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Asset managers on alert after ‘WhatsApp’ crackdown on banks

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  • Demand for software to record, archive messaging on the rise.
  • Banks pay hundreds of millions of dollars in regulatory fines.
  • Continued remote working underscores risk of compliance missteps.

LONDON: Asset managers are tightening controls on personal communication tools such as WhatsApp as they join banks in trying to ensure employees play by the rules when they do business with clients remotely.

Regulators had already begun to clamp down on the use of unauthorised messaging tools to discuss potentially market-moving matters, but the issue gathered urgency when the pandemic forced more finance staff to work from home in 2020.

Most of the companies caught in communications and record-keeping probes by the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have been banks – which have collectively been fined or have set aside more than $1 billion to cover regulatory penalties.

But fund firms with billions of dollars in assets are also increasing their scrutiny of how staff and clients interact.

“It is the hottest topic in the industry right now,” said one deals banker, who declined to be named in keeping with his employer’s rules on speaking to the media.

Reuters reported last year the SEC was looking into whether Wall Street banks had adequately documented employees’ work-related communications, and JPMorgan was fined $200 million in December for “widespread” failures.

German asset manager DWS said last month it had set aside 12 million euros ($12 million) to cover potential U.S. fines linked to investigations into its employees’ use of unapproved devices and record-keeping requirements, joining a host of banks making similar provisions, including Bank of America, Morgan Stanley and Credit Suisse.

Sources at several other investment firms – described in the financial community as the ‘buy-side’ – including Amundi, AXA Investment Management, BNP Paribas Asset Management and JPMorgan Asset Management, told Reuters they have deployed tools to keep all communications between staff and clients compliant.

Spokespeople for the SEC and CFTC declined to comment on whether their investigations could extend beyond the banks, but industry sources expect authorities to cast their nets wider across the finance industry and even into government.

Last month Britain’s Information Commissioner’s Office (ICO), the country’s top data protection watchdog, called for a review of the use of WhatsApp, private emails and other messaging apps by government officials after an investigation found “inadequate data security” during the pandemic.

Good business for some

Regulations governing financial institutions have progressively been tightened since the global financial crisis of 2007-9 and companies have long recorded staff communications to and from office phones.

This practice is designed to deter and uncover infringements such as insider trading and “front-running,” or trading on information that is not yet public, as well as ensure best practices in terms of treatment of customers.

But with thousands of finance workers and their clientele still working remotely after decamping from company offices at the start of the pandemic, some sensitive conversations that should be recorded remain at risk of being inadvertently held over informal or unauthorised channels.

Brad Levy, CEO of business messaging software firm Symphony, said concerns about managing that risk had driven a surge in interest for software upgrades that make conversations on popular messaging tools including Meta Platforms’ WhatsApp recordable.

“Most believe the breadth of these investigations will go wider as they go deeper,” Levy said.

“Many market participants have retention and surveillance requirements so are likely to take a view, including being more proactive without being a direct target.”

He said Symphony’s user base has more than doubled since the pandemic to 600,000, spanning 1,000 financial institutions including JPMorgan and Goldman Sachs.

Symphony peer Movius also said its business lines specialising in making WhatsApp and other tools recordable have more than doubled in size in the space of a year, with sales to asset managers a growing component.

“Many on the buy-side have recognised that you can’t just rely on SMS and voice calls,” said Movius Chief Executive Ananth Siva, adding that the company was also seeking to work with other highly-regulated industries including healthcare.

Movius software integrates third-party communications tools such as email, Zoom, Microsoft Teams and WhatsApp into one system that can be recorded and archived as required, he said.

Amundi, AXA IM, BNPP AM and JPMorgan Asset Management all confirmed they had adopted Symphony software but declined to comment on the full breadth of services they used or when these had been rolled out.

Amundi and AXA IM both confirmed they used Symphony services for team communications, while AXA IM also said they used it for market information.

Amundi, BNPP AM and JP Morgan AM declined to comment on whether they thought regulators would seek to investigate record keeping at asset managers after enforcement actions against the banks were completed.

A spokesperson for BNPP AM said it had banned the use of WhatsApp for client communications due to compliance, legal and risk considerations including General Data Protection Regulation (GDPR).

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The recall AI feature rollout by Microsoft will be delayed.

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A computerized history is created via the Recall feature, which records everything from phone conversations to web browsing. This way, even months later, the user may search through it for remembered actions.

In a blog post, Microsoft announced that recall, which was originally going to be widely available for Copilot+ PC users on June 18, will now only be available for a preview on its Windows Insider Program (WIP) in the next weeks.

As to the statement from the Redmond, Washington-based company, the decision is “founded in our dedication to offering a reliable, safe, and comprehensive experience for every client and to obtain more input before releasing the feature to all Copilot+ PC users.”

An artificial intelligence (AI) feature-rich class of personal computers called Copilot+ PCs was introduced in May.

Millions of “Windows biggest fans” can sample new improvements for the operating system through the WIP, a public software testing initiative.

According to the business, following feedback from the WIP community, the Recall preview will soon be accessible for all Copilot+ PCs.

Shortly after the feature’s release, billionaire technologist Elon Musk opened a new tab and referred to it as a “Black Mirror episode,” drawing parallels to the Netflix series that examines the negative effects of advanced technology. However, some social media users expressed concerns about privacy, saying that it could allow for spying.

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TikTok plans to introduce an image search capability in order to directly compete with Google.

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TikTok, a Chinese short video platform, is now conducting a trial of a novel functionality that enables users to capture or submit images in order to discover comparable products within the TikTok Shop, as reported by TechCrunch.

TikTok, the current leader in social media, is now aiming to enter Google’s domain in the field of search, indicating a direct competition against Google’s control in visual search.

The functionality, originally observed by user Jonah Manzano, is presently accessible to users residing in the United States and Southeast Asia. Users that have access to the feature will see a camera symbol that is integrated.
This feature allows users to effortlessly search for products by capturing or uploading photographs, eliminating the requirement for written descriptions.

For example, if you are eating at a restaurant and like the dish that is presented on a certain plate, you can take a fast photo using the TikTok app to discover comparable goods that you can buy.

Similarly, if you come across an expensive item while shopping online, you can save its image and use TikTok’s image search feature to locate similar, more affordable options.

Although TikTok Shop has previously utilized conventional search methods, this new advancement represents a notable deviation by harnessing the capabilities of visual search, similar to Google Lens.

TikTok’s decision is a calculated maneuver aimed at not only attracting users’ interest in finding new products but also promoting sales within its e-commerce network.

This development is not only a criticism of Google or Amazon; it is a more extensive effort to rival other participants in the field of visual search and e-commerce, such as Klarna and rising businesses like Cherry.

TikTok’s shift towards e-commerce is apparent in its recent announcement that TikTok Shop accommodates more than 15 million vendors worldwide, including a significant presence in the United States.

The company has made significant investments in platform safety, dedicating more than $400 million and establishing a staff of 7,500 personnel to guarantee the integrity of TikTok Shop.

TikTok continues to pursue its e-commerce goals, while encountering regulatory obstacles, especially in the United States.

TikTok’s momentum remains unaffected by President Biden’s recent measure, which indicates a possible prohibition if ByteDance does not divest the platform.

However, the corporation regards e-commerce as a strategic source of income and a method to maintain consumer involvement within its ecosystem.

TikTok is continuously expanding and improving its TikTok Shop to encourage more user interaction and spending. This will help establish TikTok as a strong competitor in the e-commerce industry.
in the search bar of TikTok Shop.

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Pakistan experiences substantial expansion in the information technology sector.

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Pakistan experienced significant development in the exports of its IT sector, reaching a total of $2.283 billion, as stated in a recent Economic Survey Report.

The increase in exports emphasized the rising global demand for IT services from Pakistan and the sector’s impact on the national economy.

The survey demonstrated that IT freelancers contributed $35 million in remittances, highlighting their significance in the IT industry.

The study data indicates a significant rise in the number of broadband and telecom customers nationwide, with broadband users reaching 135 million and telecom users growing to 194 million.

Earlier this week, the federal government has suggested a substantial 357 percent rise in the budget for the IT sector for the fiscal year 2024-25.

As to reliable sources, the Ministry of IT has been granted a budget of Rs 27.43 billion in the development budget, out of which Rs 6.28 billion has been allotted for the implementation of 15 new projects.

The government has additionally suggested allotting Rs 21.15 billion for projects that are currently in progress, as well as Rs 3.5 billion for the Digital Economy initiative.

Additional noteworthy allocations consist of Rs 1 billion for fostering innovation in the IT sector, Rs 50 million for the digitalization of the national assembly, and Rs 300 million for the implementation of smart office projects in government ministries.

The government has additionally suggested investing Rs 9.92 billion for the Islamabad Technology Development Park and Rs 6.78 billion for the creation of an IT park in Karachi. The budget additionally comprises a proposition for an allocation of Rs 1 billion for the Cybersecurity Fund for the Digital Pakistan initiative.

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