Message received: Time for UK banks to get clear on Whatsapp

IN THElast year, multiple banks in the US have paid a high price for staff use of unmonitored private messaging services and personal devices. The most recent one –two weeks ago –received a $15m (£12m) fine from the US Securities and Exchange Commission (SEC). To date, the penalties add up to more than $2bn. Executives and staff at these institutions have also seen their pay impacted and jobs lost by various compliance failures, including the unmonitored use of Whatsapp for business matters.

It won’t be long before the UK financial sector likely experiences a similar wave. The Financial Conduct Authority (FCA) is already looking into the matter, with banks facing ongoing questions about their use of private messaging, as the watchdog decides whether to launch a full probe.

It’s easy to dismiss compliant communication as merely cautious red tape, but it matters. The 2008 financial crisis showed the long-lasting impact that irresponsible financial activity can have, and the need for regulators to be able to easily review communications.

Since then, regulation has sought to create more transparency and accountability in the industry, but these methods have been disrupted by the rise of technology and hybridworking practices.

As well as negatively impacting share prices and irritating investors, failure to work in line with FCA rules is a symptom of a lack of internal control, which poses serious reputational challenges for banks. Particularly in London, whose crown as Europe’s largest stock market has already been lost to Paris, this is an issue banks can’t afford to get wrong.

Ultimately, the vast majority of people are not aiming to break the rules. Banking and financial services are all about relationships, and there can be a tendency to “let things spill” into channels which are more suitable for personal exchanges. It is key that financial firms are incredibly proactive on this front, using the tools available to ensure the right controls and compliance mechanisms are in place to foster collaboration and meet clients where they are –be it Whatsapp, Wechat, LINE or SMS.

Revolut Ruling

Despite a two-year campaign from Britain’s most valuable fintech company, it seems the Bank of England is inclined to reject Revolut’s application for a UK banking licence. It’s been reported the problem might be to do with Revolut’s balance sheet and a concern around reporting figures on time. While this matter might get resolved, one important element to double down on is regulatory compliancereporting practices across the financial sector as a whole. Revolut is a poster child of British fintech, and its ability to be transparent and demonstrate financial controls matters.

£ Following the collapse of SVB and crypto ‘earthquakes’, the government has proposed new legislation in the Financial Services and Markets Bill currently making its way through the House of Lords. While it’s healthy for regulation to be periodically refreshed and scrutinised, this shouldn’t come at the expense of stability in the financial system, especially at a time of increasing volatility. For regulatory frameworks to cope, they will also need to embrace new technologies. Tools like machine learning and open-source collaboration can help finance teams keep ahead of new technology trends without sacrificing compliance requirements.