Melbourne, Australia –01 February 2022 – Cognitive View, a communication monitoring platform, today announced it has joined IBM’s (NYSE: IBM) growing ecosystem of more than 125 Global Systems Integrators (GSIs), Independent Software Vendors (ISVs), SaaS providers, and FinTechs supporting the IBM Cloud for Financial Services. The IBM Cloud Framework for Financial Services is designed to address risk in the digital supply chain through a common set of security controls that are adhered to by the entire ecosystem.
A growing portion of the $1 trillion hybrid-cloud market opportunity is comprised of the financial markets industry, which is expected to increase nearly twenty percent by 2024. Key findings in a recent IBM internal analysis suggests that Cloud is expected to account for about 60% of that future market opportunity as financial institutions are accelerating innovation to meet heightened customer expectations, deliver consistent services in the face of challenges like the global pandemic, and navigate the ever-complex regulatory environment.
Cognitive View monitors communication and collaboration channels to automate compliance, quality, customer experience, and conduct risk. It provides the necessary tools to create a customer-centric culture and risk-based supervision to reduce operational risk. It supports voice, video, and text data and integrates with hundreds of 3rd party systems, including MS Teams, Cisco WebEx, Zoom, Genesys. As Cognitive View targets regulated industries like Banking and Financial Services, IBM Cloud provides the necessary security and control framework.
The industry’s first financial services-ready cloud, the IBM Cloud for Financial Services uses IBM’s fourth-generation confidential computing capabilities and “Keep Your Own Key” encryption delivered via IBM Cloud Hyper Protect Services to help partners and their customers retain control of their data and transact with financial institutions in a secure environment. The IBM Cloud Framework for Financial Services is designed to reduce third- and fourth-party risk in the digital supply chain through a common set of controls and processes that are adhered to by the entire ecosystem. The built-in controls are engineered to help customers accelerate innovation, unlock new revenue opportunities, and decrease the cost of compliance.
“We welcome the opportunity to offer our Regtech solution hosted on a highly secure cloud supporting the industry-standard controls required by regulators. It will accelerate customers’ adoption of innovative Regtech solutions,” said Dilip Mohapatra, Founder & CEO, Cognitive View.
“We designed the IBM Cloud for Financial Services with a control framework to help financial institutions accelerate hybrid cloud adoption and drive revenue growth while addressing their need for a secure and compliant partner ecosystem,” said Brendan Kinkade, Vice President, Technology and Hybrid Cloud Partnerships, IBM.“By collaborating on the IBM Cloud for Financial Services, partners like Cognitive View can transact with financial institutions on their journey to modernization.”
Cognitive View is part of IBM’s partner ecosystem collaborating on the IBM Cloud for Financial Services to help partners accelerate transactions with financial services institutions. The IBM Cloud for Financial Services is designed to help financial services institutions as they address their requirements for their regulatory compliance, security and resiliency. IBM’s partner ecosystem is fueling its hybrid cloud platform by accelerating cloud adoption to drive client digital transformation.
About Cognitive View
To address misconduct, compliance failures, fraud, bad customer experience, and support remote work requirements, Cognitive View has developed a Regtech platform. Its AI-based communication monitoring analyses voice, video, and text-based channels to automate compliance & conduct risk. It integrates with all major contact centers and collaboration channels. Headquartered in Australia with offices worldwide, you can find more about us by visiting www.cognitiveview.com
Note: This report is based on internal IBM analysis and is not meant to be a statement of direction by IBM nor is IBM committing to any particular technology or solution.
- IBM Global Market View, Banking and Financial Markets Industry Markets Opportunity, March 2021.
Remote work is gaining momentum across the world. It’s difficult to say how many companies have adopted remote work since the pandemic crisis began, but Gartner researchers provide some insight in one of their recent surveys.
There are several advantages to adopting remote working, but the process has its challenges. It takes effort to stay connected when you are not physically there with your coworkers, team members, or colleagues, and with a little innovation and creativity, you can maintain high productivity and engagement with your employees.
Some Pointers on Managing a Remote Team
Choose The Right Infrastructure
To achieve the speed and agility required for a smooth transition office to WFH you may have to consider technology infrastructure that can support the flexibility needed, e.g. cloud-based contact center and customer communication and collaboration solution.
Use team Collaboration Tools.
Collaboration tools strengthen the team dynamic and build stronger bonds between employees who may not meet in person.
Establish New Rules Of Meaningful Employee Engagement
According to a survey published in The Wall Street Journal, one of the most important criteria that distinguishes successful organizations from others is that they provide employees the feeling of belonging.
A study reveals those who work from home complete their jobs 39 percent faster than those who work in an office workspace. Employers must, however, create clear and quantifiable goals for their remote staff to set them up for success.
Adopt Remote Monitoring Tools
With most communication happening through text or video calls, this leads to massive data build-up and challenges in supervision.
The use of physical surveillance and phone monitoring is not feasible in the WFH scenario. Instead, employers must adopt AI-based quality assurance and compliance monitoring.
Track employee activities, goals, and rest parameters using tools and analytics. AI-driven quality assurance systems are one of the essential ways to manage remote employees.
Misconduct is not limited to customer-facing interfaces only; instead, inter-employee communication is also critical for detecting misuse.
Provide Personalized Feedback
Leaderboards are fantastic, but nothing matches one-on-one feedback. Supervisors should set aside time to engage with employees through video and evaluate client interactions, reinforcing appreciation and telling them that individual performance counts.
Building connections and resolving disputes through active listening is achievable when you align technology and communication. The goal is to include mediums that give a plethora of info and communication cues.
Optimize Upskilling With AI-driven Tailored Learning
Use a variety of distance learning strategies that have been proven to be the greatest fit for each employee using AI models. This includes video, team roleplays, and gamified learning.
Avoid Micromanaging employees And Instead Macro-manage Customer Experience.
While it’s disappointing to lose direct visibility into how employees spend their time when they work from home, top-line CX measures like C-Sat and NPS can be useful. Shift the focus on daily customer support KPIs for your organization, such as interaction quality and customer happiness.
Conduct Risk Monitoring And Control
It is necessary to design a conduct risk strategy. A risk-based supervision paradigm with a balanced scorecard is essential.
All channels should be included, as well as real-time risk insights compared to commitments and a risk-based supervision approach. Humans in the loop are critical, and AI must be implemented. As AI is used in compliance risk, ethics, biases, and transparency are all essential.
Promote A Positive Culture
Harsh controls are futile. Culture should be the focal point. Culture and creativity necessitate some face-to-face connection. This is crucial for long-term organizational efficiency because it fosters mutual understanding and a feeling of shared identity.
According to Gartner, by 2023, fewer than one-third of digital employees will prefer to work in an office setting.
The most effective approach to successfully managing this continuing predicament and preparing for another crisis is to embrace cloud technology– specifically SaaS platforms.
Businesses that invest in their people, policies, and technology to support remote work facilities will reap significant benefits in the short and long term.
With the onset of the Covid-19 pandemic, businesses were forced to embrace remote working almost instantly without any scope to prior preparations. Now, as the economy recovers, more people are sticking to flexible work schedules.
The Financial Conduct Authority (FCA) of the United Kingdom has now issued guidelines to firms to meet their “regulatory obligations” while managing a remote or hybrid workplace.
The remote work “regulations,” according to the FCA, apply to current companies, organizations requesting to be regulated, and firms intending to submit further applications.
It added that remote working should have no impact on the company’s location in UK or ability to fulfill the threshold conditions for the regulated activities for which it has approval.
The FCA advises companies to assess their remote and hybrid working arrangements on a “specific instance approach.” Existing firms that want to go totally remote should be able to show that not having a central office location will not hamper the company, its workers, customers, or the market.
According to Principle 11 of the FCA’s Principles for Businesses, any substantial changes to how a firm plans to operate may need prior notification to the regulator.
Businesses must also demonstrate that their remote working arrangements are well-planned.
The FCA offers a list of advice that includes the following:
- Review plans before making any permanent changes in the workplace.
- Practice proper governance and supervision across the departments in the organization or firm.
- Risk management, compliance, and auditing must be unaffected.
- Firms must take cybersecurity measures into account.
- Firms and organizations should continue to maintain appropriate record-keeping.
- Companies may also be obliged to inform the FCA of changes to their operations, depending on regulatory requirements.
The FCA and regulators should be able to receive information and do their job, and the remote working arrangement must not create any hindrance.
Separate guidelines were issued by the FCA for firms seeking approval or planning to register.
The suggestions include the following:
- Make arrangements for consumer access
- Determine a place where FCA can visit.
- Continuity of preparations in case of a Wi-Fi interruption at home
- Consider the legal consequences of operating a business from a distance and remotely.
- The location of top management and their objectives for monitoring the company’s operations.
- Confirm that your processes and procedures are consistent with the agreements.
- The estimated duration of the arrangements (if not permanent).
- How your company plans to respond to complicated consumer demands.
- Customer authentication and vulnerability assessments setups.
- A company should inform the employees that FCA visits may take place in their homes.
- Plans for compliance audits to ensure that the remote working methodology is working appropriately.
According to a thematic research report by Global Data, “[Office work] will not be the same after Covid-19.” Physical settings will change, and remote working with the help of technology will become the new norm for millions of people across the globe.
The FCA stated that “the above mentioned is a suggestive and non-exhaustive list”.
Any remote or hybrid working approach that is adopted should not risk or compromise the firm’s ability to follow all regulations, regulatory standards, and obligations or result in a failure to meet them.
You may find the complete list of the remote work guidelines on the FCA’s website.
The ASIC (Australian Securities and Investments Commission) has updated its regulatory guidance on the prohibition of hawking financial products in the country.
The regulatory guide (RG 38) portrays the changes in the anti-hawking system under the Financial Sector Reform 2020, commencing on the 5th of October, 2021. It also clarifies how the reform affects commercial practices and how an industry can comply with it.
In 2018, ASIC identified bad sales behavior and poor customer outcomes by assessing unsolicited life insurance sales calls, where 40% of the consumers reported feeling pressured to buy a product.
In 2019, the ASIC passed legislation prohibiting the unsolicited selling of direct life insurance and consumer credit insurance.
In July 2021, ASIC issued Consultation Paper 346 Updates to RG 38 The hawking prohibition in July 2021, asking stakeholder opinion on proposed RG 38 (21181MR) updates. ASIC received 19 written submissions and carried out a meeting with industry and consumer groups on multiple occasions.
The proposed reforms were designed to tackle the harm caused to consumers by unwanted products sold to them through cold calls or other unwelcome contacts.
ASIC Deputy Chair Karen Chester said, ‘These updates put in place fairness measures, so customers are not offered items they don’t want or need. The prohibitions mean a consumer’s need will determine how any business offer products. ‘
The reforms introduced by the government mean that customers will have more choice over how and when they are offered products, instead of being amidst a situation where they feel
forced to make snap decisions. Under the new law, ASIC will have the power to deal with businesses that pressure people into purchasing products that aren’t beneficial for them.
The guideline clarifies industries on how to comply with the system and how the reforms influence business operations. With the constructive responses from the industry and other stakeholders obtained throughout the consultation process, ASIC improved its guidelines. Additionally, ASIC also shared 12 samples of the input received.
ASIC has said that at the start of the new obligations, which start during the first week of October, it will take a fair attitude if industry players make best efforts to comply (21-213MR).
Key features of the reforms include:
- All financial products (as specified in the Corporations Act 2001);
- A definition of “unsolicited contact” that includes any “real-time engagement in the manner of a conversation or discussion” without consumer agreement, in addition to in-person meetings and phone conversations;
- Consumer assent to contact must be voluntary, positive, clear, and reasonable to comprehend;
- The consent be only valid for six weeks from the date it is given and that the consumer has the right to withdraw it at any time; and
- A statutory right of return for customers who have been subjected to hawking.
The Treasurer has approved regulations exempting certain products from the hawking regime since ASIC published its consultation. RG 38 provides a summary of products that are exempt from the hawking prohibition under the Corporations Regulations.
For further reading: ASIC, 21-257MR ASIC publishes guidance on hawking reforms, [media release], 23rd September 2021.
Continuous control monitoring (CCM) is a technology-based solution for constantly monitoring processes and leveraging sample-based testing methods for more cost-effective monitoring. CCM lowers audit costs by continuously monitoring transactional systems.
A simple Control Monitoring isn’t enough to keep things under control.
In a digital world, the control environments can not keep up with the difference in the ever-changing regulatory requirements and evolving risk dynamics. Reviewing thousands of processes, systems, and geographical locations, companies often find many overlapping and redundant controls and a significant manual effort to test and report the efficacy of the control environment. In addition, control rationalization and operationalization continuously keep the cost high.
Teams that keep an eye on risk must be aware of the rapid changes that might occur in an elegant setting on a minute-by-minute basis. Whatever the environment, whether it’s new product launches, financial information, or confidential customer information, it must be monitored and analyzed. Unfortunately, companies can’t keep up with this level of examination with only human resources. Unless a continual auditing process uses automation to achieve its goals, humans will make mistakes.
Therefore you see the old form of control monitoring is unacceptable, and there is a growing need for control definition to support new operational requirements and adapt to the hybrid work environment.
Control Monitoring with AI-based automation
Organizations need to plan for control transformation where internal control functions should include a common language of risk and control that offers clarity and centralizes tasks that can drive efficiency. With highly automated and real-time control environments, real-time identification of issues, rapid course correction, and optimal resource allocation for testing and monitoring controls allow management to focus on driving growth.
Process automation tools like RPA and unstructured data analytics with NLP and machine learning have a lot to offer. AI systems can support real-time monitoring of control and can automatically adapt to the exceptions and reduce human supervision. In addition, predictive insights can help continuous risk sensing.
Things to consider when selecting a control automation tool.
- How flexible it’s risk taxonomy and control framework?
- Does it support control libraries, the level of granularity for control definition, and how easy is it to create custom ones and integrate them with AI
- Can the AI adapt to ever-changing risk dynamics?
- What level of human supervision is required?
- What level of transparency does it provide, and does it supports AI explainability?
- Does it support risk-based control testing, and how flexible and the level of automation?
- Does it support an Open API & how well is it integrated with business applications?
- What is the level of flexibility it has for the operational model in a hybrid work environment?
- How well it supports governance and workflow around the 3-lines defense model?
Understanding and addressing the drivers of conduct risk is fundamental in further developing standards of behavior. The sources of conduct risks can be categorized into:
- Inherent factors
- Governance and business processes
- Economic and environmental factors
Let’s understand these factors/ sources of conduct risks in detail.
Various inherent factors are causing the conduct risks in different businesses and industries. These factors can be seen as the combined effect of failures of the suppliers and weakness of customers. The situation caused by these factors becomes worse when the customers are not financially strong enough to buy the goods sold by the supply market. Moreover, these factors communicate with the already existing management, which is mixed completely with the financial market, creating conflicts of interest and causing conduct risks.
There are three inherent factors which are:
- Information asymmetries: The situation occurs when one of the two, i.e., sellers and customers, have more or less knowledge regarding the product. Mostly the sellers try to hide information in front of the customers, which results in a lack of symmetry.
- Biases, rules of thumb, and mental shortcuts: This is when buyers make decisions based on influence by the financial advisors, even if they have the complete information about the product. Here the customer makes decisions based on bias, available news or reviews, overconfidence in a brand, and framing.
- The growing importance of financial capability: when customers take decisions beyond their financial capabilities, conduct risks occur. A financial capability that can lead to unwanted results is a lack of confidence, understanding, knowledge, motivation, etc.
Governance and business processes
The conduct risks caused by governance and business processes of sellers fall in this category. The organizations’ structures, management, operations, and governance framework are executed to make the organization profits. These are not executed keeping in mind the customer benefits, resulting in bad customer feedback. This can be further broken into three factors:
- Conflicts of interest: disagreement between the interests of seller and customer is one of the severe threats to good conduct. Conflicts of interest cause conduct risks when the interests of sellers do not match with the interests of customers.
- Culture and incentives: A firm’s culture or the incentive model often causes disagreement of interest, causing conduct risks.
- Ineffective competition: When preliminary competition arises in the market, conduct risks are most likely to occur. The inadequate competition happens when the sellers sell their goods and services at much higher rates to earn enormous profits. This causes customers to switch the brand; hence firms lose valuable customers.
Economic and environmental factors
The economic and environmental factors play an important role in the decisions taken by the firm and customers. From time to time, changes along with new technologies affect these decisions even more. The financial market’s development greatly impacts the products and services offered by the firms — macro-economic developments that can affect financial markets and, in turn, the drawn-out requirements of consumers. Firms incapably reacting to these pressures can prompt poor conduct outcomes. These factors are those which are the cause of conduct risks but uncontrollable by the firms or customers. The economic and environmental factors can be categorized as:
- Economic and market trends: When the economy and the financial market evolves, it affects the products and services provided by the financial organizations, customer’s needs, and profits earned by selling the products.
- Technological development: In the financial industry, technological evolution has changed the way it operates. Now, everything from initiating a transaction to check transaction history is available online. This evolution has benefited the customers. However, the advancement of technology has created many risks related to financial services. The customers’ information is exposed online, fraudulent cases risen, etc., are few conduct risks caused by technology development.
- Regulatory and policy change: Regulatory and policy change must happen promptly to ensure the financial market’s development. The motive of structural changes in the financial market is to achieve better results for the consumers served by the banking institutions.
Conduct risk is available in practically all parts of a monetary foundation, driven by a company’s methodology, item, administrations, and sales lifecycle. Thus, there is no one-size-fits-all approach to manage conduct risk; each firm should handle it differently. In any case, firms can quantify and oversee conduct risk feasibly by catching risk data to foster a broad viewpoint on traditional sources and pointers of potential lead conduct risk failures.