Two-thirds of financial firms are unsure if they are compliant when using video conference tools

March 4, 2020

Even though 90% of financial services and insurance companies are using video, most are uncertain about if they are complying with regulations, according to new research from Theta Lake.

The RegTech100 company surveyed over 100 compliance professionals in the financial services and insurance industries for the report.

Of the people polled, 68% were only somewhat or not very prepared for the increasing use of video. “Although video is being used quite broadly across organisations, this metric suggests is that firms need to define a compliance strategy for its inevitable expansion,” Marc Gilman, general counsel and vice president of compliance at Theta Lake, told RegTech Analyst.

This strategy may become even more needed as the Financial Industry Regulatory Autthority (FINRA) is looking into video and other new forms of communications more and more. “Given FINRA’s focus on digital communications, thinking critically through the features sets of tools like Zoom, Microsoft Teams and Cisco Webex to choose appropriate supporting compliance technologies is imperative,” argued Gilman.

“Respondents should leverage compliance tools purpose-built for new video and collaboration tools, rather than relying on legacy applications that cannot offer technical controls to reduce risk. Investing in modern compliance tools will increase the efficiency and effectiveness of supervision processes and reduce costs.”

While FINRA and other regulatory bodies may put additional pressure on financial firms and insurance companies to get this right, 81% of respondents felt they did not understand what regulators demanded from them.

That, Gilman warned, could have severe consequences. “In 2019, financial services firms were fined over $150mn globally for electronic communications supervision failures,” he said. “Firms who ignore or fail to implement controls to align to regulatory guidance on capture, retention and supervision of video and collaboration content are likely to face fines and other remedial sanctions. Given that FINRA specifically included digital communications as a 2020 Exam Priority, fines for non-compliance are a very real possibility.”