Building a communication monitoring platform which leveraged AI and machine learning from the ground up and covered the full spectrum of voice, video, chat, and text based communication was essential in the creation of Theta Lake, as this enabled it to offer something legacy systems just could not, according to the company’s co-founder Devin Redmond.
Previous iterations of monitoring technology were not built for the levels of regulation, proactive monitoring needs, and communication methods we see in the market today. Once upon a time it was okay for a company to simply capture everything, store it somewhere and forget about it until it was needed, which was very rarely. It was enough to say they had the information stored, and it could be searched manually or with keywords.
However, regulations are becoming tougher and more stringent, particularly around communications and data privacy. The interesting rub is that there are more regulations requiring more record keeping to protect consumers from being intentionally or unintentionally misled by financial institutions, and there are simultaneously more regulations to protect the personal data collected in that record keeping. The European directives MiFID II and GDPR are great examples of the former and latter respectively that require a firm to have understandings of what they are telling customers and what personal information they are holding of those customers. In the US, FINRA’s 2019 exam findings specifically states that firms must supervise and keep records of those conversations wherever they are happening including on collaboration platforms, while new data protection regulations like CCPA require firms to know and protect the data they have. Redmond said, “You see the regulatory intent on how to protect the consumer increasing in terms of more focus on suitability and best interest in conversations while they are also broadening their coverage requirement around where or how those conversations are happening. It all simply means that firms need to do a better job of proactively monitoring and proving that they are monitoring and guiding the business-related communications their employees and affiliates are having. At the same time, other regulations require them to also protect the privacy of their customers and the data exchanged in communications.”
This shift and confluence of requirements has happened rather quickly, only really coming to fruition over the past few years. The technology that was previously used for monitoring communications is no longer capable of keeping up with what is now required of them. Redmond said, “They’re very ill-suited for the challenges businesses have today, both in terms of how they’re communicating, using methods like unified collaboration that include video sharing in the mix of all the other things, but also in terms of what they need to do, to be able to keep on top of the change in the regulatory landscape and regulatory impact.”
Theta Lake was founded in 2017 by long time industry experts to help companies solve this problem, ensuring businesses not only record and supervise everything correctly, but can also remove manual labours around compliance. When coming up with the idea, Devin Redmond and fellow co-founder Rich Sutton examined existing technology in the market and realised there was a better way to build a solution if machine learning and AI were baked into the process of analysis. He added, “if you talk to most customers, they have something which probably works okay, but they’re not exactly in love with the infrastructure they have and are feeling the pain of the modern problems.”
The Californian RegTech company leverages AI, natural language processing and deep learning technology to automatically detect regulatory compliance risks within video, text or audio files. AI and machine learning were fundamental to the creation of the company and is one of the three keyways it differentiates itself from other players, Redmond explained. Incorporating these technologies enable Theta Lake to add context by classifying the data as it is collected. Contrast to this, legacy systems where they simply store it and force a compliance professional to parse through everything in order to find potential risks, adding more time to an already time-consuming process.
AI and machine learning help businesses do smarter things with their data. For example, it can be set to automatically redact certain types personal information and inform the compliance team when a review is needed to assess risky behaviour. He said, “when you need to find the needle in a pile of needles, anything that can give the advantage to the compliance professional is important.” Not only are firms able to make the process easier through Theta Lake, but they can also keep up with the various ways of communication in the modern world, which is only increasing. E-mail, video conferencing, business messaging apps, social media and phone calls, are just a handful of communication methods used today, and each year there seems to be more added to the list each with increasing complexity and demand from users.
Drawing on their experiences within the compliance space, Redmond and the founding team at Theta Lake understood the need of easing workflows. Expanding the capabilities of review using ML and AI to help streamline workflows is another quality Theta Lake prides itself on. With an AI at the helm of review, it can walk a compliance professional through a call recording, highlighting where there are potential compliance risks and the exact time in which they happen, all while giving the compliance expert control and the ability to apply human judgement. Going even further, Theta Lake uses AI to detect visual content in videos, meaning it can inform a business if anything risky is shown on-screen including detecting text content shown via a camera.
Popularity of video as a form of communication is becoming increasingly popular for businesses, with its ability to create a more personalized connection with a customer being one of its main draws. Real-time video company Vidyo recently completed research which indicated 77% of businesses have seen higher close rate when using videos in operations.
Benefits of video conferencing or online video are paramount, but they also come with their risks. In a video the business can show files, display something in the background, write on a whiteboard and put things in the chat in real-time. While these are great dynamic ways to iterate points, they leave more opportunities for oversharing without oversight. Incorrect information could be shared, the wrong permissions could be given to participants, inappropriate gestures could be made and much more, making a video a hotbed for compliance and liability errors.
“When we look at the problem, the video collaboration is the riskiest and most complex thing that organizations are using. If you can solve that, then every other communication type is an upstream sub-component you end up solving by default. Firms have ignored it because it was hard to solve and more convenient to ignore it, but now that it is such a big and rapidly growing part of the communication mix it’s obviously unsafe to do that.”
Theta Lake aims to be the go-to partner for communication compliance, both in terms of technology and knowledge, for companies like Cisco, LogMeIn, Zoom, RingCentral, Microsoft Teams, and an ever growing list. The reason for this is quite simple, “if you’re in a market competing to build and sell a state-of-the-art collaboration tool, you’re probably not pioneering around things like compliance versus creating a platform to enable integrations with other leaders in other segments like Theta Lake’s.” To achieve this goal, it has meant the RegTech has formed dozens of partnerships with communication companies.
Compliance is not a walk in the park and there will always be challenges. When describing the creation of the platform, Redmond concluded, “I don’t think a lot of people are inspired by compliance. But for us, this is one of those intersections that we honestly care about. It may not be sexy, but it’s very required and if the ultimate premise is that this is designed to help firms better protect consumers, then that is fundamentally important.”
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