Navigating honesty amidst evolving regulations in the realm of communication
In the rapidly evolving world of financial services, compliance has become a cornerstone for success. AI is now a powerful addition to the compliance toolkit, helping firms sift through vast volumes of content and analyzing both the content and tone of communications to enhance regulatory compliance.
Tom Padgett, President of Enterprise Business at Smarsh, emphasizes that compliance has evolved and is no longer just about reacting to regulatory pressure. It's about fostering a culture of ethical behavior and cultural integrity, which is increasingly important to younger professionals.
The UK financial services landscape has undergone a significant transformation over the past 15 years. This transformation, coupled with the explosion of informal communication tools like emojis, voice notes, and messaging apps, presents new challenges for organizations striving to uphold truth and compliance.
Smarsh, a 2025 Gartner Magic Quadrant Leader for Digital Communications Governance and Archiving, is at the forefront of this transformation. Their solution, Smarsh Enterprise Conduct, is designed to monitor non-financial risks, such as inappropriate employee behavior and cultural issues.
The employee appetite and support for using technologies to detect non-financial misconduct (NFM) is there. According to research, 66% of employees support the use of AI to detect NFM. AI can identify patterns indicative of bullying, harassment, or other forms of misconduct by analyzing the tone of voice notes or the context of emoji usage.
Smarsh is a trusted communications compliance partner to over 6,500 customers worldwide, including 80% of the top global banks. They recently announced an integration with Microsoft to securely govern Microsoft 365 Copilot, enhancing productivity and enabling organizations to use AI safely, responsibly, and within regulatory guidelines.
Firms that fail to address NFM risk not only facing regulatory penalties but also the loss of top talent. Research from Smarsh in 2024 found that 63% of UK financial services employees lack confidence in their organization's current monitoring systems. However, 78% of employees say that knowing non-financial misconduct is being identified and addressed influences their decision to stay with their organization.
Modern compliance tools can serve as a catalyst for growth and innovation by allowing employees to communicate freely across a variety of platforms without fear of breaching regulations. Smarsh offers technology solutions that capture communications across all digital channels in their native format, preserving metadata, attachments, and context.
To navigate the shifting communications landscape while ensuring compliance, fostering innovation, and addressing regulatory priorities such as Non-Financial Misconduct (NFM) and the Digital Operational Resilience Act (DORA), firms must adopt integrated, technology-driven compliance frameworks that emphasize digital operational resilience, advanced data monitoring, and risk management.
Key approaches include implementing robust ICT risk management and resilience practices aligned with DORA, enhancing communications compliance through technology, integrating compliance into governance, risk, and compliance (GRC) frameworks, staying updated on supervisory expectations and regulatory clarifications, and collaborating with critical ICT third-party providers and regulatory bodies.
In summary, firms must adopt a proactive, technology-enabled compliance strategy that balances the agility required for innovation with the rigor needed to meet complex regulatory demands like NFM and DORA, ensuring operational continuity and regulatory confidence in today’s evolving communications environment.
Technology plays a crucial role in implementing proactive compliance strategies, as seen with AI's integration in monitoring non-financial risks like inappropriate employee behavior and cultural issues. This technology-driven approach is essential for businesses in the financial sector to navigate the complex regulatory landscape and foster innovation.
Furthermore, the adoption of advanced data monitoring and risk management tools, such as those offered by Smarsh, can help firms avoid regulatory penalties and retain top talent by addressing concerns related to Non-Financial Misconduct (NFM) and Digital Operational Resilience Act (DORA) compliance.
