A new report from Smarsh finds that financial services firms need better compliance measures for mobile, social and other electronic communication channels.
Portland, Oregon-based Smarsh, which characterizes itself as a provider of archiving and compliance solutions for companies in regulated and litigious industries, has unveiled its eighth annual Electronic Communications Compliance Survey report.
The 40-question survey of 191 financial services professionals with direct compliance responsibilities found that “organizations are not keeping pace with their retention and supervision efforts — particularly with a growing, younger workforce that relies on expanding, mobile-friendly channels, such as social media and text messaging.”
The result, according to the survey, is that “evolving technologies and shifting demographics within the workforce, and within firms’ customer bases, are forcing organizations to rethink their approach to the adoption and oversight of electronic communications.”
Traditional email is still the “largest piece of the overall electronic communications landscape, [though] social and mobile platforms are playing an increasingly important role in how firms, and investors, conduct business,” Smarsh says.
The survey also finds that fully half of all respondents (50 percent) reported “concern around non-email communications channels, such as social media, instant message/collaboration platforms, and SMS/text messaging.”
Furthermore, the increasing “complexity of managing employee use of mobile devices for business communications was a top five concern for 42 percent of those surveyed, matching recent increases in regulatory scrutiny and enforcement.”
The survey was conducted in February and March 2018, when 191 persons direct compliance supervision responsibilities in financial services participated in a 40-question online survey “designed to identify current trends and to share insight on policies and practices about the usage, retention and supervision of electronic business communications. Respondents were drawn from a wide range of firm sizes and job titles, from C-level management and chief compliance officers to compliance department staff.”
Survey responses were collected by a third party, Smarsh points out.
“This year’s survey reveals that firms are focusing too much energy on older technologies and not enough time on the mobile and social communication channels that are growing in popularity among their customers and their advisors,” according to Marianna Shafir, Smarsh’s corporate counsel and regulatory advisor. “Many don’t have archiving solutions in place for the retention and oversight of modern communications channels, such as text messages, which causes problems and significant risk when facing a regulatory examination, open records request, an investigation, e-discovery event or litigation.”
Smarsh spotlights the “workforce demographics [that] are rapidly shifting toward Millennials” as impetus for the changes, and notes that “nearly 30 percent of personal financial advisors are Millennials, while another 44 percent are members of Generation X.”
However, according to Smarsh, “despite clear employee desire to have more flexibility in the communications channels that they consistently use for business, most firms are slow to formally adopt and support the governance of new channels such as social media and mobile.”
Email is the “greatest perceived source of risk by a large margin,” followed by SMS/texts messaging and social media and instant messaging/collaboration platforms.”
Survey respondents also “identified content from instant messaging/collaboration platforms and SMS/text messaging as the top two channels where they devote too little time to supervision,” Smarsh says.
Additionally, the report also finds that:
- “among respondents that allow SMS/text messaging for business, nearly half (48 percent) lack an archiving/supervision system. While most compliance gaps have decreased from last year, the SMS/text messaging gap is the same as in 2017 and the corporate IM/collaboration platform gap has increased year-to-year from 24 percent to 31 percent;”
- And “among firms that prohibit the use of SMS/text messaging, only 44 percent are mostly or completely confident they could prove that their prohibition efforts are working. Respondents also surfaced significant confidence gaps for LinkedIn, Twitter, and Facebook.”
The full survey report is available here.