Patrick Barnert, CEO of Qumram, which won Best Compliance Solution in the 2017 FTF News Technology Innovation Awards competition, is urging compliance executives to move faster to secure and control digital channels.
(FTF News recently interviewed Patrick Barnert, CEO and member of the board of directors at Qumram, winner of the Best Compliance Solution award of the 2017 FTF News Technology Innovation Awards. Qumram’s offerings help firms gather cross-channel intelligence and comply with regulation affecting digital channels. In this Q&A, Barnert reviews important moments from last year and calls on chief compliance officers to move faster to secure digital channels: “Despite the upward spiral of digital business, and the increased demands this places on compliance, chief compliance officers are not acting quickly enough.”)
Q: How would you describe Qumram’s business philosophy?
A: At Qumram, we believe that financial institutions should be able to conduct business via digital channels, and to satisfy the engagement preferences of customers and employees, without fear of breaching regulatory requirements.
Digital business is becoming the norm in financial services, but for many firms the perceived risk of non-compliance can hinder digital transformation.
We also believe that RegTech (technology solutions that address regulatory compliance) can utilize the same data collected to ensure compliance, to bring great value to the business — improve customer experience, open new channels of communication (instant messaging apps and social media), and prevent fraud.
Q: Have digital interactions made regulatory compliance more difficult?
A: Yes. The volume of digital interactions has sky-rocketed; financial firms are now providing services that involve regular touch points with their customers.
Digital interactions come in many forms: websites, online banking portals, native mobile apps, third-party social media and fully-encrypted instant messaging apps, such as WhatsApp, WeChat and Facebook Messenger.
The technical and business challenge associated with engaging via these multiple channels, in a compliant manner, is exacerbated by the sheer volume of regulatory controls.
New and innovative technology solutions are required to ensure compliance, because traditional manual processes and legacy technology platforms are ineffective and not scalable.
Q: What digital-related compliance issue surprises many firms?
A: The three primary aspects of digital compliance that surprise financial services customers are:
- Pace of change in customer demand for digital interactions. Many have been caught off guard by the rapid rise in customers wanting to communicate via WhatsApp, for example. Failure to adapt quickly puts these firms at a competitive disadvantage, and accelerates the need to record every client interaction to ensure compliance.
- Extent of digital channels governed by compliance. Many financial firms still believe that regulatory requirements for digital record-keeping are limited to voice, face-to-face meeting minutes, email interactions. They are not. Regulators require public websites, client portals, social media conversations and instant messaging chats to be recorded in exactly the same way.
- Compliance data can leverage value across the business (e.g. Marketing, Operations too). RegTech solutions like Qumram can be used to analyze customer behavior and experience, enhance customer service, and prevent internal and external fraud.
Q: What developments in 2016 helped Qumram distinguish itself against the competition?
A: In 2016, the use of modern digital channels in financial services rapidly increased.
Customers rarely visit branch offices anymore; many closed their doors by 2016.
Digital channels are utilized for 75 percent of all customer interactions; experts forecast this figure will rise to 95 percent by 2025.
The escalation of social media utilization, and especially fully-encrypted instant messaging tools such as WhatsApp and WeChat in financial services, is astonishing.
Given this trend, Qumram is ideally positioned to lead the field for digital interaction record-keeping. Our ability to capture digital interactions in real time, and replay them exactly as the customer or employee saw them is — in Gartner’s words — ‘unique.’
Q: Why is it important for Qumram to be open to third-party developers?
A: Speed matters in innovation. Return on investment matters to our customers.
By working with third-party developers, Qumram accelerates time to value. The rich, high-quality data that Qumram records, across all digital channels (web, mobile and social), is used by third parties to generate added value.
For example, Qumram is working with one third party to enable a private banking customer to analyze behavioral data captured by Qumram, and use the results to predict the next best action for relationship managers.
Q: What industry trends for 2017 and beyond are causing you the most concern?
A: Despite the upward spiral of digital business, and the increased demands this places on compliance, chief compliance officers are not acting quickly enough.
Those who sanction the use of digital channels are often utilizing their preferred approach of throwing people at manual compliance processes, to address digital compliance; this is not scalable and is proving very costly.
Others are simply prohibiting adoption of digital channels. While this clearly reduces the compliance risk, it will lead to disengaged customers, competitive disadvantage, high attrition rates, and lower revenues.
The digital revolution is customer-driven — financial firms led by compliance teams that veto digital interactions are introducing new business risk of the highest order.
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