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Don’t just ‘be’ compliant…

Synetec Services

Compliance in financial services shouldn’t just be about buying technology in order to tick a box for the FCA and ‘be’ compliant.

The focus for many firms that we work with is to ensure that they fully understand their business and the market they operate in and put in place the correct policies and levels of assurance that are required to be proactively compliant and supplement with the best of breed technology.

The most forward-thinking businesses are those that are focusing their efforts on improving the use of ‘business intelligence’ and ‘big data’ and how these can enable better compliance. At the same time, this increased focus on intelligence can lead to improved business performance as well as compliance, the two do not need to be mutually exclusive.

Compliance, as has been seen in many industries, often drives innovation, and MiFID II is no exception. Many technology company’s products that have been designed to enable a firm to be compliant, such as call recording, are expanding their reach in order to supply accessible and readable data that firms can utilise, analyse and make work for them.

Business units are now becoming more aware of the volumes of data they generate and the value that is potentially stored within it and have the opportunity to put that data to use. Tools are available to interrogate data sets to understand trends and patterns in order to set the correct policies and procedures for better compliance. This interrogation, or analysis, can help to reduce organisational risk and exposure in certain markets.

In the current climate, financial service companies are required to capture and retain all communications data generated during a financial transaction and be able to reconstruct the transaction across all channels, be it a commodity trade, a mortgage application or FOREX transaction.

Under MiFID II firms will be required to monitor and examine this data for market abuse and product governance and understand the sentiment of client interaction. This increased engagement with communications data gives firms the power to improve business performance by understanding their client interactions better and look to improve client engagement.

Through transcription services voice calls can now be turned into text files and combined with meta data from all unified comms channels to form a single communications data set across a business.

Synetec is working with organisations to understand how this meta data can be turned into business intelligence. Through the creation of APIs, Synetec are able to ingest this data into a proprietary analytics engine called…(sorry, still TOP SECRET)…and through the use of Natural Language Processing and Machine Learning protocols can analyse it in accordance to each individual organisations specific assurance processes and risk parameters to provide real-time intelligence.

This BI will ensure that compliance is not just a tick-box exercise for the regulator, but also a way to proactively manage compliance and generate real time data that can be utilised by the business to drive smart decisions.

Specifically, clients will be able to use the base line functionality of the engine to monitor and analyse client interactions to understand the presence or absence of key words and phrases, such as disclaimers linked to a sale that has been made. This data will be generated in near real-time and procedures can be amended if it is deemed that there is a current compliance risk

In the upper levels of the engine the client will have the capability to program the system to map and report on the frequency over time of certain words/phrases in accordance with business critical incidents. For example, an FX trader may see higher than average usage of the words ‘yen’ and ‘dollar’ without an obvious external reason then the organisation is able to undertake high level investigations to ensure that there is no untoward activity. At the same time, the investigation may well uncover the fact that the business would need to increase their spread to account for the most probable requirement to increase margin as the spike in communications may signal a future increase in transactions.

At the top level of the engine clients will be able to run sentiment analysis, specifically the correlation of content, sentiment and sequence of critical incidents. For example, insurance claims can be analysed in order to ensure that product governance had been adhered too during the sale of a product and also able to detect irregularities that may indicate fraudulent claim activity.

Upgrading applications with .NET Core

At Synetec we have a passion for technologies and love breaking our comfort zone by learning new ones which benefits to upskill the engineers but also helps the company to move forward. We make sure that we can keep on track with our clients’ requirements.
This article exposes a real-life example. We are currently working on a project which consists of improving an old application written with Web forms. The big challenge at the beginning of the project has been to find a way to write a solution that we could deliver in a short period of time without rewriting the entire application. The approach was obvious, we had to rewrite step by step the application by extracting one responsibility at a time. For that we had to think about the technology to use, a technology that all engineers would be able to maintain and also a technology that wouldn’t need to be changed in a year’s time. .Net Core has been the chosen one for different reasons:
• .NET Core is one of the newest technologies therefore it brings better performances due to the code optimisation at compilation
• Less code is needed which means more readable by other engineers.
• Less code means that the application is easier to maintain
• .NET Core is cross platform. You can now use Microsoft technologies to write application for any device on any platform
• .NET Core is Open Source which means that any developer can contribute to improve the language anywhere in the world
Great we will write a .NET Core Api for various reason. Here are some points that motivated our decision:
• An Api can be consumed by any other application so it allows the features to be reusable
• We can have a better separation of concern. The front-end part of application should be separated from the back end and the back end should be composed of several modules each handling one responsibility
• With an Api first approach it can massively help a business diversifying its activities. With a good design it can help to build a good product base
• Once the application up and running it is a lot easier to add new features
The language is not everything though. A technology like .NET Core is not enough to build an amazing application. You have to think about your architecture as well. We deal with more and more data every day which is the reason why it is really important to make sure that you can write a scalable application. It is a way easier to improve and adapt an application created on solid foundations (without any bad wordplay ) .
We had to think about the architecture of the new Api carefully. The decision made was to implement a unit of work on top of a generic repository pattern. The reason is that the application is highly transactional and the unit of work is a good pattern for that kind of application. As for the generic repository it is a great way to bring an abstraction between your data access layer and your business logic.
As explained earlier in the article the project is an upgrade of an existing application which means that the data model is already existing. It was then a no brainer that Entity Framework Core was the way to go for the data access layer as it allows to create your entities with a simple line in a command prompt.
All the technologies listed in this article would each deserve at least a book so it is not possible to talk about them in details but don’t worry more will come where each will be detailed so make sure you follow us to receive our latest news.
As a conclusion we would just give a simple piece of advice “make sure to understand what you want to achieve with your application”. Answering the later question will definitely help you making the right decision.

 

Written by Tarik Miri

Compliance driving innovation at Synetec

The summer months saw more and more Synetec clients focusing on their MiFID II preparations with many asking us to advise them on ways they can become compliant but also to help them drive competitive advantage.

Some areas of MiFID II are driving businesses to start paying more attention to data that they are already compiling, and to date, often just storing to ensure they are compliant with existing regulation.

One example is voice call recording. Today, all companies that are regulated, and some others such as councils, record telephone calls. This ensures that if there is ever an investigation by the FCA, or police, that conversations can be accessed and listened back to help the investigation.

This process has flaws, the main one being that sell side businesses in financial services can often generate 10 hours of call content per day across multiple channels. A simple investigation may require the phone calls of 2 people to be analysed to asses potential fraudulent activity, in the above case this could mean a lawyer(s) having to sit and physically listen to around 300,000 minutes of conversation. This would take 1 person 2 to 3 years to complete which is both time and cost prohibitive.

Organisations also use these recorded phone calls, especially in contact centres with direct retail client engagement, to study the quality and effectiveness of communication with clients. However, a buy side firm with only 20 phone agents would generate over half a million minutes of conversation per year to be listened too. Detailed analysis of this data isn’t feasible and thus results in businesses not capitalising on their client engagement.

New regulations state that firms must be analysing their client interaction, in both buy and sell side firms, to ensure that there is no market abuse nor miss selling through poor product governance. This analysis allows organisations to monitor interactions with clients and in real time spot any potential irregular and fraudulent activity or simply poor operational procedures that result in non-compliance, such as an agent not providing a disclaimer on a sales call.

Redbox Recorders are ahead of the game in this space, not only does their service “enable you to meet the challenges of the evolving compliance and regulatory landscape, from PCI Suppression through to the complexity of GDPR, Dodd-Frank, and MiFID II”. Redbox now provide a full transcription service for all recorded calls. This breakthrough in innovation means that businesses can implement big data and data mining strategies across their companies in order to drive business value and mitigate risk.

Over the summer Synetec have been working with our clients to understand what they would like to do with this transcribed data in order to adhere to MiFID II compliance but also to use the data to find a competitive business advantage. The common response is to mine the information and provide the business with real time feedback. Both to the compliance team with respect to any irregular spikes in certain activity, as well as information to CEO’s, in real time, as to the trends in their organisation which can be used to make informed and timely business decisions.

Synetec, working with the team at Redbox in London, and our clients have built an machine learning analytics engine that ingests the JSON files from Redbox’s transcription service, as well as other communications data such as e mail, enrich it with meta data, and provide real time reports to business leaders.

Both the CEO and Compliance officer are able to make immediate decisions that can benefit the firm based on the real-time data analysis rather than waiting for the FCA to knock on the door.

Richard Robinson

@redronrich

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