Banks are required to comply with many different regulations. Ensuring full compliance with regulations, acting ethically, and conveying this transparency to their customers is essential for the banking industry. But not only because this is a way to gain a competitive advantage, but also because the failure of these aspects means the disappearance of the company (either because of its reputational damage or because of the costly fines it will have to face), especially for those in highly regulated sectors such as the financial sector.
Download Now: Churn Reduction in the Banking Industry
Some facts you should know
- In 2021, according to AEPD, the sectors most sanctioned for data protection breaches were banking and telecommunications.
- Financial institutions worldwide were fined $10.6 billion for regulatory non-compliance, including Anti-Money Laundering (AML) and Know Your Customer (KYC) practices in 2020.
- Payment fraud (59.6%) and data security (54.6%) are among leading friction points for cross-border payments.
The evolution and growth of regulatory demands, technological advances, and changing communications trends over the last decade have brought new challenges to the market and forced the banking industry to adapt to this constantly evolving landscape.
Of all the requirements imposed by international regulations that apply to the banking sector, call recording is the most repeated and therefore occupies a prominent place in the day-to-day life of highly regulated sectors such as the financial sector.
3 International regulations to be considered in the banking industry
The fact that there are numerous international regulations governing customer data protection can be confusing for banks, but it doesn’t have to be. Of all the international regulations on the market today, GDPR, MiFID II, and PCI DSS have the greatest impact on the banking and financial sector.
General Data Protection Regulation (GDPR)
RGPD is the privacy and security law, drafted and approved by the European Union, which regulates the processing by individuals, companies, or organizations of personal data relating to EU citizens. To comply with RGPD, the banking sector must consider several rules including consent, of which it must keep a record, and this must be obtained explicitly, only after informing the caller of the reason.
Markets in Financial Instruments Directive (MiFID II)
MiFID II is the European directive that increases transparency in the European Union’s financial markets. It seeks to reinforce investor protection and transparency, introduce a common regulatory framework to unify financial services in the EU, and regulate the behavior of financial institutions. It establishes a series of requirements, among them, the call recording, retention of records for 5 years, or restriction of access to these recordings.
Payment Card Industry Data Security Standard (PCI DSS)
PCI DSS is a set of strict standards created to protect private financial information and prevent credit card fraud. Among the requirements that financial institutions must comply with are the encryption of all communications involving credit card holder data and the implementation of access control and information security measures to ensure that this data remains secure and safe from fraud.
How can banks comply with the international regulations that apply to them?
To achieve compliance with the regulations that apply to the banking sector, call recording, conversational intelligence, and biometrics solutions are perfect for them.
1. Call recording and transcription:
As we say, call recording is a very important, and even essential, point in all the regulations that apply to the banking sector since it is a sector that handles very sensitive information. It is, therefore, necessary to have call recording and transcription solutions that allow recording and custody of these recordings of interactions and personal and sensitive data, such as those referring to credit cards, in a secure and robust manner, ensuring data protection and privacy.
2. Conversational intelligence:
Regulatory compliance is essential in the banking sector and Speech Analytics plays a key role in driving compliance processes. Conversational intelligence allows to automatically qualify and analyze 100% of the calls to the banking contact center, detecting those with compliance failures and reducing the risk of penalties and lawsuits related to non-compliance.
In addition, this conversational intelligence with Speech Analytics and Sentiment Analysis allows banks and financial institutions not only to detect non-compliance but also to extract data to improve sales and customer service processes, detect trends or improve products and services.
3. Voice Biometric Identification:
Following the digitization of banking, attacks such as identity theft and financial fraud or extortion were increased and as a prevention and security measure in the identification and authentication of customers emerged KYC or “Know Your Customer”.
Know Your Customer (KYC) rules require banks to verify the identity of customers before opening accounts or performing any transactions related to their finances, in addition to requiring banks to report suspicious activity to law enforcement agencies.
Thus, automated KYC technologies such as Voice Biometric Identification solutions have emerged with the aim of improving and streamlining customer identification and authentication processes. These solutions, such as Recordia Biometric Identification, help financial institutions ensure regulatory compliance in real-time, being able to manage data processing consents, and to improve customer satisfaction while avoiding fraud and identity theft, thanks to the fact that the voiceprint detected by the technology is unique for each person.
Complete recording, transcription, conversational intelligence, and biometric identification solutions like Recordia enable the banking industry to comply with all international data protection and privacy regulations, while reducing fraud, preventing identity theft, and improving processes and customer experience.
Find out more about our most complete solution, Recordia, by clicking here.