The newest addition to the guardREC® Compliance system aims to make compliance monitoring more efficient and offers new opportunities to show and document your proactive compliance efforts.
The MiFID II directive requires all investment firms to adopt a proactive stance on compliance. Simply recording all phone calls and electronic communication that may lead to a transaction is, by itself, not enough to meet the rigid requirements of the directive. To fully satisfy these requirements, finance companies must actively monitor communication to ensure compliance with regulations and minimize the risk of violations.
While compliance officers should spend time training consultants and brokers to operate in line with rules and regulations, their primary responsibility is to monitor calls and identify transgressions. The main complication is, of course, that large firms may make hundreds, if not thousands, of calls every day – making the task of the compliance department all but impossible to carry out satisfyingly.
Today, most compliance officers rely on random sampling and manual checks to find deviations and identify potential risks in spoken voice communication. While this may serve as evidence of a proactive approach, it is a time-consuming method that may miss out on potentially damaging violations of the MiFID II directive.
High quality and accuracy
To improve on this, guardREC has implemented an innovative speech-to-text module in the guardREC® Compliance solution. This new function provides an automatic transcription of spoken communication and enables compliance officers to search for specific words or phrases within phone calls – eliminating the need to listen through each call.
– We have been talking to our clients about built-in speech-to-text transcription for a couple of years now and we know that this is something the market has been wanting for a long time, says Joachim Thougaard, Sales Manager Bank & Finance at guardREC.
First implemented for a small selection of clients, part of a pilot project, one year ago, full implementation was put on hold due to unsatisfactory quality and accuracy.
– We’ve monitored development for the last year, and recent tests on a multitude of Teams recordings, in both English and Norwegian language, show that both quality and accuracy have been massively improved. Accuracy is now at over 90% even when speaking in a broad Norwegian dialect, says Thougaard.
Speech-to-text eliminates guesswork from call monitoring
At its core, the speech-to-text module is an addition to the guardREC® Compliance solution that aims to make proactive compliance efforts more efficient by providing a less time-consuming method of checking phone calls and other voice communication channels.
By searching red flag terms like “risk-free investment” or “guaranteed return” compliance officers can easily identify deviations and irregularities at an early stage, follow up on potential issues and evaluate possible measures to be taken.
This method not only saves time and resources, but it also leaves much less of your compliance work up to chance as it enables compliance officers to sharpen their risk-based approach and make targeted searches, rather than random sampling and listening to a few, select conversations.
Additionally, the system enables your compliance department to create filters based on specific words or phrases. The system can then populate review queues and lists with calls where these words or phrases appear. This further eliminates the guesswork from your proactive compliance efforts and gives you an advantage, should financial authorities require insight or show up for an on-site audit.
Other areas of use
In addition to general compliance monitoring, the speech-to-text functionality is an excellent tool for identifying and extracting incidents related to insider trading and wall crossing. Should the suspicion of wall crossing arise, compliance officers can quickly determine the time up until the point where information in question became publicly available and filter all conversations related to the subject.
Another area in which the speech-to-text function may be applied is customer retention. By searching for typical words and phrases that might imply dissatisfaction towards the company or specific consultant or broker, you have a much better chance of reaching out and defusing the situation before it is too late.
Benefits of the speech-to-text module:
- Enables you to better show and document good, proactive compliance
- Streamlines compliance monitoring
- Enables a more holistic search in customer dialogue, across both audio and text
- Automatically identifies high-risk calls
- Saves time and resources for the compliance department
- Eliminates the guesswork from your proactive compliance efforts
- Allows you to better identify incidents of potential insider trading and wall crossing
- Aids customer prevention by identifying potentially dissatisfied clients early
Trainable and constantly improving
The speech-to-text module is still at an early stage, and the full range of functions is still in development. However, the main functions in terms of transcription and search are already up and running, accessible to clients, and working with great accuracy for most major languages – English, German, French, Spanish, etc. – as well as Nordic languages.
– The transcription module is trainable and we are working with our clients to improve accuracy related to the language of the finance world, including industry-specific terms and phrases, product names, company names, etc., says Thougaard, adding:
– In the end, the important thing for us is not 100% accuracy, but rather that the software picks up on those critical words and phrases that compliance officers are actively searching for.
Complete overview in one single system
The purpose of the guardREC® Compliance solution is to be a centralized system catering to all your compliance needs. By adding speech-to-text transcription, users get yet another tool enabling them to access a complete, holistic overview of all your compliance efforts in one single system.
This simplifies internal audits across a range of communication channels, improves data security by not having to transmit information between systems, and, most importantly, streamlines the work of the compliance department.
GuardREC is a Norwegian Reg Tech company providing leading recording and compliance solutions. The solutions are aimed towards international customers in Banking and Finance and Air Traffic Control. GuardREC has 20 years of experience in development and delivery of security-critical solutions. The recording solutions is specifically designed to help organizations comply with increasingly stringent legal and industrial requirements and regulations. GuardREC is a subsidiary of Hatteland Technology AS and a part of Embron Group.