By January 2018, financial institutions will need to be fully compliant with the Markets in Financial Instruments Directive II (MiFID II) legislation. What does this mean? Well, in an effort to make financial markets in Europe more transparent and resilient, companies must prove that they have acted honestly and in accordance with client wishes. It also means that companies must record and store every interaction with a customer that leads to a trade for five years. Regardless of the original intent of the call, if that conversation evolves into a trade, the entire interaction must be logged.
Ensuring compliance with this regulation–by recording and storing every conversation–is no small feat. Compound this with the fact that customers communicate with companies across multiple channels, and firms will be drowning in a sea of customer interaction data. And, the price for these measures isn’t cheap: According to an estimate from EY Advisory, a typical medium-sized UK wealth manager is spending between £3m to £5m to get ready for MiFID II. In addition, a staggering 300,000 employees in the UK alone will fall under the new regulation as the new regulations cover a wider range of employees beyond the traders covered under present regulations.
To ensure compliance, companies will have to govern communication on company-issued devices as well as applications loaded to personal devices. However, the difficulty lies in the fact that conversations will take place over non-recorded channels, and companies must find a way to govern them. For MiFID II to truly work, companies must perform due diligence to identify those conversations fall off the radar.
Taking this all into consideration, financial institutions are scrambling to find a feasible, cost-effective path to compliance, and the answer lies in analytics.
With Calabrio’s speech analytics technology, companies not only have the power to extract insights from recorded conversations, but analytics can also help identify conversation gaps, or those offline interactions that could prove to be critical. For instance, if there are no recorded calls from an employee in two or three days, alerts can be sent to management so they can dig deeper.
To ensure compliance success, financial institutions will need to implement analytics strategies, and there are two possible approaches to do so:
The Legacy Approach
The first option is to upgrade legacy solutions, which may sound like the easiest and fastest option. However, this will require additional hardware installation, expert personnel, software licenses and the hardware, itself, which can be a costly and ongoing proposition; the average lifespan of hardware is three to five years, and then the upgrade cycle starts again.
In addition, given the sensitive nature of the industry, privacy and confidentiality when recording calls is imperative. Often, legacy, on-premises solutions are less secure than their cloud counterparts, putting companies at risk with sensitive customer data. Equally, legacy solutions are not equipped with smart searching, making it nearly impossible to locate specific call information.
The Calabrio Approach
Given the nature of compliance needs and fast-approaching deadlines, the cloud may be the answer that companies are looking for. With Calabrio cloud technology, financial institutions have scalable amounts of storage and reduced costs of IT labor, as well as secure methods for recording and storing confidential calls.
Calabrio cloud deployments are faster than on-premises legacy solutions, and updates and upgrades are performed much quicker, which gives institutions access to the newest technology to ensure utmost compliance. With Calabrio’s utility-based subscription billing, companies also have a more economical option than constantly upgrading both internal hardware and software.
Most importantly, Calabrio allows companies to quickly create queries and drill down into pertinent calls, allowing financial institutions to stay ahead of potential compliance woes. These search capabilities are available at anytime and anywhere, over an intuitive user interface, which means companies can take action faster if something suspicious arises.
Up, Up and Away
Overall, the cloud offers a flexible, scalable, and cost-effective solution for financial institutions looking to hedge against potential compliance issues when the new MiFID regulations take effect, and Calabrio offers the right suite of tools to help financial institutions stay compliant while mitigating risk. With the help of the cloud, the finance sector can focus on implementing the right internal processes to ensure that their customers are getting the best, most ethical service from every single employee.
With MiFID II quickly approaching, it’s imperative that financial institutions are ready. Click here to learn more about how the cloud can make for a faster, easier, and more secure deployment.