Compliance is an important aspect of any business, with compliance officers in great demand. As technology continues to advance, the digital and financial industries can expect to too. This requires compliance to go digital as well and, in fact, built-in compliance technology is the natural evolutionary direction for these industries. Digital compliance is the hot new topic being discussed in all hi-tech and online circles.
Organisations need to pay attention to changes in regulatory requirements and the changes in technology. All of this changes the way organisations should view compliance and the way compliance operates. With new technologies becoming available, companies may be able to decrease their costs, at the same time improving their productivity, boosting quality and improving the value of compliance to the company by focusing more on their digital compliance. This will allow them to enhance their customers’ online experience and improve the overall regulatory compliance of the company.
Two new regulations were introduced last year – the Senior Managers Regime and the EU Market Abuse Reporting. The Senior Managers Regime, for banks and other financial institutions in the UK, focuses on individual accountability and taking reasonable steps to prevent anomalies. The EU Market Abuse Reporting aims to guarantee the integrity of European financial markets (and therefore digital compliance) by prohibiting any unlawful behaviour in the financial markets. From May 2018, any organisation that fails to comply with EU General Data Protection Regulations (GDPR) will be subjected to heavy fines. Using digital technology, a supervisor would be able to see anomalies seconds after a trade.
This compliance which covers the market, the trader’s behaviour and the financial institution’s policy is able to significantly reduce the probability of non-compliance. Every anomaly can create a profile which can be analysed by management. With digital compliance, speed is introduced and that, combined with the digital fingerprints that are created with each anomaly, enable authorities to prevent or apprehend malicious behaviour. These digital fingerprints allow the organisation to reconstruct the sequence of events of the anomaly creating a timeline to develop a full picture that offers the opportunity for analysis of the entire event.
Areas of vulnerability and hot spots can be highlighted with digital technology, combining with bank, market sources and social data. Once these areas of vulnerability have been detected, they can be checked both before and after trades. Rules and specified levels of exposure can be built into digital technology and these can trigger alerts once breached, allowing a management team to be alerted in real-time for immediate action.
Improving Digital Compliance
It can be built in stages, in order to develop communication between various aspects of a business, including stakeholders and regulators. This allows the company to identify the most pressing issues and focus on these issues first in order to develop a level of compliance that prevents breaches. Regulations will continue to evolve across all industries in the future and the digital experience of customers will continue to expand, making digital compliance an increasingly important area for all businesses.