In the past year, regulators have increased exams and issued a large amount of fines, specifically for not monitoring communications from mobile communications apps.
This has compelled even larger financial institutions that typically have longer buying cycles to ramp up their search for communications monitoring solutions, to withstand the scrutiny of regulators taking a closer look at their messaging channels, and to meet compliance requirements – as early as this year.
Surprisingly, multi-million-dollar fines do not occupy the top spot among the concerns of compliance professionals, according to the 2023 State of Mobile Communications Compliance Report from Shield and LeapXpert.
They come in second place with 34% of respondents selecting them as the top concern, according to the report.
When it comes to mobile communications, the top concern for financial institutions (64%) is their level of preparedness for regulatory audits and potential fines.
Internal audits follow behind at 32%, while concerns about reputation damage stand at 28%, and losing business data at 27%.
Last September, an SEC probe found that from 2018 to 2021, employees at several leading banks frequently used off-channel communications to conduct business.
In the last 18 months, $2 billion worth of fines have been levied at more than a dozen financial firms.
“When the massive SEC fines were issued, it seemed imminent that widespread changes across the industry would occur,” said Eran Noam, Co-founder and Chief Business Officer at Shield.
“Our report shows that this has not happened. While data capture, monitoring, and user experience challenges are real, confidence in banning policies is low.
“Technology gives companies the option to monitor these channels rather than simply implementing policy bans, which don’t provide full coverage,” he added.
The report reveals that financial institutions are currently investing in monitoring several chat channels, with WhatsApp (51%), SMS (45%) and iMessage (34%) being the top priorities.
Virtually all respondents are planning to adopt monitoring solutions for these channels by the end of this year, as well as for channels like LINE, WeChat, Telegram and Signal, albeit to a lesser degree, according to the findings.
While only an average of 29% of respondents reported monitoring WhatsApp, SMS, iMessage, LINE, WeChat, Telegram, and Signal at the moment, this is set to skyrocket to an average of 90% by the end of 2023, the report said.
Meanwhile, 73% of financial institutions still lack confidence in their ability to enforce bans on mobile communications over unapproved channels.
Given the lack of continued faith in the effectiveness of current channel banning strategies, it’s unlikely this approach will remain viable moving forward, and reinforces the urgency for organizations that don’t currently have a mobile communications monitoring solution in place to invest in one, the report said.
According to the findings, half of financial institutions agree that their existing mobile communications monitoring solutions are unreliable, deliver poor user experience, and are not cost effective.
“The surge in demand for comprehensive compliance solutions in 2023 reflects a clear realization among financial institutions that closing compliance gaps is imperative,” said Avi Pardo, Co-founder and CBO at LeapXpert.
“From installing messaging capture solutions to seeking robust governance controls, organizations 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 minimize risk by ensuring messaging compliance.”
