Phonetic search: A powerful new regulatory compliance tool for financial institutions
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Phonetic search: A powerful new regulatory compliance tool for financial institutions

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Financial services companies around the world are getting into the recording business in a big way. No, they’re not going into the studio with the latest pop music sensations. Instead, they’re ...

Financial services companies around the world are getting into the recording business in a big way. No, they’re not going into the studio with the latest pop music sensations. Instead, they’re recording just about everything being said in and around their institution. Client trades made over the phone. Voice mails left for financial advisers. Conference calls. Audio from videoconferences. Employee calls from mobile devices, whether the company’s or their own.

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Phonetic search: A powerful new regulatory compliance tool for financial institutions Phonetic search: A powerful new regulatory compliance tool for financial institutions Document Transcript

  • Financial services companies around the world are getting into the recording business in a big way. No, they’re not going into the studio with the latest pop music sensations. Instead, they’re recording just about everything being said in and around their institution. Client trades made over the phone. Voice mails left for financial advisers. Conference calls. Audio from videoconferences. Employee calls from mobile devices, whether the company’s or their own. A variety of federal, state and international regulations are driving institutions to blanket their operations with voice recordings. Regulatory requirements specify how long recordings need to be retained by financial firms and how quickly records must be delivered to government agencies or other requestors. Furthermore, compliance can involve granular searches. For example, complying with e-discovery requests may include isolating a specific recording of a certain employee or client conversation. For some time, institutions have stored and analyzed the content of audio communications using speech-to-text technology that translates audio into a minable data format. But the recent, rapid growth in regulatory requirements has thrown the limitations of speech-to-text into sharp relief. For instance, a bank that previously only had to record 1,000 turrets of financial trader information could now find itself having to record and retrieve audio from half-a-million telecommunications end points throughout the enterprise. Speech-to-text technology simply isn’t up to this kind of challenge, for several reasons. As a result, institutions are increasingly turning to phonetic search to find and analyze conversations and content. Phonetic search is a process built on phonemes — basic language elements that provide the building blocks for how human speech sounds. avaya.com | 1 Phonetic search: A powerful new regulatory compliance tool for financial institutions Complying with e-discovery requests may include isolating a specific recording of a certain employee or client conversation.
  • Phonetic search can help financial services companies meet increasing regulatory requirements by providing the capability to capture calls in real time regardless of the source. Institutions can then use advanced analytical tools to mine the phonetic records from those calls to identify specific topics, specific people and specific calls. Growing mandates and scrutiny Two very recent developments highlight the increasing legal and regulatory imperative that financial institutions be able to record and retrieve specific calls and other audio exchanges. In April 2012, the U.S. Commodity Futures Trading Commission (CFTC) finalized regulations recommended in the Dodd-Frank Wall Street Reform and Consumer Protection Act regarding reporting, record keeping and daily trading records for swap dealers and major swap participants. The regulations state that effective July 3, 2012: Each swap dealer and major swap participant shall make and keep pre-execution trade information, including, at a minimum, records of all oral and written communications provided or received concerning quotes, solicitations, bids, offers, instructions, trading, and prices, that lead to the execution of a swap, whether communicated by telephone, voicemail, facsimile, instant messaging, chat rooms, electronic mail, mobile device, or other digital or electronic media.1 In March 2012, the U.S. District Court in New York granted a Federal Trade Commission (FTC) motion for summary judgment against businessman Paul Navestad for violating the FTC Act. Navestad was found to have made 1 Commodity Futures Trading Commission, 17 CFR Parts 1, 3 and 23 RIN 3038–AC96, § 23.202, Daily trading records. Phonetic search can help financial services companies meet increasing regulatory requirements by providing the capability to capture calls in real time regardless of the source. avaya.com | 2
  • While the Telemarketing Sales Rule does not apply directly to financial institutions, individuals or companies, it does apply to them indirectly when they contract with an institution that must comply with the TSR. material, false and deceptive claims to deceive consumers and to have violated the Telemarketing Sales Rule (TSR). In addition to calling consumers on the national Do Not Call Registry, Navestad’s violations included: • Not providing an opt-out mechanism for consumers not wishing to receive calls; • Not providing consumers with the ability to speak to a live operator; and, • Making false and deceptive statements intending to induce consumers to pay for services that would allegedly enable them to easily and quickly receive public or private grants.2 While the TSR does not apply directly to financial institutions, individuals or companies, it does apply to them indirectly when they contract with an institution that must comply with the TSR. However, two other rules do apply directly to financial services companies: the Telephone Consumer Protection Act (TCPA) and the Gramm-Leach-Bliley Act. The Federal Communications Commission recently amended the TCPA to include telemarketing done by banks and insurance companies in Do Not Call Registry rules and regulations and in the Gramm-Leach-Bliley Act, including provisions that protect personal consumer financial information held by financial institutions. Gramm-Leach-Bliley’s privacy requirement has three principal parts: the Financial Privacy Rule, the Safeguards Rule and pretexting provisions. Civil penalties are steep, costing up to $10,000 per violation levied against officers and directors found to be personally liable and up to $100,000 per violation for financial institutions held liable. These are just a few of the regulatory requirements that either directly or indirectly impact U.S. financial institutions. Multinational firms need to add foreign regulations to their list of concerns, such as those imposed by the U.K.’s Financial Services Authority (FSA) requiring all participants in the country’s capital markets to begin recording mobile communications, including voice, short message service (SMS) and instant messaging (IM), of all their employees involved in trading by November 2011.3 2 http://scholar.google.com/scholar_case?case=17476208810662567879. 3 Policy Statement 10/17, “Taping of mobile phones,” Financial Services Authority, http://www.fsa.gov.uk/ pubs/policy/ps10_17.pdf. avaya.com | 3
  • Speech analytics solutions, in general, convert recorded audio to text and then perform a text search. This approach has several limitations associated with efficiency, cost, propensity for errors and lack of flexibility. In response, should financial institutions consider taking the approach of recording all employee voice communications? Such a decision would have monumental technical implications, especially if those firms are using speech-to-text technologies for call retrieval and data-mining purposes. The limitations of speech-to-text Speech analytics solutions, in general, convert recorded audio to text and then perform a text search. This approach has several limitations. First, speech-to-text conversion is inefficient, consuming considerable CPU and memory resources. The process effectively duplicates the content, which once converted, must still be searched in its entirety. This both drains resources and creates a content management challenge. Also, the process of converting the spoken word to a text file requires that a series of dictionaries be loaded into the conversion system. In addition, the hardware- and software-intensive nature of speech-to-text solutions makes their widespread deployment, in perhaps hundreds or thousands of financial institution branches for example, an expensive proposition. Speech-to-text is error prone. The further content is removed from its original source, the more likely it is that errors have been introduced during the conversion process. Finally, speech-to-text offers limited flexibility. Words and phrases to be searched in the converted text must be predefined in a dictionary of terms for the text search engine to perform. For ad hoc searches, this can become unwieldy and a challenge to manage. avaya.com | 4
  • For any user wishing to access the information from an audio stream in real time or cost-effectively deploy the solution across an enterprise, the phonetic search approach is the only practical option. The phenomenal power of phoneme analysis Until fairly recently, the science of phonetics was confined to university research laboratories. However, the breadth of potential applications in the commercial world is accelerating its development and use. For any user wishing to access information from an audio stream in real time, the phonetic search approach is the only practical option. Its lightweight requirements in terms of the processing power required to perform a search mean that it is able to scale easily to whatever levels are required to cover an entire organization. The benefits of this approach are wide-ranging, perhaps the most valuable being its ability to reduce decision-making latency based on accurate and up-to-date information. Real-time phonetic search enables insights discovered in speech to be populated into business intelligence (BI) platforms, allowing financial institutions to consume aggregated data, measure the scale of a problem and compare its criticality to other issues — all within a very short time from occurrence to discovery. This low latency then enables companies to deploy proactive notification systems to make the technology work in an observer-less way, saving time and resources. Another benefit of phoneme-based searches is that they do not require a large vocabulary of predefined phonemes. For example, there are 40 phonemes in U.S. English and 44 in U.K. English. Bottom line, phoneme-based searching is faster and more efficient than speech-to-text conversion and search. The first step in phonetic search is to build a language- and dialect-dependent index of the audio content represented as phoneme strings (Figure 1). Future searches then leverage this index to yield hits or results. Words and phrases a user searches on are converted into phoneme strings, and searches or matches are then obtained by walking through the index. Each hit enriches the context for future searches. Results are presented in such a way that a user can see which portion or region of the selected audio content contained phrases or utterances deemed to be similar. avaya.com | 5
  • Figure 1. Building a phonetic search Audio data is transformed into phoneme strings h e l @ U . . . Hello 1 3 Words and phrases converted to phoneme strings and searched Relevant search results are displayed 2 Taking phonetic search to the next level Two recent technology advancements are expanding the capabilities of phonetic search. One is the development of high-performance desktop clients for searching and indexing searches in real time. Searches can be issued through such a client, and, as part of the process, relevance thresholds can be set that define results the user can ignore. There is no right or wrong way to set the relevance threshold level. By varying it, trade-offs can be made between false positives and false negatives. The second noteworthy development in phonetic search is the emergence of cloud-based BI solutions. Scalable, secure cloud-based BI platforms can provide advanced analytics and reporting with low organizational risk, impact and cost. For example, phone calls can be tagged by criteria, such as the work shifts during which they occurred or the top reasons clients are calling the institution. Cloud solutions also offer automated upload of search and discovery results to an analytics and reporting engine. They can also include out-of-the-box coverage for industry-standard key performance indicators such as first-call- resolution and average-hold-time analysis. avaya.com | 6
  • avaya.com | 7 These and other advantages of phonetic search not only can offer faster, and potentially more accurate, analysis but also can significantly lower expenses across an organization, particularly relating to the hardware platform required to deliver a particular capacity of analysis. In short, what is accomplished on an entire server for speech-to-text search can be accomplished on a single core for phonetic search. For example, speech-to-text system analysis of 200 hours of data in 24 hours may require the purchase of a server-grade computing resource that costs around $2,000. A phonetic search system can analyze 500 hours of data in only two hours, requiring only a laptop computer costing less than $1,000.4 Also, total cost of ownership may be lower due to the reduced maintenance effort required to operate a phonetic search system. A phonetic search system is not dependent on a dictionary to perform recognition, which means it natively supports product names, jargon and other non-dictionary phrases. This translates into fewer ongoing costs relating to system operation and support of a changing business environment.5 A powerful compliance capability Financial services companies are under great pressure to record verbal transactions of every kind and to be able to retrieve recordings on demand. Phonetic search, coupled with powerful desktop clients and cloud-based deployment, can help financial firms respond rapidly to regulatory and other legal demands for the content of conversations, transactions and other voice interactions. 1 Not including software, maintenance and other costs. Illustrative only, based on Avaya experience through client engagements. 2 Based on Avaya experience through client engagements. About Avaya Avaya is a global provider of business collaboration and communications solutions, providing unified communications, contact centers, data solutions and related services to companies of all sizes around the world. For more information, contact your Avaya Account Manager or Authorized Partner or visit us at www.avaya.com. © 2012 Avaya Inc. All rights reserved. Unless otherwise noted, all trademarks identified by the ® , TM or SM are registered trademarks, trademarks or service marks, respectively, of Avaya Inc. 7/12 • UC7105