Best Practices for Compliant Messaging in the Financial Industry

The financial sector faces significant challenges when it comes to maintaining communication compliance.

Regulatory bodies such as the SEC, CFTC or FCA (UK) require each financial organization to capture, manage, and store client conversations regardless of the digital channel used. Communications data is becoming more complex to capture and govern as demand for new forms of communication, such as SMS, messaging apps, and social media, grows, driven by clients and employees preferring new channels that are efficient and fast.

Countless financial organizations are embracing the mobile revolution in a limited way. They are offering apps to consumers for finance management, responding to queries via messaging tools, but many are reluctant to allow their employees to use mobile apps to communicate with clients and have messaging apps part of their monitored, official communication channels. Adhering to these regulations is complex but there are ways for finance industries to leverage the power of messaging for improved client communication and employee productivity, without excessive regulatory risk.

The Problem: Messaging and Financial Compliance

Consistently capturing communications data and storing information effectively when using a multitude of third-party messaging apps is complex.

The regulatory framework surrounding messaging compliance is complex and multi-faceted, making the development of a comprehensive plan complex. Unfortunately, companies can’t afford to simply ignore the rise of messaging tools. Already, over $3 billion in fines has been levied against top tier banks, because of poor data governance strategies for channels like WhatsApp.

Instant messaging platforms provide both teams and clients with a valuable ability to share information quickly and effectively. They can enhance team productivity and boost customer satisfaction rates. The benefits are so significant, that simply asking finance employees not to use messaging tools could lead to lost customers, and a higher risk of shadow IT.

“Bans don’t work because messaging apps have become ubiquitous so when financial institutions ban their use, it just creates bigger issues,” said Avi Pardo, Co-founder and CBO of LeapXpert.

“Not only have investment banks moved to adopt technological solutions for compliant and governed use of messaging channels, but PEs, hedge funds, VCs, commodities, and even small RIAs too – every regulated body on the buy-side and sell-side needs to solve this problem and they need to so yesterday.”

The Solution: Best Practices for Messaging Compliance

As demand for messaging apps for client communication and collaboration continues to grow, the only solution for finance companies is to develop a comprehensive strategy for compliance. This involves a multi-faceted process which includes examining the risk landscape, implementing new standard operating procedures, and accessing the correct technology.

1. Understand the Risk Landscape

The first step in implementing a compliant approach to messaging in the financial industry is understanding the risks you face, and the regulatory guidelines you’ll need to adhere to. There are numerous different types of regulations to consider, such as:

• Recordkeeping regulations: The SEC, CFTC, FCA, and many others have specific rules to follow when it comes to which records you should keep, and how long they should be stored for. Ensure you know the guidelines relevant to your industry.
• Message delivery laws: In the US, companies are bound by the TCPA guidelines, which prevent them from sending marketing messages without consent. In Canada, the Anti-Spam litigation rules impose similar restrictions.
• Privacy and security rules: Throughout the world, regulatory bodies impose rules on how information should be captured and stored. GDPR, for instance, demands companies to implement measures to ensure the confidentiality of data.

2. Implement Compliant Business Communication Policies

Although there are many regulations to keep track of, depending on your geographic location and the communication tools you use, there are certain policies you can apply to mitigate a range of risks. For instance, obtaining consent before sending any message to customers is a crucial way to implement compliant business communication policies. Other strategies to include in your policies include:

• Capturing and storing conversation data and metadata: capture all client communication data and metadata like time, phone numbers, group and user IDs, across various channels. Store everything in one place so that data is easy to retrieve and analyze for any audit or control purposes
• Sending the right content: Ensure the messages you send and receive are respectful and related to your business. Safeguard data to avoid unintentional or inappropriate disclosure or reception of sensitive/confidential information.
• Ensuring confidential client conversations: Ensure recipients are authorized to communicate and verify their identities to avoid potential conflicts of interest and comply with ethical wall regulations.
• Giving customers control: Aside from simply asking customers to “opt-in” to communicating with you via messaging apps, empower them by providing control over their communication options. Offer the ability to transition conversations to their preferred channel, ensuring they understand that this is a governed and monitored channel.
• Implementing end-to-end security: Ensure the messaging apps and tools you use enable end-to-end encryptions for all messages. Check that there are no security risks, such as malware and viruses. Implement data breach response strategies to safeguard your data, and closely monitor all your channels for any potential risks.
• Providing training: Give your team members insights into how they should share data on different channels, what recording and data collection tools they should be using, and how they can protect themselves from account breaches.

3. Leverage the Correct Technology

Technology can be a valuable tool for financial companies struggling with messaging compliance. It can help you take a proactive, rather than reactive approach to communication compliance, assisting with everything from consent management to consistent communication tracking.

Some of the key technology resources you can use to optimize your strategy include:

• Comprehensive recording tools: End-to-end recording tools for all your communication systems help ensure you maintain a comprehensive record of all discussions. Vendors like LeapXpert provide an enterprise-grade solution that captures and governs communications across every channel, including WhatsApp, iMessage, WeChat, Telegram, LINE, SMS and voice (phone calls).
• Unified archiving system: Long-term storage of client conversations and related metadata across messaging, voice, SMS and email
• Advanced reporting tools: Comprehensive reporting tools, from systems that monitor historical data, to real-time data dashboards help optimize compliance in real-time. They offer insights into potential data breach risks and compliance issues. Plus, the information collected help boost team productivity and performance.
• Workflow automation solutions: With workflow automation tools, companies set up comprehensive security strategies for their messaging campaigns. You can leverage solutions for verification, streamline recording across a range of channels, and simplify recordkeeping and compliance for your team.

Compliant Messaging Starts with the Right Partner

Preserving compliance in the financial sector can be complex, particularly as communication preferences continue to evolve. Unfortunately, companies can’t afford to simply ignore the rise of messaging. Instead, they need a comprehensive plan for how they’re going to communicate with customers, implement security policies, and leverage the right technology.

Working with the right partner can streamline this process., for instance, offers an enterprise-grade business communications platform that ensures all conversations are recorded, on every channel. The solution has already helped leading banks and financial institutions globally to use messaging apps in a compliant way.

“Navigating communication compliance in the financial sector poses intricate challenges, especially amid the ongoing evolution of communication preferences,” summarizes Pardo.

“Yet, turning a blind eye to the ascent of messaging is a luxury companies can’t afford. It’s imperative to empower relationship managers with the channels their clients prefer, enhancing productivity and fostering superior client service. Collaborating with a trusted partner is the way optimize relationship managers’ productivity and ensuring exceptional client service while upholding strict regulatory compliance standards.”

Start your path to messaging compliance, with the right partner.