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How tech can save the day on MiFID II compliance

05.jpgBrian Martin looks at speech-to-text technology - which he says could be a key part of MiFID II compliance for 'behind schedule' financial advisers

As late as December 2017, 39% of financial firms in the UK were unaware whether their organisation was compliant with the Markets in Financial Instruments Directive II (MiFID II), according to research.

Now that it's 2018, and the deadline (3 January 2018) has passed, it would be interesting to know how many organisations have actually made inroads to understand and achieve MiFID II compliance. 

If it's not already on your to-do list, then it really should be.

MiFID II's express aim is to fundamentally alter the behaviour, structure and transparency of financial markets. The legislation seeks to provide investors with clarity of all expected point-of-sale costs and charges, including the impact on investor returns. 

It affects all financial institutions that deal with voice communications, meaning they should be aware of the radical and far-reaching changes MiFID II now requires around voice record-keeping and discoverability. 

Crucially, the penalties for failing to comply are severe, with businesses facing fines of up to €5m or 10% of annual turnover.

And with the legislation already in effect, regulators will be looking to make examples of those who fail to comply. No organisation wants to be the first to fall afoul of a fine of that size. 

Consequently, financial institutions should be looking to identify where they are not compliant and find immediate remedies that can be implemented rapidly. Luckily, there are technology innovations formulated with MiFID II in mind can reduce the time and complexity of regulatory compliance. 

Where Speech-To-Text Can Help 

Now that MiFID II is in place, financial service firms have new requirements when it comes to recording and storing calls (both landline and mobile) as well as email, social media and SMS communications.

Firms must now keep records of these interactions for a minimum of five years - whether they resulted in a transaction or provision of services or not.

And, crucially, the regulation calls for greater rigour in the storage and discoverability of all this data - all records must be stored in a durable and easily accessible format.

So, unless you became MiFID II compliant before the deadline, it's unlikely your organisation will have the capabilities to record and store data in this way. Prior to now, businesses rarely had a reason to keep call data for as much as seven years. 

This is where speech-to-text platforms can help. The technology rapidly and accurately converts any recorded call into an easily-searchable text format. Not only does this make it easier to store and discover call information, but it makes the data much easier to investigate, as the regulation requires. 

MiFID II places an incredible burden on financial institutions to analyse thousands of conversations, featuring multiple parties communicating across numerous mediums over a long period of time.

But with speech-to-text solutions, time consuming manual analysis of call information can be dramatically reduced.

A mixture of keyword spotting and trend identification be used to detect high risk calls that should be flagged to security officers for further action. And, as the process is carried out automatically and algorithmically, call review times will be drastically reduced to the point that 100% of conversations can be analysed, instead of just a handful. 

It's Time To Act 

If you haven't yet become MiFID II compliant, then you've already left it too late. With the regulation in effect, it's only a matter of time before a financial services institution is handed down a huge fine for non-compliance. 

Speech-to-text solutions can help you meet the requirements of MiFID II and avoid such a fate.

What's more, they are quick to implement and customise to the specific needs of your business. At this point, it shouldn't be a case of when you can make the changes, but how fast.

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