How to combine people & tech to bridge growing gaps in compliance

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How to combine people & tech to bridge growing gaps in compliance

Divya Bhatia

@DivyaH2O

April 4, 2021

Tech for Good

Compliance has always been a challenge, but that challenge is becoming greater than ever for many financial institutions.

The sheer number of employees with access to material nonpublic information (MNPI) is growing, and these individuals are highly dispersed due to the pandemic. At the same time, they’ve been handed new software and collaboration tools that add numerous channels for internal and external communication. Add in a growing number of transactions and deals, with a concurrent increase in MNPI, and it’s easy to see how quickly compliance risk is proliferating in the financial services industry.

It’s simple math, really: The number of employees with access to MNPI x the number of communication tools x the number of deals = a lot that could go wrong. And it’s unrealistic to expect compliance teams to manage it all on their own.

Firms need a tech-enabled human approach to compliance

To close compliance gaps, it’s necessary to bring together people and technology to achieve greater oversight. However, many compliance departments are largely composed of non-digital natives who have served for decades in a conservative industry surrounded by heavy regulation. Technology resistance is common — usually not out of fear of losing jobs to automation, but rather out of strong belief in the value of human judgment.

And compliance officers aren’t wrong about that. Machine learning and artificial intelligence are advancing all the time, but the tech still lacks the ability to make every connection and judgment call that a human compliance officer could. The goal should not be to replace the human element, but rather supplement it and free up more time for decisive action by handing off the more tedious tasks to compliance automation software.

To turn things around and implement the right solutions in your organization, focus on evolution over revolution and look to implement technology slowly but purposefully. Not sure where to start? The following steps will help direct your efforts.

Streamline self-reporting processes

Making reporting as easy as possible for employees to do can help firms close the compliance gap that comes with a heavy reliance on self-reporting. Reduce the number of hoops employees must jump through to report and disclose information. If you remove barriers and frustrations and make disclosure a frictionless process, you’ve already set the stage for creating a culture of compliance that helps your entire organization achieve its goals.

Rely on technology to help, and implement solutions that remind, facilitate, encourage, and incentivize employees to report and disclose their access to MNPI as soon as they’re able, whether they’re in the office, at a client’s location, or on the go. Any time you can simplify the self-reporting process, you’re making it likelier that employees do the right thing concerning their access to MNPI — and reduce the burden on your compliance professionals to seek out that information.

Organize compliance activities — then automate

Compliance has a lot of moving parts, but departments should be organized around a few key functions: information aggregation and organization, communication, process tracking and research, and risk assessment. You don’t have to automate all of these components right away, but you should start to identify your biggest pain points and explore where technology could facilitate the process.

Some of the work involved in the compliance process is time-consuming, and you should automate these tasks and direct your compliance officers to higher-value work whenever possible. These individuals should be using their powers of assessment, their years of experience, and their knowledge of policies to help your organization achieve compliance goals — not performing repetitive tasks that are better suited for automation.

Open your mind to further tech and data investment

All organizations must carefully consider how they allocate time, money, and resources to achieve the best outcomes for their business. Because compliance is considered a non-revenue-generating part of business, leaders don’t often see room to allocate much of their budgets toward it. That attitude, however, ignores that compliance is meant to protect the revenue-generating side by reducing firm risk. Start viewing compliance through a different lens and consider the ROI these investments in compliance could yield.

It’s true that trends are converging to make compliance more challenging than ever. Employees are working from all over the world using more digital tools to connect, and the number of deals and projects they’re involved in is also on the rise. In this environment, firms need to tackle compliance head-on and arm compliance officers with the tools and technologies they need in order to reduce risk. By following the steps above, you can begin to create a culture of compliance that sets up your organization to thrive in an increasingly complex and interconnected world.

Source: International Banker/Jeniffer Sun

MNPI machine learning #AI #IOT #ArtificialIntelligence #technology

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