AI Can Help Meet MiFiD II Requirements

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AI Can Help Meet MiFiD II Requirements

September 13, 2017

The European Union’s MiFiD II goes into effect in less than four months. It will make recording of mobile conversations related to financial transactions mandatory on both personal- and company-owned devices. It requires organizations to store these interactions for five years. And it covers conversations between both wealth managers and independent financial advisors, and their clients.

But, as Resilient plc Director James Foley explains in a Sept. 11 Banking Tech article, MiFiD II requires more than just call recording. It also requires businesses to actively monitor calls to identify mis-selling or other bad practices.

So organizations need to figure out how many calls need to be monitored to meet MiFiD II requirements. And they need to decide what kind of and how many resources to put in place for this purpose.

The Financial Conduct Authority not been completely forthcoming in defining how many calls need to be monitored. Instead, Foley says, it’s used words like “appropriate” to describe the number of calls organizations need to listen to. However, he adds: “In a review of the Final Judgements that the FCA has made on firms who do record their telephone calls, it appears that over the past five years the FCA expects firms to listen to around 20 percent of their recorded calls.”

That may sound reasonable. But, in practice, it’s a lot of work. The good news is artificial intelligence can help organizations meet new MiFID requirements without hiring an army of new compliance people, says Foley.

“Recurring neural networks are a part of AI that model the way the brain synthesizes language, enabling the rapid and accurate transcription of conversations,” says Foley. “So, instead of listening to telephone calls, compliance officers can simply specify words or phrases that they are interested in and thereafter they will be immediately alerted to any conversations that contain these trigger words.”

AI also can highlight out-of-context words and phrases, or identify conversation sentiment, he adds. That way compliance officers can better understand which calls they need to review. However, he notes, businesses need to consider where this data can be stored to meet MiFiD II requirements, and select their solutions providers accordingly.

Edited by Maurice Nagle

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