Gemma Livermore: Today we are going to be looking at the importance of embedded compliance in go to market teams. to discuss this topic. I’m joined as always by my colleague, Rachael Rowe. Welcome Rachael.
Rachael Rowe: Hi Gemma, lovely to be here.
Gemma Livermore: And we’re also joined by Madison Gray, Director of Investment Management Compliance at BNY Mellon. Hi, Madison.
Madison Gray: Hi Gemma, Hi, Rachael Thrilled to be here.
Gemma Livermore: Glad to have you here and lastly, but not leastly, by any means, Hannah Pring, Chief Compliance Officer at Lockton. Hi, Hannah.
Hannah Pring: Hi, Gemma. Hi, everyone.
Gemma Livermore: Great to have you all here. I think we can really get into the nitty gritty of the need of embedded compliance. We keep our conversations in the theme of our earthquakes. First of all, we will look at the tremors of where we started and we look back of how we navigated compliance in the beginning. Then we’ll look at the epicentre of where we are now. And finally, we’ll look forward to where we see this going in the future in terms of aftershocks.
So we start each podcast by asking our guests what enabling financial services means to them. So first of all, I’ll go over to Madison
Madison Gray: For me, I would say that’s equipping organisations and individuals within them to meet their objectives, that’s commercially, that’s with their stakeholders, that’s with their partners, and that’s internally. That’s what I view enabling to mean in this context
Gemma Livermore: Excellent summary there, and Hannah?
Hannah Pring: Yeah, I think enabling for me is about the business’s objectives. What is the core business? What is the core doing that the business is doing and making that happen? Yeah. So I think for me, it’s about how as a team we go forward to deliver the business.
Gemma Livermore: Love it So let’s get this conversation started.
Let’s go to the tremors and look back at how navigating compliance used to be like map reading before sat navs, if we wanted to compare it to something. Hannah, if you could talk to us about how you started in your industry and how compliance used to look back then.
Hannah Pring: So I started working in regulation when the FSA was the regulator and even then in terms of financial services history, the FSA is just, the 11th hour in, the sort of profile of time. The financial services has been going, especially as we moved into the Twin Peaks regulation, when the FSA separated into, the conduct regulator and the prudential regulator, there was a lot of change.
Businesses were navigating all that change and they wanted an expert to tell them what to do. They wanted to have a compliance officer who had sat down, who had read the rules, and who had, would just tell them what to do. Yeah, so I think in that way it was very much like map reading actually. It was, going, the driver, the business, looking to the passenger seat for someone to tell them where to go and what to do.
Gemma Livermore: Yeah, I completely agree. And Madison, did you find something similar when you started your career? Yeah.
Madison Gray: I think I’ve just been reflecting on Hannah’s point and absolutely. I think when I joined financial services, I actually began my career in legal and it was, it’s pre MIFA too. And a lot of the focus was saying, okay, from a preparation perspective, let’s take all the recitals, everything method two, put it into a spreadsheet, that was the default reaction.
And I ultimately had this spreadsheet that I think was hundreds of thousands of lines of regulatory text. I obviously navigated it really well. But then when we came to work with business stakeholders, it was completely unwieldy. And then once you had to consider new regulation, overlaying related regulation, interpretation and different implementation in different jurisdictions, it was absolutely unworkable. And I think that for me really solidified that to enable effective compliance or reliance on technology was absolutely necessary. But at that time, it really wasn’t front of mind from a compliance officer perspective. So that was really the starting point for me.
Gemma Livermore: And I think those ways of working also didn’t lean into the collaboration that we see now across different areas of a company as well. Rachael, what about yourself? How have you seen this change over your career?
Rachael Rowe: Yeah, very interesting. So in the early days, I was an investment analyst, so I was writing research. And I remember we had an editor and then there were various checks that you needed to go through, from a legal and compliance perspective. What really stands out to me if I look back now is the amount of time that it used to take to turn a research report around from the moment that it was written to the moment that it was published, there were actually quite a lot of hurdles to go through. And so it’s pretty clear that technology has a really key role to play in speeding up that, that whole process.
Madison Gray: I think in terms of the time it takes from a compliance perspective, I think the role of compliance and the perception of compliance has also changed quite significantly. I think our boards, our business partners really are expecting a strategic partner and they’re expecting collaborative decision making.
I think that’s one of the drivers for the speed as well.
Gemma Livermore: Completely agree. And that was my point earlier, that collaboration piece is paramount now between the different parts of an organisation in a way that it wasn’t previously and like looking back on my role when I started, I’ve always been in those go to market teams. I definitely wasn’t as collaborative with that side of the organisation back then, as I am now.
And I see that across lots of organisations. I know that when we’ve previously spoken, Hannah, you said that you felt like the financial crisis in 2008 had a big pivotal moment for all of this changing. How do you see that as being a point where things started to move in a different direction?
Hannah Pring: I think the thing that happened in 2008 was, the public perception of financial services took a real nosedive. People blamed banks and financial institutions for the problems that were impacting individual people on the street and their own lives, their own banking situations, their own experience of the tanking economy and the personal impact that had.
And they looked to who was managing these organisations and who took those risks and there was no personal accountability. And that’s when the shift at the regulator really changed into the senior manager and certification regime. So you had approved people before, but the SMCR really puts individual and personal accountability onto who is going to pick up personal responsibility for that decision being made to try and really focus the mind around that.
And so I think what happens there is, this increasing sense of it’s not corporate responsibility anymore, which is what everybody had been used to. It’s me. I’m responsible for this. And so you go from a situation where you refer something to compliance, to actually, the first line control sits with me.
And, I was just thinking as we were talking over the first point as well around the timeliness of compliance advice. If you’ve put something into a system and compliance comes back and says, no, it’s probably too late because the business has probably already done it and then it’s unwinding.
But if you have got that sort of business partner model, you can be really, collaborative and work together and actually help people. But the really important thing is we have to use the full sentence. It’s compliance with the regulatory framework. And actually, the people responsible for that are the people doing the doing.
So there’s no sort of referral to somebody else to get something done. So you actually have to embed in the tools that you’re using to deliver to your clients what those regulatory accountabilities are. And, and that, 2008 piece really focuses the mind on. Individuals doing the doing in a regulatory environment.
Madison Gray: Yeah.
I think that’s an excellent point about the embedding of the compliance responsibilities within the business taking those decisions. I think what we’ve also seen as well, following on from those shifts is cultural embedding, really that ownership of compliance and compliance being a partner to support, effective, intelligent risk taking that’s safe, that’s considered, and that’s really where I see the role of compliance shifting, really from reactive to very proactive, and I think absolutely what you said, if it’s in a system and compliance are seeing it, it’s almost too late.
Where I see the role of compliance going is really to that at the initial spark of the idea saying we’d like to do this product in this market. How do we consider that? That’s really where I think compliance should be engaged. They should be part of all those conversations, strategically working with the business to get to that outcome rather than coming in later.
Hannah Pring: But also, Madison, do you feel like individuals who this is their day to day job should have a pretty good working knowledge about the outcomes they’re delivering for their clients? So when they’re putting pen to paper in designing new products or starting to think about, what fees can we add on?
How can we charge more for this and, have better profitability for the organisation, actually. Aligning those objectives with, okay, but what’s the customer experience? Because I think you can’t divorce somebody doing their job and thinking about their clients with, you shouldn’t need compliance in the room prompting you, oh, have you thought about whether that’s fair? Have you thought about whether that’s actually adding value for the, client onto that product? And sometimes it is.
Madison Gray: Yeah, I think that’s part and parcel of the accountabilities if you’re holding that role. It’s really not sufficient in my view that you can divorce those or you can view them through separate lenses. I think the post crisis reforms and really, the culture in financial services has really shifted away from that.
You are responsible for the end customer and I think initiatives such as the consumer duty reinforce that but they don’t create that from scratch. It’s really developing on how the sector is changing.
Rachael Rowe: I completely agree. I think it’s been to your point, Madison, it’s been a whole shift. If we’re looking at the tremors, Gemma, to use your, kind of framing, I think it’s been a whole shift from compliance as something that everyone has to adhere to, to actually compliance has a role to play now in the customer experience that you’re delivering as an organisation and it should be embedded in, across workflows to ensure that everything is compliant at scale, but it’s also delivering an experience that, that you as a business would like to, would like your customers to receive.
Gemma Livermore: Yeah. And I think something that’s worth discussing here as well is looking at how we’ve now become a global society and things are very different to those tremors that we look back on and how that movement has been in terms of needing to navigate cross border compliance as well. And going back to those points, how each part of an organisation needs to understand how to use it.
How do we ensure that they have the right content to share? In the right location and so on.
Rachael Rowe: Yes, this is a key challenge that, that we see with many of global clients. because they were facing exactly this challenge in terms of the cross border products that they were positioning and really needing to streamline the delivery of these, and together with a partner of ours, APX, we were able to shave off a number of business days so that they were able in terms of speed to market to publish ahead of their competitors by a number of business days. And I think that just goes to show the, business impact of, embracing compliance and embedding it through the organisation.
Madison Gray: No, I think that’s a great point and I, this is one of my favorite questions actually because I think as we think about us as a global society we really do a lot of one of a quote that I often use is, the risk just doesn’t end at the border and I think that’s a culture that we’ve really tried to focus on when delivering compliance advice in terms of cross border compliance.
As you said, it’s things like product compliance, marketing compliance, but it’s also fusing together as a compliance function as well to enable the delivery of advice to the business and partnership with the business so they don’t have any downstream issues because these are, and I’m sure we’ll all acknowledge, really thorny, difficult to grasp questions about the different interplay of legal entities, about the overlay of regional requirements.
It really is a complex minefield. And I think that’s what makes it A, so interesting, but B, so incredibly challenging to navigate.
Hannah Pring: being piece for, employees in global organisations because where you have, centers of excellence or, a key, say, for example, compliance is centralised. You have people waking up at five in the morning to have a call with Australia or Asia, working their day in London and hanging on into the evening to speak to their colleagues in Latin America and North America.
And that can be highly stressful. And if you’ve got sales people in those jurisdictions that are looking to you for some sort of sign off, not only is it going to take you longer because you might need to reach out for local regulatory advice and support, you’re in the wrong time zone. And, I think we do have to think about as well, the people that we’re working with and the expectations and pressures we put on individuals to deliver.
Gemma Livermore: Completely agree with that. And that brings us really nicely to the epicentre, part of our talk track here, where we can talk about how we are now, and we are in a beautiful position where tech can start enabling us in these roles. We’ve talked about a lot of pain points that used to happen in the past and we have started to see where tech has started to remove some of those cumbersome processes and allow us to give that wellbeing back to our employees, as you say, so that they can get their job done quicker, easier, and within their own time zones.
So let’s look at where we are now. Be really good to have a chat to each of you of how you’re seeing tech starting to automate some of those processes and what benefit you’ve seen on that on your company. Hannah, we can go to you first.
Hannah Pring: Yeah. I think we’ve seen is, we’re really learning about the importance of data and how we can set frameworks up to point things out to us. And, over the last few weeks, I’ve just been thinking about AI nonstop. So describing the epicentre and where we are now already feels like we’re describing history. But, being able to say if this set of circumstances comes together, then compliance needs a red flag. For a number of years, we’ve been looking at things like if there’s this frequency of return premiums of this value just below the threshold.
It’s a bribery and corruption red flag. If we’re in this jurisdiction, you need to apply this disclaimer. It’s, and you can start to use technology to self serve the business in terms of repeatable queries.
I did have one example of something that we’re going to use, which is a bit of a comedy example, almost. But we, had a problem, sanctions is something that often sits within compliance departments and we used to see when the Iranian sanctions first came in, quite frequently, people would code the country that their insurance risk was domiciled in as IR, which is the code for Iran, when they meant Ireland.
And so we’d get all these alerts and people ringing in the middle of the night to say oh, we’ve done something in in Iran, and it’s actually, they’ve done it in Ireland. So sometimes data can let you down, but that’s why, this next phase is. I think really exciting.
Gemma Livermore: Completely agree. And I think that also brings up to a nice point that I was about to raise, which is, do you believe that a lot of this enablement that we are seeing automation brain needs to start with almost a data cleanse where you’ve got the data correct in order to really help the automation happen?
Madison,
Madison Gray: I absolutely agree. I actually have that written in front of me that new tech isn’t a solution to poor controls or bad data. I am hugely supportive of integration of technology, tooling to support with compliance activities, but I think the important reminder is, tech alone is not a silver bullet. Integrating tech requires thoughtful delivery.
It requires patience and it does require perseverance to calibrate it, to get it right. But once you do those things, there is a really strong payoffs and it, and similarly to what Hannah said, it feels quite a silly example, but in my previous role, I managed a global regulatory changes, team and what our focus was, identifying any changes, however big or small, that we needed to do from a regulatory perspective.
That’s actually quite a difficult proposition because, we don’t just have one regulator. There’s quite a lot of soft regulation or, evolving guidance, evolving shifts from legislatures, et cetera. So we needed a way to identify all of those changes every day. Similar to our conversation at the start, it was checking websites manually, logging in a spreadsheet that quickly, you can’t do that.
That’s not sustainable. And over the last seven years, there’s been a lot of vendors and offerings in this space and that’s, a huge step forward being able to identify them from an automated tooling perspective. And then you can start to build on top of that to filter, to get patterns in what’s applicable to different legal entities and countries that builds into a really powerful tool for the organisation.
Not only have you automated a process, but you have this evolving tool that can signal regulation. And developments that may be of interest to your users or your business. So it really is powerful once you cleanse that data and you build it up in a thoughtful way.
Gemma Livermore: Completely agree. And I think it’s always an important point to point out, which is what you just said. Tech doesn’t take over the person, it enables them to do their job better and more efficiently. and when it matters, you do still need a person, especially when it comes to compliance. Rachael, what have you seen in that respect?
Rachael Rowe: Yeah, it’s very interesting from a Seismic perspective. So as many of our listeners will know, Gemma. we’re very well established within financial services. We work with over 400 organisations globally and compliance is really central to everything that we do. And if I look at what we drive for our customers, I think firstly, through automation and robust risk controls, we ensure that only compliant and on brand content is shared.
And that’s really important. I think to, to Hannah and Madison’s point. You’re able then to do that at scale as an organisation, which brings a great level of comfort as well as efficiency. But what I think is really exciting, and we’ve already touched on it a little bit, is the advent of consumer duty, what that means for the end client, because I think it’s all ultimately in service of providing a best in class client experience. But it’s a real opportunity to embrace compliance and to see this as a chance to, create that kind of audit trail and understanding of kind of interactions that your clients are receiving from your organisation. so we enable our, customers to, record those meetings, but much more than that, we work with them in the preparation phase, in the post meeting phase.
And I think all of that, when you bring it together, we talked about break, breaking down silos. I think it’s a great opportunity to use this to amplify the impact of these touch points with the customer in a compliant, consistent way. And I think if you look at organisations within the world of tech or the world of healthcare, where regulation has persisted for a long time as well, they’re also very highly regulated industries.
I think they’ve found innovative And exciting ways to embrace that. And I think that financial services maybe is now at that pivotal point that compliance has come full circle and is, now, seen as a catalyst for exciting innovation and growth in the industry.
Gemma Livermore: I love that way of looking at it. So let’s move on to the aftershocks. This is an exciting point where we look forward to how we see things moving in the future. And what I like here is that we’ve now told the story of how things began, where we are now, and I believe that a lot of learnings from all of this is where things went wrong.
So in an ideal world, if we learn from everything that has gone wrong over the years, how can we improve on that? And where would you see us going in the future, Hannah?
Hannah Pring: I don’t think we can have this discussion without talking about AI.
But I’ve been grappling with how we can use AI in our organisation. At the moment, we’ve got a very cautious approach. We don’t want to put any data into any GPTs that we then lose control of. So we’re being very prudent as you would want a financial services institution to be. There’s limited activity going on at the moment, I would say, but in terms of opportunity, I think that, in a year’s time, saying we don’t use AI would be saying, oh, I don’t use Google, and that’s because a lot of the tools are like Google.
And I don’t know if I can do a plug, but one of my favorite tools is Perplexity AI. It’s like Google, apart from it gives you a simulated response and, citations and is absolutely super. And I’ve completely moved all my searching onto Perplexity, from Google. It doesn’t just give you adverts and things but one of the cautions that I give is we shouldn’t be AI driven, we shouldn’t be doing AI for the sake of AI. We should be looking at where have we still got problems. And this is where you come from being a reactive solution to being a proactive solution. So SMCR, consumer duty, all of those things.
We’re driven out or born out of a problem and reacting to a problem. But actually now we’re creating, we’re being forward looking, so we should be thinking, how can we do things better? How can we remove the administration burden? How can we drive value in terms of how people are spending their time?
And I think compliance analysts and compliance officers will be using AI to do a lot of the research, but there will still be a hand, a pair of eyes using that research to be an intermediary then back to the business on advice. But actually all of their advice will be, brought up a level, because it becomes big picture, it becomes horizon scanning, it becomes forward looking because you’re taking in a wider source of information and really thinking about what does the future look like.
Something that I’ve been playing around with, outside of my job because I’m not putting any company data into chat GPT is actually writing my own GPTs and thinking how can I teach the GPT with my own, fictitious procedures or fictitious training manuals and then use it like a chatbot for the team.
And so within about 10 minutes, you could create a team chatbot that looks at your procedures, that tells you how to do something. You could onboard a new associate with their own personalised chatbot, with all the information that they need to do their job to onboard them. And, you could even make that available to the business for them to self serve the sort of lower value, more common kinds of queries. And I just think, I cannot see a way of running a compliance team efficiently within 24 months without having AI tools on board.
Gemma Livermore: I completely agree with you what you said there as well, how it doesn’t need to be AI driven. And I know the term I’ve used a lot is about being AI enabled. It’s about enabling people to do their job. and I really like what you said there. Rachael, I know that you’ve done lots in regards to onboarding, people with using AI, and I’d love to hear a bit more about that.
Rachael Rowe: yeah, absolutely. I think that AI has a really key role to play in personalisation. And I think, often we talk about personalisation, we talk about it from a client perspective. But I think the employee in journey, the employee journey within an organisation is equally as important.
I know from my perspective, bringing on new folks into the team, onboarding them, the faster that you can do that, the faster they become effective and the more enjoyable their experiences. We use AI through our learning and coaching capability to identify from a personal perspective, where the gaps are, what are the on an ongoing basis, throughout the work, the workflow. and then to be able to give bite sized in the moment, training or support through a number of different ways. So it could be through recordings or it could be through, quizzes or to drive, adoption and engagement. But it’s really all about performance enhancement as opposed to, a learning system.
It’s much more on the job, driving effectiveness, and really helping to, move the arrow for, organisations and individuals. So I think that’s a really exciting, role for AI, through that process.
Gemma Livermore: Love that. And what about you, Madison? Where are you seeing the future going? Is it in terms of AI or something else?
Madison Gray: I absolutely love the idea of AI enablement that was touched on, particularly as I view some of the aftershocks are still continuing, looking at things like, there’s a huge amount of geopolitical risk that organisations are facing. particularly this year with the vast array of elections that we’re anticipating.
I think even thinking back to last year with some of the collapses seen with Silicon Valley Bank, et cetera, those aftershocks are not going anywhere, which is why equipping and enabling compliance officers and financial institutions to integrate AI, to get better look through of their data, to automate processes.
So they can really focus their time. On that advisory, on that risk mitigation is really where I see focus continuing.
Gemma Livermore: I love that. So we’re all going to be AI enabled this time in 24 months. Maybe we should do a return of this conversation and, see where it takes us.
Rachael Rowe: Good idea. It’ll probably have moved faster than we anticipate even.
Gemma Livermore: Very true. I love the quote I heard on Justin Trudeau recently on AI, which is we’ve never been as fast as we are now, and we’ll never be as slow agAIn. And I just think that completely sums it up and it’s so exciting to see where it will take us.
Hannah Pring: And so gemma, that also makes me go back to my point earlier about, being of associates. And, we thought when computers came along, it would free up so much time and that, Now we didn’t have to write letters out by hand and we could use a computer, we’d all finish work at lunchtime and, have the afternoon to ourselves.
And I think we need to make sure that, as we start to bring AI in, we think about how, responsible we are in our stewardship of additional time to enhance value in the services that, human hands can deliver, but not to the point that it then exploits those human hands even further.
Gemma Livermore: I completely agree. And, even when you think about it in terms of taking on a new way of working is to give people grace to learn that new way of working as well. And to see what will enable them in that day to day role. Completely agree with that.
Hannah Pring: And I think, expectations on timescales as well, because when, business users know that you can get an answer from a GPT in 10 seconds and they emAIled you this morning and you haven’t responded by lunch, they’ll, I think there’s going to be a lot of learning in terms of how we, Use our time when time gets so fast.
Gemma Livermore: Yeah, no, it’s a very important point and that leads really nicely. It’s as if you knew what I was going to ask. It’s really nicely into our final part, which is the roundup. I’d really like to hear from each of you what your roundup word is of today that summarizes everything that we’ve just done. I think I can guess what Hannah’s will be and why that is. Hannah, if we can go to you first.
Hannah Pring: Okay. So I think my roundup word is going to be value. And I don’t know if that’s the word that you thought I was going to say, Gemma, and I’m interested to know what you thought I was going to say,
Gemma Livermore: I thought you were going to say being, but maybe I’ll steal that one now.
Hannah Pring: Well, okay, yes, so it is part of that. So it’s valuing our employees, our associates, our colleagues and our stakeholders, valuing their contribution, increasing the value of Whoa.
As we can deliver as individuals and increasing the value to our shareholders and to our businesses of, how much business we can process when we fully embrace embedding, compliance and technology.
Gemma Livermore: That’s amazing. And Madison, what would be your round up word?
Madison Gray: I think the words that I’m going to basically steal is enablement and looking at that through a few of a few different lenses through enabling financial institutions with technology, whether it’s AI, whether it’s Enabling them to improve their data, enabling them to be effective partners, whether it’s freeing up time, focusing on collaboration and enabling compliance professionals to thrive.
That’s really what I think the key themes of my takeaway today is.
Gemma Livermore: That’s really good. And Rachael, what would be your takeaway?
Rachael Rowe: They were both two good ones. I think mine would be opportunity. I think, and twofold really, I think that there’s great opportunity for compliance professionals, a strategic partners within the business, given the direction of travel. With consumer duty and similar types of regulation, which are very focused on the customer, the, end consumer and I think also from an organisational perspective, I think those organisations that embrace, changes in the regulatory environment and really embrace that strong compliance stance. Put themselves in a very good position, to deliver innovation, best in class customer experiences and build on that currency of trust that we hear so much about within financial services. Compliance is non-negotiable, but I think more than that, it offers a, genuine opportunity in the industry at the moment.
Gemma Livermore: I think that’s great and I think I’d have to go with collaboration because I think after this conversation and I thought it before but it solidified it, is I really think the future of compliance is that it needs to collaborate with those go to market teams so that everybody’s saying the same thing, the right thing at the right time.
Gemma: Thank you to everyone for joining us today. I hope you’ve enjoyed it as much as I have. And yeah, thanks and goodbye.
