Top 5 Financial Services Predictions for 2017

2016 was a roller-coaster year for financial services. What will 2017 bring?

Below, Smarsh shares its top 5 predictions for this year, specifically related to overall data governance, compliance, supervision and risk management trends for broker-dealers:

1. Firms that exercise superior data governance will have a competitive advantage. Firms are sitting on a wealth of information about their customers, partners, and prospects that can be analyzed for insights on how to grow their business. However, firms continue to struggle with the different approaches taken for data governance required for regulatory compliance, versus data that can provide business value. In 2017, technology providers catering to firms will make significant progress in helping to merge and leverage solutions that surface data for compliance and business value, all in one place. Firms will be able to do more with their archived data, and share more knowledge across compliance, IT, legal, risk management, and exec teams as a result.

2. Analytics will go mainstream. Related to the prediction above, analytics will become a bigger focus as business intelligence becomes a necessity for firms. Analytics will be increasingly used to inform decision making by C-suite execs. Machine learning, predictive analytics and visualization will be used to drive the data governance solutions that empower decision-makers, without the need for a highly-specialized degree to interpret data.

3. Technology vendors will also provide more security and cybersecurity support. Regulators continue to focus on cybersecurity threats as one of the most significant risks firms face. For instance, FINRA will continue to assess firms’ programs to manage risks, while acknowledging there’s no one-size-fits-all approach to cybersecurity. Now firms will seek tech solutions and providers that can help implement security processes and controls, and assist with preparation for ongoing assessments—tailored to their specific business model, size, and risk profile. In addition, to help fight against data leaks and breaches, tech providers will need to show they have strong physical security controls, internal controls and oversight, emergency response processes, authorization procedures, authentication procedures, identity management, privacy, security, and more.

4. Electronic communications retention and supervision systems will be under the microscope. Regulators including FINRA will continue to closely review firms’ compliance with their supervisory and record-retention obligations related to social media and other electronic communications, since these digital records have an increasingly critical role to play in the securities business. These obligations apply to business communications irrespective of the medium or device used to communicate. Under SEC and FINRA record-retention requirements, firms must ensure the capture of business-related communications no matter what devices or networks are used by an organization and its employees. Firms that don’t capture and maintain all business-related communications for review will find themselves vulnerable to receiving regulatory sanctions and fines once again in 2017.

5. Firms will turn their attention to solving the compliance challenges posed by text messaging. Many firms haven’t allowed reps to use text messaging for business communications or simply ignored/denied the ubiquity of this messaging channel. A barrier to addressing this elephant in the room has been thee perceived complexity of preservation and supervision of the content for regulatory purposes in every mobile scenario. Different options between the devices/operating systems, mobile carriers, and ownership scenarios (corporate-issued vs. personal devices) made retaining and overseeing this type of content seem unmanageable at best, or impossible at worst. Technology solutions have simplified the oversight landscape, making it easier for firms to adopt mobile communication and meet compliance obligations. The comprehensive archiving technologies available now reliably enable retention and oversight of text messages and greatly reduce the time and energy that a firm needs to spend on supervising this content alongside other communications, all in one place.