NatWest’s recent decision to ban popular messaging platforms like WhatsApp and Facebook Messenger on company devices has reignited debate over how financial institutions manage off-channel communications.
Brad Levy, CEO of Symphony shared his insights with RegTech Insight on why channel bans are only a temporary solution to a complex issue. Levy argues that there is no need to block/remove these apps from devices if staff have the right controls and tech in place to stay compliant and facilitate the instant communication clients are demanding.
Regulatory enforcement actions for failures in e-comms controls and archiving heave been well publicised for more than two years now, so what factors might be preventing firms like NatWest adopting this technology, beyond initial budgetary constraints?“I think this is true in the context of the US,” notes Levy. “Over the past few years, the SEC and CFTC have been probing the use of off-channel communications in financial services firms and as a result have issued approaching $3bn worth of fines. These cases have gotten a lot of publicity and serve as a cautionary tale for other firms to update their technology in order to make sure they’re compliant and can still have instant communication with peers and customers,” he says.
However, he notes that, “In the UK, we’re only just starting to see this level of interception by regulatory bodies. It was only this year that the FCA announced they’re launching a similar probe, and big banks are starting to react to this – NatWest’s decision to ban these messaging platforms is a quick and initial reaction to what’s coming, but I expect what will follow this is the roll out of compliance-enabling platforms as part of a longer-term strategy,” he says.
The longer-term risk of a channel ban lies in its potential to create a compliance paradox. While intended to simplify adherence to regulatory requirements, bans may inadvertently complicate oversight as employees attempt to circumvent them, particularly when dealing with high-value clients. Moreover, they signal a reactive rather than proactive approach to compliance, which may erode trust among both clients and regulators.
Firms that take a more forward-thinking stance by adopting compliance-enabling technologies should be better positioned to meet regulatory expectations without compromising client experience. By offering secure, traceable, and user-friendly platforms, these solutions strike a balance between compliance and operational efficiency, reducing hidden costs and safeguarding the firm’s reputation in a highly competitive market.
“Banning these platforms has to be an interim exercise,” Levy continues, “ Financial professionals use these channels and applications, such as WhatsApp, because their clients and peers demand instant communication – that’s just the world we live and work in. And the level of usage varies across regions.”
But regulators require that all communications channels over which business is conducted are supervised and archived and subject to supervisory oversight which e-comms messaging apps like WhatsApp are not designed to do ‘out of the box’.
“The solution is to invest in technology that provides staff with instant communication so they can meet client’s expectations, but also protects them from being brought over the regulatory coals. These platforms are purpose built, so help employees achieve high levels of productivity whilst complying with existing and new regulations,” explains Levy.
Commenting on UK readiness, Levy continues, “To date, UK firms haven’t been under the microscope like firms in the US, but they soon will be. The FCA is launching a similar probe to the SEC and CFTC, and if we’ve learned any lessons from across the pond it’s that most firms aren’t prepared,” he notes. “The UK has the advantage of learning from these cautionary tales, but what NatWest’s decision indicates is that UK firms don’t have those long-term strategies in place just yet. Next year will be really important for UK firms to get their plans in place and execute.”
Compliance is often viewed as ‘cautious red tape’ and a hinderance to business, but it’s not optional. Failure to work in line with regulation is a symptom of a lack of internal control, which poses serious reputational challenges for the firm, threatens to negatively impact share prices and irritates stakeholders.
Embracing the appropriate technology can help firms stay compliant whilst enabling customer-facing staff to communicate and work in the way they prefer – boosting overall efficiency as well as employee satisfaction.
Purpose-built platforms like Symphony with its established track-record can bring off-channel communications under supervisory control and compliance. “What we created in 2014 was a platform that’s purpose made for financial services professionals and enables them to have effective communications, but also makes conversations easily traceable and accessible to regulators,” explains Levy. “With the advent of AI, we’re adding more capabilities that are fine-tuned to financial jargon and can easily flag suspicious conversations on messages, but also over the phone. Thanks to technological developments, communication solutions on the market are increasingly tailored to the industry.”
Understanding where to begin can be a daunting task when confronted by a new set of regulatory obligations which RIAs and wealth managers will be facing as the Financial Crimes Enforcement Network’s (FinCen) AML/KYC rules are extended to RIAs, wealth managers and previously exempt buy-side firms in January 2026 – see the recent RegTech Insight article here.
Levy suggests firms begin by, “Understanding how employees communicate with peers and clients – if it’s WhatsApp, for example, then your firm is at risk of regulatory breach. But firms should also consider how much time is spent manually reviewing transcripts and conversations on approved channels to identify suspicious activity. If the answer is too much, then they should look at automating these processes,” he says.
Practitioners looking to build their business case need only to point to the US firms that have been fined millions of dollars under SEC and CFTC enforcement actions, and Levy expects “the same level of scrutiny from other regulators.”
The investment needed to update communication systems and introduce the right surveillance technology is significantly less than the amount of money that has gone into fines and additional costs of retaining outside counsel which can be considerable.
“These regulatory risks can be avoided with the right level of planning, says Levy. That’s the business case.”
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