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Preface: Developing communications trends
Regulatory recordkeeping has long been a requirement for the financial services industry to enable regulators to perform their role fully. Over the last five years, traditional recordkeeping rules have been expanded and progressively modernized. However, financial organizations face a challenge – how can they meet increasing recordkeeping requirements, while simultaneously keeping pace with fast-evolving methods for business communication?
In early 2020, the COVID-19 pandemic ushered in a global movement away from traditional business communication channels to a new, digital approach. Financial services were faced with a need for overnight digitalization. How could an industry rooted in face-to-face or in-office working adapt and move away from on-premise solutions?
It soon became clear that many financial organizations had not previously facilitated a culture of “working from home” in any guise. Individuals were forced to use personal phones and laptops for business, and self-record to ensure continued regulatory compliance. Business communication and collaboration apps, such as Microsoft Teams (MS Teams) and Slack, became essential to continued business operation and efficacy, though many compliance teams did not yet have solutions to ensure that the use of such applications met stringent recordkeeping requirements.
The effort to implement a watertight recordkeeping regime that continues to scale with emerging innovation and business needs persists beyond the initial catalyst of COVID-19. While the repercussions of the pandemic still affect the way financial services use communications today, the shifting regulatory landscape has been similarly influenced by other factors – not least of which is the proliferation of innovative new business communication channels.
WhatsApp, SMS/text messages, and social media platforms are now essential tools in the era of “always-on” business communication. However, using these channels within regulated environments requires careful consideration of how firms can continue to capture business data outside of familiar legacy architectures.
As well as the proliferation of communication channels, firms must also contend with changing regulatory frameworks. For example, the Securities and Exchange Commission’s (SEC) update to Rule 206(4)-1 of the Investment Advisers Act of 1940 to introduce a Marketing Rule now requires that firms supervise how they communicate with customers, prospects, and the public through advertising campaigns, social media, and websites.
As regulators look to modernize their frameworks – including amendments to Rule 17a-4 in the U.S., the introduction of a new U.K. Consumer Duty, and increased enforcement of recordkeeping failures – compliance teams must find a way to connect ever-growing business communications data to a compliant archive.
Making connections
“Connectors,” as they shall be known for the purpose of this report, offer compliance teams a solution to this growing challenge. Connectors capture communications data at the source and securely deposit that data into an archive, ensuring that all messages are captured completely and compliantly. This enables compliance teams to ensure that communication data is captured from all necessary channels and retained to meet regulatory requirements, ultimately ensuring readiness for a potential audit or investigation.
This report takes stock of the expanding web of connections that are being made, how the industry is capturing data, and what the future may hold for compliant communications.