RegEd recently attended the NSCP National Conference, where industry leaders gathered to discuss pressing issues and trends impacting the financial services landscape. The NSCP National Conference once again highlighted the pressing topics of cybersecurity and artificial intelligence in the financial services industry. As organizations navigate the complexities of these evolving technologies, key insights emerged from the sessions that warrant attention.
Dominance of Cybersecurity and AI
Cybersecurity and AI dominated discussions throughout the conference, highlighting their growing importance in today’s financial services landscape. Many firms are in various stages of adopting AI technology, but panelists noted that concrete examples of efficiencies gained from AI are still emerging. While AI is recognized as an evolving area, there is a growing understanding of how to manage associated risks. Firms are looking for experienced vendors offering closed-loop, proprietary AI models that prioritize data privacy and security. Discussions focused on ensuring proper regulatory oversight and thoughtful implementation. Panelists cautioned against the use of notetaking technologies, urging firms to clarify whether such tools are simply transcribing or summarizing discussions. Firms should maintain an AI risk register to track AI utilization, as regulators are likely to seek this information. Panelists noted that there are likely areas for which your firm is already utilizing AI, but you’ve not been made aware of it.
Managing Compliance and Remote Supervision
During the session on “Managing COI and Employee Reporting Obligations,” a recurring theme was that while regulators encourage self-reporting, there is a need for caution in doing so. Panelists emphasized the importance of implementing technology that prevents issues from arising in the first place. The Remote Supervision Pilot Program and RSL session highlighted critical factors leading to disqualification for remote inspections, including the number of financial outside business activities (OBAs), complaints received, heightened supervision status, non-compliance with policies and procedures (P&P) or written supervisory procedures (WSPs), changes in supervisory structure, and recordkeeping violations. Notably, 67% of the registered representative population, comprising 741 member firms, opted into the Pilot, including 60% large firms, 47% mid-sized firms, and 18% small firms. It was revealed that 11 states do not currently recognize RSLs, leading to increased complexity in complying with the RSL reporting requirements.
In the Remote Auditing and Supervision Talk Group facilitated by RegEd’s VP of Product Management (Adam Schaub), a roundtable made up of CCO’s, branch audit managers, outside consultants and others discussed challenges and best practices around the end-to-end process of branch audits and remote surveillance/supervision. The group discussed the eligibility criteria for remote inspections, audit pre-work, inspection processes, technology options, frequency, and evidence of supervision. Regarding FINRA’s Remote Inspection Pilot Program, talk group members whose firms are 2024 participants in the Pilot shared their experiences and challenges, and firms that are joining or considering doing so in 2025 were able to ask questions and learn how to prepare for and manage their future Pilot participation. Key takeaways from the session included the following: most firms have followed a similar path in obtaining data and applying that information toward remote inspection eligibility for their locations; several firms shared processes they have followed when conducting remote “unannounced” inspections; and that general concerns about joining the Pilot program such as providing FINRA with findings data were less troublesome in reality.
Training and Regulatory Compliance
To enhance effectiveness, the conference underscored the necessity of tailored training programs for different roles within compliance, representatives, legal teams, and more. This specialized approach is critical in addressing the distinct responsibilities faced by each role. Frequent references to Regulation S-P (privacy of consumer financial information) and Regulation S-ID (identity theft red flag rule) emphasized the ongoing need for comprehensive training, policies, and procedures around cybersecurity. As AI fraud technology rises significantly, the conference shared alarming anecdotes, such as a Zoom board meeting with fake attendees that resulted in a human participant being tricked into wiring money.
SEC’s Focus on Compliance Programs
The SEC has resumed physical and onsite examinations, focusing on partnerships with Chief Compliance Officers (CCOs) to strengthen compliance programs. This collaboration aims to ensure that compliance measures are appropriately resourced and that senior staff are actively listening to compliance concerns—highlighting the importance of having compliance at the decision-making table.
Conclusion
The NSCP National Conference shed light on the critical intersection of cybersecurity and AI, emphasizing the need for strategic planning, regulatory awareness, and comprehensive training in the financial services industry. As firms continue to adapt to these challenges, ongoing dialogue and collaboration will be essential in navigating the future landscape. RegEd is uniquely positioned to help firms navigate these challenges with our comprehensive compliance platform. Our suite of purpose-built solutions helps firms meet their compliance obligations efficiently, offering robust tools for managing advertising review, branch audits, conflicts of interest and onboarding, licensing, and registration. If you are interested in learning more about how RegEd supports firms in overcoming their compliance challenges, schedule a personalized consultation with one of our solution experts today.
About RegEd
RegEd is the market-leading provider of RegTech enterprise solutions with relationships with more than 200 enterprise clients, including 80% of the top 25 financial services firms.
Established in 2000 by former regulators, the company is recognized for continuous regulatory technology innovation with solutions hallmarked by workflow-directed processes, data integration, regulatory intelligence, automated validations, business process automation and compliance dashboards. The aggregate drives the highest levels of operational efficiency and enables our clients to cost-effectively comply with regulations and continuously mitigate risk.
Trusted by the nation’s top financial services firms, RegEd’s proven, holistic approach to RegTech meets firms where they are on the compliance and risk management continuum, scaling as their needs evolve and amplifying the value proposition delivered to clients. For more information, please visit www.reged.com.
