Fabian Grande, head product manager for Engage at Avaloq, discusses the latest developments in the ongoing scrutiny into the use of WhatsApp and other encrypted messaging services by employees of financial institutions.
Following the $1.8 billion of SEC fines for several Wall Street financial institutions, investigations into financial institutions’ “off-channel” communications is now spreading to other jurisdictions.
The FCA’s announcement that it has entered into dialogue with a number of City firms to better understand the frequency and content of communications through non-complaint routes is not surprising.
In the US, fines were imposed for allowing bank employees to discuss business via unapproved and unmonitored messaging systems - such as WhatsApp - when their chats should have been recorded and available to government authorities.
The US regulator may have been the first to act, but it comes as no shock that the FCA has now started its own enquiries too – and we expect regulators in other regions across Europe and Asia to follow suit.
However, in an environment where clients are increasingly looking for a seamless digital experience, fully abandoning messaging channels such as WhatsApp may not be a wise idea for the financial industry. Instead of banning social messaging apps, financial institutions should acknowledge their convenience and better enable their use between relationship managers and clients.
Banks and wealth managers, as well as independent financial advisers (IFAs), should invest in built-in chat capabilities housed in a secure environment.
Avaloq Engage app
In order to remain compliant, the relationship manager’s endpoint of the messaging channel can be embedded into a safe banking environment so that financial institutions are able to ensure full control, transparency and auditability of their interactions with clients.
In this way, financial institutions can maintain adequate records of their communications and avoid hefty fines in the future. Banks, wealth managers and IFAs will then have the confidence to offer a seamless digital client experience – involving social messaging apps – with features such as client interaction analysis and natural language processing capabilities, which will help increase efficiency in communications and strengthen client relationships.
FCA questions banks over Whatsapp use
Regulators are merely catching up on what is now an established trend in the financial industry. For financial institutions to harness the true benefit of conversational banking – ie convenient communication on mobile devices – they need to have the right technology in place to ensure regulatory compliance while assuring clients that their conversations remain private and secure.
This will promote greater client engagement and loyalty, boost the productivity of relationship managers as they can respond more quickly to client requests, and help financial institutions demonstrate the value of the service they deliver.
