Proactive vs. Reactive Approach to Communications Compliance

Few industries can claim to be as strictly regulated as finance and banking. That makes it especially surprising when these institutions drop the ball and face embarrassing publicity and expensive fines. Some bank executives have even used personal and financial accountability to address these lapses. Will you take a reactive or proactive approach to safeguarding your business and its use of messaging app channels?

Communications Compliance Concerns for Financial Institutions

There are several concerns financial institutions face when it comes to compliance. The first is recordkeeping. Financial institutions must keep records of all customer communications for varying periods, which must be accurate and complete. Records include phone calls, emails, social media posts, and text messages.

Communication content is another area of concern. It refers to the actual information transmitted and whether or not it complies with regulations. For example, banks must word messages carefully to ensure they do not make misleading comments about products, services, and yields. Another example involves communication that amounts to insider training.

The third compliance concern focuses on communication channels. Financial institutions must use specific channels to ensure secure and encrypted communication. Using IM apps can sometimes violate this if companies do not take the proper precautions.

The Risks of Using an App for Messaging Customers and Colleagues

There is nothing wrong with using an app for business communication, even in financial settings. The problem is whether the company secures its text message app and other private messaging app channels. There are also concerns regarding archiving discussions that take place via apps.

Here are some potential risks companies face when they fail to ensure compliance:

• Fines and penalties from regulators
• Revoked licenses
• Loss of business
• Reputational damage
• Lawsuits

The Two Approaches to Addressing Communications Risks

A proactive approach to communication compliance requires businesses to ensure their employees use approved and secure methods. It focuses on preventing problems before they begin and involves crafting safeguards with that goal in mind.

In contrast, a reactive approach to communication compliance puts the onus on employees to follow the rules and report any violations they witness. The reactive approach waits for violations and then addresses them as they arise. This is an expensive and inefficient way to do business.

A perfect example of this involves a head of a big European bank. When US regulators launched investigations into non-compliant use of WhatsApp, the bank came under fire. The head of the bank, alongside other fellow executives, responded by voluntarily giving up €75,000 from their bonuses as a show of personal accountability. While it is an honorable move, it is nonetheless expensive and reactive.

Ultimately, no proactive strategy is foolproof, so every business requires both approaches. However, companies should focus more of their resources on preventing violations. Reactive systems should only become necessary for the few incidents where violations still slip through the cracks.

The Benefits of a Proactive Approach to Communications Compliance

Companies often neglect to take a proactive approach because of the investment. It requires putting extra measures in place aimed at prevention. Sometimes, it can also mean investing in better technology solutions or battling potential privacy concerns with customers and workers. Here are the benefits of moving forward anyway:

• It is much less expensive, taking into consideration the latest $1B fines to the US banks. It is far cheaper to prevent a problem than wait until it creates an issue.
• A proactive approach protects the company’s reputation. By preventing compliance problems, the company can avoid the public relations nightmare that would come with a significant violation. 
• A proactive approach protects the company from legal action. The company can avoid costly lawsuits and penalties by taking steps to ensure compliance.

How to Implement a Proactive Strategy for Communications Compliance

There are several measures businesses can take to implement a proactive strategy and reduce the risk of compliance violations:

1. Identify the best messaging app for your business needs and prohibit the use of others.
2. Educate employees on the importance of compliance and the consequences of not using an approved and secure messaging app.
3. Train employees on approved methods of communication and how to use them correctly.
4. Restrict the use of personal devices for work-related communications.
5. Require employees to report any compliance violations they witness and reward them.
6. Enforce discipline for employees who violate communications rules.
7. Monitor employee communication channels for compliance violations.
8. Invest in secure archiving solutions to preserve important communication records.

The Role of Capturing and Archiving Solutions in a Proactive Approach

Using apps to message was not the problem. US regulators feared that financial institutions might use unapproved apps to evade recordkeeping requirements. WhatsApp, after all, has a reputation as a secure and encrypted messaging app. Whether companies archived WhatsApp and other instant messaging conversations posed the problem.

At LeapXpert, we created an automated solution for capturing, recording, and archiving conversations from multiple sources. It streamlines the process of securely storing messages, bypasses individual attempts at deletions, and ensures authorized access. Book your demo to fine-tune your proactive strategy.