The UK financial services landscape has undergone a seismic transformation over the past 15 years, necessitating adaptation to emerging technologies, a rapidly changing policy environment, and new client expectations.

At the heart of this shift lies a fundamental principle: the preservation of truth. In an industry built on trust, ensuring that what firms are telling customers and colleagues is accurate, transparent and compliant is critical. Yet the rapidly shifting communications landscape creates new challenges for organisations striving to uphold this principle.

No one understands these challenges better than Smarsh, the trusted communications compliance partner to over 6,500 customers worldwide, including 80 per cent of the top global banks. A 2025 Gartner Magic Quadrant Leader for Digital Communications Governance and Archiving with over two decades of industry leadership, the company has had a front-row seat to the seismic shifts taking place across the industry.

“Compliance has evolved. It’s no longer just about reacting to regulatory pressure – it’s about staying ahead of risk,” said Tom Padgett, President, Enterprise Business at Smarsh. “Firms now face a new frontier: the explosion of informal communication tools like emojis, voice notes, and messaging apps woven into everyday workflows. At the same time, non-financial misconduct is in sharp focus, with the FCA spotlighting it through its recent Sexism in the City recommendations.”

Against this backdrop, regulators in the UK and Europe are intensifying their efforts to penalise non-compliance in communications capture. The staggering €5.65 billion in General Data Protection Regulation (GDPR) penalties issued to date serve as a stark reminder of what’s at stake.

With the pressure on, how can firms navigate this shifting communications landscape while ensuring compliance, fostering innovation and addressing emerging regulatory priorities such as NFM and the Digital Operational Resilience Act (DORA)?

The compliance challenges of today

Traditional compliance tools, while once effective, are now increasingly ill-equipped to handle the complexities of modern communication, and the sheer volume and variety of data generated by today’s workforce presents significant challenges. 

Generative AI tools, such as Microsoft 365 Copilot and OpenAI’s ChatGPT, are transforming productivity by enabling employees to create content at unprecedented speeds. Gartner research indicated that more than 80 per cent of enterprises will have used generative AI APIs or deployed generative AI-enabled applications by next year. In addition, the Bank of England and the FCA found that 75 per cent of financial services firms already use AI. 

However, this also generates a dramatic increase in the volume of data that firms must monitor and archive for compliance purposes. A single employee using such tools could easily double their content output, creating a compliance challenge of scale. To that end, Smarsh recently announced that through its integration with Microsoft, it can now provide its customers’ compliance teams with the tools to securely govern Microsoft 365 Copilot, significantly enhancing their productivity and enabling organisations to use AI safely, responsibly, and within regulatory guidelines.

What’s more, informal communication tools and styles are no longer on the periphery. Recent research from the company revealed that 57 per cent of employees use emojis in client communications, while 56 per cent frequently send voice notes for work purposes.

While convenient, it’s notoriously difficult to capture instances of misconduct in these formats. Recognising this, Smarsh acquired CallCabinet in February 2025 to bring advanced voice capture and analytics capabilities to clients. Smarsh models identify the language of interest and focus on the context rather than individual words to capture, flag and act on instances.

NFM, encompassing behaviours such as bullying, harassment and discrimination, is also now a regulatory priority. The FCA is expected to introduce new rules requiring firms to identify and mitigate these risks in the workplace, with communication channels being a core component.

Yet, despite the urgency, research from Smarsh in 2024 found that 63 per cent of UK financial services employees lack confidence in their organisation’s current monitoring systems. This is a critical gap, given that 66 per cent of employees support the use of AI to detect NFM: but the employee appetite and support for using technologies to detect such misconduct is there.