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The Main Challenge in Financial Services Communications Compliance

Updated: May 10, 2023

By Ari Kaplan with Shiran Weitzman.


Ari Kaplan speaks with Shiran Weitzman, the co-founder and CEO of Shield, an Israel-based reg tech software company that focuses on workplace intelligence for compliance professionals.

Ari Kaplan

Tell us about your background and the genesis of Shield.


Shiran Weitzman

I've been working in the financial services technology sector for the last 20 years. I started in R&D, moved into sales, and became an entrepreneur in this area. Prior to Shield, I owned a small consulting firm, which helped financial institutions select and integrate complex software solutions. During this time, I was working with one of my customers that had to resolve an electronic communication compliance demand from the Commodity Futures Trading Commission. It looked relatively simple at first, but turned out to be very complicated, requiring the purchase of a multi-siloed solution stack. It took us two and a half years to resolve the issue and inform the CFTC that the institution was in compliance. Two months after we went to production, one of the communication vendors changed a minor element in the structure of its chat function, which completely crashed the system. Three months later, in mid-2017, I closed my consulting firm and partnered with an old friend, the co-founder, to start Shield. Now, we are a team of 60 in Israel, the UK, and the US.


Ari Kaplan

What's the main challenge in financial services communications compliance?


Shiran Weitzman

There are multiple challenges, such as unstructured data, which changes from medium to medium. WhatsApp is different from Microsoft Teams, which is different from Zoom and Bloomberg Chat. Each vendor has its own way of operating and there is no unified standard for capturing communications. Each platform is also a point solution so financial institutions typically have multiple programs capturing information. Now, there is a growing number of communication channels bringing new complexities and requirements to each firm. Working from home also complicates communication compliance because there are many false positive-driven solutions, which provide irrelevant alerts that are easily dismissed, but that raise operational efficiency challenges because organizations need people to review them.


Ari Kaplan

Do these challenges vary by jurisdiction?


Shiran Weitzman

Not really. There are nuances between different jurisdictions around the world, but regulations are similar in nature. Also, the communication channels are the same and the challenges of working from home are similar. Everyone wants to trade and communicate so they all basically follow benchmarks related to the same requirements, which simplifies compliance.


Ari Kaplan

How has the pandemic impacted the way organizations communicate and exchange information?


Shiran Weitzman

The level of the electronic communication has grown or scaled dramatically. There is much more internal and external correspondence. Also, compliance has been significantly impacted, especially since compliance professionals cannot walk around the office and convey a presence in front of their peers. They were blind sitting at home and need to perform their compliance oversight using digital tools, changing the way that they work. In order to leverage the volatility in the markets, we saw financial firms allowing or approving different communication channels that might have not been approved in a ‘normal authorization process’ and that is fueling greater adoption of different tools.


Ari Kaplan

As we return to an office-centric workplace, do you expect changes to the record-keeping challenges associated with working remotely?


Shiran Weitzman

I don't foresee changes in the way that regulated firms are handling, record-keeping or records management. The volume of data is much larger and we will slowly see the requirements apply to retail banking, or retail divisions within financial services.


Ari Kaplan

Do you anticipate greater regulatory scrutiny of communications in a post-pandemic environment?


Shiran Weitzman

Absolutely, and we have started seeing that already. At the beginning of pandemic, regulators were facing the same challenges associated with remote work and the need to move to the cloud, so they were providing a bit of slack to regulated firms in all jurisdictions. We saw much more intensity at the beginning of 2021, with increased enforcement and oversight.


Ari Kaplan

How do you see these various developments affecting corporate legal departments?


Shiran Weitzman

Legal departments and e-discovery teams are realizing that they need to be more proactive than reactive in their day-to-day work, such as by monitoring specific terms or behavior to anticipate investigations, rather than react when something happens. There is better technology available and compliance leaders want to use it. They are becoming more creative and the accuracy of AI is improving the ability of legal teams to make forecasts.

 

About the Author

Ari Kaplan (http://www.AriKaplanAdvisors.com) regularly interviews leaders in the legal industry and in the broader professional services community to share perspective, highlight transformative change, and introduce new technology at http://www.ReinventingProfessionals.com and his series at Legal Business World


Listen to his conversation with Shiran Weitzman here.


1 Comment


Very interesting, thanks for sharing!

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https://www.siulaudarba.lt/

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