Compliance, IT, General Business Concerns Converge
FRAMINGHAM, Mass. - Technology and business managers alike are finding that keeping good records is getting more expensive, more complicated, and in some respects, more important in today's brave, new world of identity theft, money laundering and, last but not least, regulatory compliance. Financial institutions, including credit unions, are finding...
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FRAMINGHAM, Mass. – Technology and business managers alike are finding that keeping good records is getting more expensive, more complicated, and in some respects, more important in today’s brave, new world of identity theft, money laundering and, last but not least, regulatory compliance. Financial institutions, including credit unions, are finding themselves collecting more and more information in growing numbers of formats and having to be able to find it when they need it and prove they are protecting it as well. It’s a complicated task and requires an enterprise-wide approach, according to Sophie Louvel, a Financial Insights analyst and author of a new report titled “Information Management Compliance: Get Your Information in Order.” While failures to comply don’t at all necessarily indicate a desire to deceive (Louvel says it can simply be the result of a wrong number in an Excel sheet or an inadvertently discarded e-mail), the consequences can be costly, as rules and regulations under the Patriot Act, Gramm-Leach-Bliley and more continue to proliferate and be enforced. For instance, Morgan Stanley was fined $2.2 million in July for, among other things, a failure to assign clear responsibilities to staffers that resulted in 1,800 late broker disclosures. Western Union, meanwhile, was dinged $8 million because its systems couldn’t identify all multiple transactions handled by all its agents in a single day. To deal with all this, Louvel advises that institutions design and deploy an information management (IM) strategy that requires that cooperation of business, IT and compliance managers alike. “Information management is not the domain of IT or of legal and compliance groups alone,” she says. The shift is beginning to happen, Louvel says. Business needs and compliance requirements, and the consequences when they aren’t met, are driving a convergence of IT and business unit spending and functionality that can be expected to carry forward, the Financial Insights analyst says. One of the challenges is the differences in dealing with structured and unstructured information. Louvel defines structured information as “financial and customer data that are stored in databases and business applications.” Unstructured information, she says, “includes paper and electronic documents, e-mails, images, video and instant messages.” IDC, Financial Insights’ parent company, estimates that unstructured information accounts for 80% of all corporate information. “Financial institutions are more challenged to manage unstructured content than structured content for two primary reasons,” Louvel says. “They have less experience managing unstructured information, and unstructured information is growing at a much faster rate than structured content due mostly to the explosive growth in messaging content.” Another challenge is deciding what tech gear to buy and who to buy it from. Louvel says compliance is driving two major investments in content-management solutions: those that manage documents describing businesses, risks, controls, and policies and procedures; and those that archive e-mails and instant messages while performing content monitoring. (This currently is primarily a concern for broker-dealers.) Storage itself isn’t a problem. That cost has been decreasing 50% to 60% a year since 1997, according to industry giant IBM. “Rather the difficulty today lies with managing information such that important documents and data are retained and made accessible to shoe who need ready access,” Lovel says. “Keeping all information and storing it blindly in storage servers is no longer an option today because that clouds the information most critical to the business.” -
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