Keep trading from the kitchen: Financial compliance and the new normal


Posted on: 02/12/2020

COVID-19 has sparked a major global change in working habits, as stay-at-home orders found financial services organisations operating in a new world - overnight. Now it looks here to stay.

This year, Barclays CEO Jes Staley said that the notion of putting 7,000 of his employees in a building in London’s financial district may be a thing of the past. At the same time, a recent survey by KPMG and the Financial Services Skills Commission found the sector has responded well to the pandemic, with 78 per cent of staff saying they had been able to work from home effectively. Not only this, but the success of working from home has pointed to other ways to save money via office space, reduced travel and technology – something previously achieved by staff retention schemes and pay cuts. However, 9 months since the first national lockdown, remote working is still presenting some challenges.


Remote workers, regulations and rising compliance

In a world of evolving regulation from the likes of MiFID II and Dodd Frank, the need for providers of financial services to keep a secure and accurate record of voice communications is greater than ever. This comes amid mounting pressure from the Financial Conduct Authority (FCA) who, in October, warned that banks must now provide the same standard of surveillance of staff working from home as they would in an office environment.

As UK financial services firms store critical customer information across 9 different systems on average and with a myriad of compliance regulations, for many organisations this is still proving difficult. Whilst regulations differ globally, authorities in the US and Hong Kong have always required trading floor phone calls to be recorded for activities. Whilst in the UK, the FCA demands that financial institutions keep records of all trades and transactions related to certain types of business for at least 5 years. Such legislation is designed to help organisations improve operational transparency, deter market abuse and mitigate risk, but this has not been easy for Compliance Managers to implement for remote workers.


Keep trading from the kitchen: Rectifying the issues affecting Compliance Managers

As Compliance Managers are often seen as the second line of defence for financial services organisations, adapting to this new normal whilst fighting against rising regulations is a difficult, but not impossible task. Here are some common compliance scenarios and how to solve them:

1/ My customers are feeling vulnerable

From fraudsters taking advantage of the pandemic to the closure of banks, many long-standing customers may be worried about their financial security. Many financial services have increased customer support in the form of Interactive Voice Response technology and Instant Messaging, but as the importance of these interactions rise, so does the need to monitor them. Call recording provides the tools to enable supervisors to conduct employee assessments and track company-wide standards with built-in reports, while also keeping track of the vulnerabilities in customer behaviour.

2/ How can I reduce compliance risk?

As organisations face challenges around communication compliance, a more proactive approach to risk management is required to comply with existing regulations. AI and deep learning platforms that leverage enterprise-wide high-quality recordings provide advanced compliance capabilities by applying natural language processing to automate the detection of compliance risks, while significantly reducing the costs of managing corporate compliance to maximise the value of captured voice data sets.

3/ How can I trust my workforce to comply remotely?

Employees must be trusted to do the right thing, even when no one is looking. However, financial services organisations can invest in tools and capabilities to identify patterns and trends that can proactively prevent incidents of ethical conduct, financial crime and compliance breaches. This can include enhanced monitoring, surveillance and data analytics to assess workforce communications and ensure compliance.

4/ How can I ensure data governance?

Every interaction from customers equates to data that has increasing business value for financial services organisations – but they need the right tools to monetise it. As recent high-profile breaches demonstrate, data sharing incidents are influencing public and regulatory expectations for increasingly stringent data privacy. Without this, fragmented data ownership can lead to errors in data collection and handling, leading to costly fines and unlimited damage claims. Organisations therefore need to focus on record keeping, auditing and quality monitoring to gain full control over their data.


Compliance recording for financial organisations: Next steps

As winter beckons, organisations are beginning to find their footing in the new normal. Some regulators have been lenient when it comes to allowing financial services organisations to adapt to these changes, but now is the time to ensure that when the next change comes - you are ready - and you are compliant. Below are just a few of the must-have features that your compliance capture solution must have:

1/ Capture: All communications need to be captured, irrespective of source (mobiles, laptop screens, video etc.)  and (especially when it comes to audio) in high-quality.

2/ Surveillance and Risk Detection: Integrated AI-based compliance and archiving for voice recordings with automated detection of regulatory, corporate compliance and conduct risks.

3/ Voice Transcription: Automatic speech recognition (ASR) technology applied to audio captured from platforms, providing a structured data set of captured voice conversations and search functionality.

4/ Open APIs: To enable data sovereignty and allow data to be fed into tools and applications of choice (such as CRM compliance, business intelligence, custom-built applications and AI and analytics tools).

5/ Record keeping and archiving: To ensure full control over the storage and retention periods of your recordings.


Red Box helps over 900 financial organisations of all sizes around the world comply with regulations published by bodies including the Commodity Futures Trading Commission (CFTC), European Securities and Markets Authority (ESMA), and the Financial Conduct Authority (FCA), which enforce voice recording for record keeping. This includes six of the world’s top banks, 150+ of Tier 2 banks and 85% of Interdealer Brokers.


You can learn more about voice recording solutions for the financial services sector here.


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