Security and compliance realities for remote financial services workers
Remote work challenges for financial service companies
This year, the pandemic required many workforces to stay and work at home. While the transition may have been hectic initially, many businesses and employees have since grown comfortable with remote working options.
However, many companies have industry-specific considerations that may make work-from-home arrangements difficult to pull off. The financial services sector is one such category of businesses with particular data security and regulatory concerns that can complicate remote working.
Yet not many good options exist to telework currently. Even physical trading floors have been shut down recently, as trading shifts increasingly online. Financial services companies must address the realities of remote work and prepare to ensure business continuity and compliance.
What remote work challenges do financial services face?
Businesses in financial services — like brokers, mutual funds, asset managers, retirement investment advisors, exchanges, and trading firms, among many others — have a number of regulatory and compliance obligations. As such, their telework arrangements have to be airtight.
Broadly, the challenges they face include considerations related to:
- Cybersecurity: This is a chief concern for any business, but especially for financial services firms. The decentralization of technology presents particular risks. Employees without company-provided hardware must use personal devices to manage client accounts or access confidential information. This carries obvious risks, as personal devices and networks might not feature the same controls as on-premise solutions that were depended on before to securely store and access data.
- Compliance: Financial activity is governed by a number of regulatory and oversight agencies. Many financial firms have entire departments dedicated to compliance, but COVID-19 likely threw many into disarray with the abrupt shift to telework. Even something as seemingly innocuous as taking a client call next to a spouse who’s also working from home can be problematic, as the conversation likely contains confidential information. Other compliance concerns relate to potential ethical lapses at home when oversight is more lax.
- Real-time data: One other difficulty financial services firms may encounter is connectivity. Employees depend on real-time data, which they may have taken for granted in an office setting with an industrial connection. Working from home on the Wi-Fi could be troublesome if lag becomes persistent. For example, buying and selling stocks on price data that is outdated by even milliseconds can have a tangible, negative impact on strategy and trade execution.
What can businesses do to ensure compliance and continuity?
Despite the scale of these challenges, financial services don’t have many current alternatives to telework. Even as states reopen, the future of working will undoubtedly be influenced by remote arrangements.
In either case, there are some best practices business in the financial industry can take to safeguard their operations, employees and clients:
Beef up security
This is the very first thing financial businesses should address. This responsibility encompasses not only assessing their security readiness for telework, but actively looking at ways to improve infrastructure and controls. The Financial Industry Regulatory Authority (FINRA) issued comprehensive guidance for financial firms dealing with the COVID-19, including security tips like:
- Ensuring virtual private networks (VPNs) and other remote access systems have proper security patches and updates.
- Double-checking that system entitlements are current
- Using multi-factor authentication for employees who access systems remotely.
Implement necessary supervisory protocols
Even as more businesses adopted remote working policies, financial services firms weren’t as quick. This trend may be largely attributable to compliance obligations, including supervision of employees and associated persons. Doing so is much easier in a centralized office than it is with employees spread across disparate locations.
However, these compliance obligations have not been relaxed in light of the pandemic. Companies that may become lax in this area can face real risks and repercussions down the line.
FINRA also addressed this topic in its COVD-19 pandemic, saying it expects member firms “to establish and maintain a supervisory system that is reasonably designed to supervise the activities of each associated person while working from an alternative or remote location during the pandemic.”
The onus is on financial firms to ensure they implement the necessary supervisory protocols so that FINRA expectations are met.
It’s imperative that businesses in financial services provide adequate support and training to employees. Many may be unfamiliar with remote working, especially as it concerns compliance or security. Having a codified set of policies is not enough, your leaders need to investigate ways to engage employees on these points so they can carry out their jobs compliantly and effectively.
Using video conferencing software to host team meetings is one way to teach employees and ensure high retention of information. FINRA also recommended that firms undertake regular education and other exercises that “promote heightened vigilance.”
Use secure communication software
Financial services firms have an obligation to monitor and preserve communications. When these conversations occur outside traditional channels, they must have a secure solution to meet their needs. The problem is many popular consumer-grade options don’t feature the controls these businesses require.
Businesses need to be sure they have communication and video conferencing tools that not only feature robust functionality, but also security such encryption and other measures.
Looking for a video conferencing solution that offers high performance and security? Consider using Cisco Webex for your financial services firm to preserve business continuity and maintain compliance.
Contact us today for more information, or start with a free offer.
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Jun 1, 2023 — Geoffrey Huang