A recent study shows that more than 50% of firms with a centralized compliance system in place continued to have effective monitoring processes throughout the COVID-19 crisis, making the case that full automation in the compliance space is more important than ever
The results are in, and they make a compelling case for fully automating your compliance process.
A recent StarCompliance survey of more than 160 compliance professionals from around the globe—asking questions that got at the heart of the challenges surrounding staying compliant in the new normal of remote work—revealed that while most firms feel their compliance program has remained effective during the COVID-19 crisis, less than half of firms that rely mostly on manual, paper processes rate their current compliance processes as very effective. In contrast, 76% of firms that rely heavily on vendor software rate their current compliance processes as very effective. And 65% of firms that rely largely on internally developed software rate their existing compliance processes as very effective.
So whether you decide to partner with a compliance vendor or set out to build a compliance platform yourself in-house, full automation in the compliance space is clearly more important than ever. In that spirit, following are seven signs your compliance process is in need of total automation.
1. A STRUGGLE TO KEEP UP WITH AN EVER-INCREASING WORKLOADAs your business has grown, your compliance team has gotten not just noticeably more busy but also noticeably more frazzled. Perhaps you're losing good people as a result. On the workflow side, you're devolving from whatever processes you've managed to automate back to manual because your existing system doesn't have the capability to keep up with changes in regulation and the marketplace. Maybe you're also losing track of certifications and attestations. End user adoption has also been a challenge. Clunky, aging interfaces will do that, as will a continuing reliance on mostly manual, paper processes.
Per the study, the hustle and bustle of trade activity may only be on the increase. The COVID-19 crisis has shown that the biggest challenge overall for firms globally was handling employee requests. More requests are coming in because turmoil in markets means there's a lot more trading going on. More requests mean more reviews, and more work for an under-technologized team.
2. A STRUGGLE TO KEEP DATA CURRENT AND HANDYCompliance monitoring will always have manual aspects. Human beings will continue to be at the helm of whatever compliance processes your organization has in place. But these processes and the people who run them will be helped significantly by the leverage a modern, fully automated compliance platform brings to the table. Such a system can provide the data, analytics, history, and reporting capabilities needed to maintain a 360-degree view of pertinent firm and employee activity. The latest control room software solutions are a good example of how much cutting-edge technology can do—organizing your firm's deal information flows so control room officers can more easily manage and monitor them. Tech has become a true game changer in this regard.
3. DIFFICULTY IDENTIFYING QUESTIONABLE ACTIVITY
The point of compliance software is to make detecting compliance issues as easy as possible. Without such software, just identifying questionable activity can be a challenge. Properly integrated into all your other existing firm systems, a good compliance platform catches potential problems in the earliest possible stages. It will also provide you the kinds of tools and data that will aid in automatically surfacing and investigating questionable activity, as well as allow you to escalate or close cases quickly instead of spending hours or days on a single individual's activity. A good compliance platform should be a one-stop-shop for all your conflicts of interest and market-abuse needs. Identifying and resolving conflicts may never exactly rise to the level of easy, but it doesn't have to be as difficult as it might be now.
4. DIFFICULTY MANAGING A GLOBAL WORKFORCEAccording to the Star survey, the second biggest challenge for firms in dealing with coronavirus fallout was staying connected with their own compliance teams. But whether the world is in the grip of a pandemic or not, if your enterprise financial firm operates globally, across economic-cooperation zones, or even just across national borders, you need a compliance system that can handle unique situations. These may include employees in different jurisdictions and regions, subject to very different regulatory requirements, and a need to support multiple currencies, time zones, and languages. Or a large number of employees who need to be monitored by a geographically dispersed compliance team. Or an organization that's evolved multiple business lines through acquisitions or specializations.
A fully integrated compliance platform will go a long way toward solving these highly localized problems that global firms face. Employees can be organized into groups, with discrete configurations applied to each, including for rules, reviews, certifications, and workflows. Compliance teams can communicate using the centralized system, have access to the same data, and more easily collaborate—no matter where in there world they're working from, or whether they're at home or in the office. Regional compliance officers will see data only for the employees they monitor, and users only see the functions relevant to them. And compliance teams will enjoy a comprehensive view with consolidated reporting.
5. TOO MUCH MANUAL DATA HANDLINGThinking, sleuthing human beings will always be at the heart of the compliance process, but in this day and age they shouldn't be manually keying data except when otherwise unavoidable. It will always be preferable for a financial firm to get data into its systems from a third party by automated feed. Feeds mean far greater speed and far less chance of error. But for cases where this isn't possible, say for brokers that only offer paper or electronic statements, there does exist a handy solution that will keep your compliance officers—or anyone else in your firm—from having to manually key in data.
Star offers a service called Secure Data Entry. Star's Secure Data Entry service employs a team that extracts key data from paper or PDF statements and enters it directly into your instance of the STAR Platform. This service improves the speed and accuracy of broker-data overall, while at the same time establishing one, centralized location for the storage of all statements. A fully automated compliance platform also means total integration with all other company systems, including HR and CRM systems, expense systems, order and firm-trading systems, research systems, and broker-dealer systems.
Finally, a compliance platform supplied by a veteran vendor also has in-place relationships with data providers of all kinds, set up on feeds to get it to you quickly and accurately, with everything seamlessly integrated into your platform. This can include security masters—like the Global Industry Classification Standard, or GICS—and market research and political data. Fingers can fumble, and are slow. And while feeds must be monitored, the net effect of automation and integrations will always be in your favor.
6. TROUBLE ACCESSING RECORDS QUICKLY AND DEPENDABLYYou'll have no trouble remembering if this has ever been an issue: auditors arrive and expect you to be able to produce records very quickly, if not on-demand. Were you able to do so, and make it successfully through the audit? Were you able to prove the firm did everything possible to prevent a situation from occurring? Proper data storage and ease of recall is something regulators get picky about. A fully automated, modern compliance platform is in greater position than ever to offer help. Look for software with built-in reporting functionality, for software with standard reports, and for functionality that allows you to easily configure, schedule, and distribute communications. Look for reports that offer a range of graphs and charts to make your data easy to interpret and compare. Look for functionality you think will help make your enterprise financial firm more audit ready.
7. SENIOR MANAGEMENT HAS VOICED ITS DISPLEASURE
Every issue mentioned so far could cause a lot of trouble for a firm, and perhaps you've already been on the receiving end of a good chewing out from senior management for not spotting one in time. Trouble for the firm means trouble for compliance, whose job it is to protect the firm's good name. Automation means efficiency. Efficiency means integrating and synthesizing as much functionality as possible into a single-view, centralized system that employees of every level can and want to use, and that gives compliance teams a comprehensive view. A fully automated, fully integrated solution does this, and also allows the kind of high-level reporting capability that will keep upper management up-to-date and happy, as well as keep the compliance team out of hot water. A win-win.