tasks in the job, rather than the role in its entirety, as the need for human intelligence is still highly necessary. In particular, we still need human input to first challenge, and then synthesise, this information before taking action. Employees should therefore work with the business to proactively identify what areas of their role could be automated, so that they can focus on the areas that add real value to the business’ commercial goals.

Challenging AI is certainly still important. We know that algorithms can be much better than humans on certain, bounded tasks. However, many algorithms rely on existing data sets to build their understanding. As a result, when a business unit has ‘symptoms’ that fall outside of that body of knowledge, the algorithm may suggest the wrong course of action with costly results.

Indeed, even with plenty of data, algorithms will reflect any biases the data set contains. We’re seeing this with some legal sentencing algorithms where there is evidence that they are treating disadvantaged people more harshly. Getting the answers to why and how far we should trust our algorithms should therefore become an everyday part of any job affected by AI.

Rather than depending entirely on AI for all decisions, workers should be taking all these new, AI-generated insights and using them to complement the human decision-making process. No manager of a complex business ever has enough time to sieve through all the analysis available, but with AI driven algorithms able to flag up any issues and indicate where action needs to be taken, we may find that we have some AI ’colleagues’ who will cover our backs and suggest innovative options. Yes, there will be times when the algorithms get it wrong, but as long as we’re watching out for those, the future is bright.

 

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HOW TECHNOLOGY IS FUTUREPROOFING STOCK MARKET TRADING

stock market

Tony Shaw, Executive Director, London Office and Head Sales UK & Ireland at the Swiss Stock Exchange

 

Markets are shifting, there’s no doubt. Amid all the disruption and volatility from the past year, the Swiss Stock Exchange asked traders about what they expected in 2020 and beyond in our industry survey. The findings point to a rise in digital to help traders content with external forces.

 

First and foremost, traders are enthusiastic about what digital assets can offer.

Two thirds of traders polled said they’d had a marked rise in interest from their clients for digital assets and crypto-products. Given the interest, traders are increasingly bullish about the potential of these products – so much so that 80% have predicted an increase in overall demand in the long term. Market users believe these assets will help generate cost synergies and streamlining trading and settlement processes by creating efficiencies and ultimately reducing costs.

Our 2019 results reflect what traders have told us when it comes to digital assets and products. Last year, we saw significantly higher trading volumes from products with crypto currencies as underlyings. Overall volumes grew by +8.5% over 2018, but the increase in crypto products alone was +17%, reaching CHF 518.2 million ($534.54 m). There was a year-on-year increase in the number of transactions, as well (+21%): 19,636 trades in total.

The potential digital assets hold is clear – evidenced by the building of the SIX Digital Exchange (SDX), a fully integrated issuance, trading, settlement and custody infrastructure for digital assets.

According to traders, artificial intelligence (AI) is expected to bring further benefits to market operations.

Two thirds of our survey respondents anticipate AI will create more opportunities for the traditional equities business, while a similar number expect it to reduce the cost of trading. Innovation in AI is already – and will continue to be – a key driver in making our industry more effective at withstanding future risks and challenges both within and beyond the market itself.

In Europe, there is growing momentum behind calls for shorter trading hours – this trend was reflected in our survey as well.

Industry groups such as the Investment Association are advocating for stock market trading hours to be cut from 8.5 to 6.5 hours to open the industry to working parents and women who cannot commit to such long workdays. We found traders were largely supportive of this, with many saying that it could even facilitate operational benefits. The roll of AI is clear here in improving efficiency while minimising time wastage: 36% of traders said the introduction of shorter trading hours would prompt greater market liquidity.

Beyond the market itself, geopolitics continue to shape wider market sentiment.

It comes as no surprise that four fifths of traders said their strategies have been – to some extent – influenced by Donald Trump’s tweets. Interestingly, only 39% of those polled viewed Brexit as an influencing factor in trading activity, while three quarters believe the US election will drive trading activity in 2020 and 65% acknowledged trade wars would also have an impact.

More broadly, traders are split on the state of the global economy – 58% are bracing for a global recession while 42% predict stable macro-economic conditions over the next three years. What seems clear is that whatever happens in the wider economy, traders are making headway with new technologies that can improve their strategy, efficiency, and overall market health.

 

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