Despite hefty fines, financial institutions still struggle with monitoring unapproved communication channels

Despite hefty fines, financial institutions still struggle with monitoring unapproved communication channels

A new survey by Shield and LeapXpert underscores the continued risk financial institutions face from unmonitored communication channels. Only 51% of the financial institutions surveyed are currently monitoring employee communications on WhatsApp, a popular messaging platform.

This lapse occurs despite the heavy penalties imposed by US regulators on firms that fail to control their employees’ use of messaging apps.

Even as the majority of compliance officers surveyed have plans to monitor messaging apps like WhatsApp by the end of 2023, there exists a lack of confidence, with 73% of financial institutions unsure of their ability to implement effective bans on unapproved mobile communication channels.

In the past year and a half, over $2bn worth of fines have been levied on more than a dozen financial firms following an SEC investigation which revealed that employees at leading banks frequently used off-channel communications for business purposes from 2018 to 2021.

The survey further revealed that regulatory audits are a greater concern for compliance professionals than the multi-million-dollar fines, with 64% ranking them as their primary worry. Other concerns include internal audits (32%), potential damage to reputation (28%), and the loss of business data (27%).

There are significant disparities in the monitoring of WhatsApp communications between the US and EU. 57% of US firms already monitor WhatsApp, compared to only 44% in the EU. An expected shift in mobile device policy could see corporate device issuance rise from 53% to 66% in the next 18 months.

Presently, the average monitoring rate for messaging apps, such as WhatsApp, SMS, iMessage, LINE, WeChat, Telegram, and Signal, is at 29%. However, the survey predicts a dramatic increase to 90% by the end of 2023.

Reflecting on the study, Shield Co-founder and Chief Business Officer Eran Noam said, “When the massive SEC fines were issued, it seemed imminent that widespread changes across the industry would occur. Our report shows that this has not happened. While data capture, monitoring, and user experience challenges are real, confidence in banning policies is low.”

LeapXpert Co-founder and CBO, Avi Pardo, commented on the rising demand for comprehensive compliance solutions, “From installing messaging capture solutions to seeking robust governance controls, organisations are now determined to transform all popular messaging apps used by their team members into approved and compliant channels. As regulatory scrutiny intensifies, companies understand the need for decisive action and solutions that help minimise risk by ensuring messaging compliance.”

The survey was conducted by Global Surveyz in April 2023, polling 200 professionals in the financial services industry across the U.S. and Europe.

Keep up with all the latest FinTech news here.

Copyright © 2023 FinTech Global

Enjoying the stories?

Subscribe to our daily FinTech newsletter and get the latest industry news & research


The following investor(s) were tagged in this article.