This week I have a special five-part podcast series, sponsored by Verint on the Future of Communication in Financial Compliance on the Innovation in Compliance podcast series on the Compliance Podcast Network. My guest in this series is Phil Fry, VP and GTM of Financial Compliance Strategy at Verint. Over this series, we will take a deep dive into the current status of communications in financial institutions; how to be or not be compliant; an analysis and insight into the area; and how to avoid accentuating the negative and the human element in compliance. In this fourth post, we consider the importance of data quality in financial institutions’ communications compliance.
In the ever-evolving financial industry, compliance is a critical aspect that ensures the integrity and stability of the market. One key factor that plays a crucial role in compliance is data quality. The ability to capture, analyze, and maintain high-quality data is essential for financial firms to meet regulatory requirements and effectively manage risk. Data completeness is the foundation of any investigation in the financial industry. It is not just about capturing the data, but also about identifying and addressing any gaps in data capture and communication. Regulators are particularly interested in the gaps that go unnoticed, making it imperative for compliance teams to pay close attention to these areas. As Phil Fry emphasized, “It’s the things that go under the radar that regulators are most interested in.”
The financial industry operates across multiple channels, platforms, and modalities, making data capture a complex task. Compliance teams must ensure that they cover a wide range of devices and capture all relevant conversations related to trades. However, challenges arise when employees use different devices or when conversations occur on platforms that are not easily captured. In such cases, compliance efforts are hindered, and the risk of missing critical information increases.
To address these challenges, innovative techniques such as Identity Insights are being employed. Identity Insights leverages biometric techniques to detect and isolate different speakers in a conversation, storing this information securely in a searchable manner. This goes beyond traditional identification methods and helps solve legacy issues in capturing third-party identification across various communication channels. By linking conversations together, compliance teams can gain valuable insights into communication patterns and improve investigations.
Data quality is not just about capturing complete data; it also involves the accuracy and reliability of the captured data. The adage “Garbage In, Garbage Out” holds in the financial industry. If the data captured is of poor quality, any analysis or insights derived from it will be flawed. Therefore, it is crucial to ensure that the captured data is structured, properly labeled, and contains all necessary metadata. This reduces the risk of false positives and enables compliance teams to make informed decisions.
Legacy data poses another challenge in maintaining data quality. While capturing and analyzing real-time data is essential, it is equally important to consider the vast amount of historical data that financial firms possess. The quality and structure of this legacy data can vary, making it difficult to extract meaningful insights. However, advancements in technology offer opportunities to enhance the analysis of legacy data and reduce the risk of crucial information being overlooked.
Balancing the tradeoffs involved in data quality is a constant challenge for compliance teams. On one hand, they need to capture as much data as possible to ensure completeness and accuracy. On the other hand, they must also consider the cost and resources required to manage and analyze large volumes of data. Striking the right balance is crucial to optimize compliance efforts and reduce the risk of regulatory violations.
In conclusion, data quality plays a vital role in financial industry compliance. By focusing on data completeness, addressing gaps in data capture, and leveraging innovative techniques, compliance teams can enhance investigations, improve trade surveillance, and ensure adherence to regulations. The importance of data quality cannot be overstated, as it forms the foundation for accurate analysis and insights. As the financial industry continues to evolve, maintaining high-quality data will be crucial in mitigating risks and ensuring a robust compliance framework.
For More Information check out Verint.
