Data Management and the True Cost of Voicemail
Varun Mehta, August 12, 2015
In June reports emerged that JPMorgan Chase & Co. was scrapping voicemail in its consumer bank division. At the time, many interpreted the decision as simply a cost-cutting measure. Some analysts saw it as “penny-pinching,” noting that the savings would likely prove to be meager. These reports, however, are missing the point. The cost of voicemail is no longer just a recurring payment to a phone company. With new regulations around data storage requiring financial institutions to preserve their communications data—including voicemail—for long periods of time, the calculus is rapidly changing. And while it’s true these regulations haven’t extended to consumer banks yet, limiting how much data a business unit generates remains a prudent move for a number of reasons.
For example, investment banks whose trading desks are currently using voicemail must be cognizant of Section 731 of the Dodd-Frank Act, which compels firms to maintain daily trading records as required by the Commodity Futures Trading Commission (CFTC). In its response to that section, the CFTC promulgated rule 23.202, requiring firms to maintain pre-execution 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, cash or forward transaction “whether communicated by telephone, voicemail, facsimile, instant messaging, chat rooms, electronic mail, mobile device, or other digital or electronic media.” [Emphasis added.]
Suddenly, for any bank engaged in trading activities, voicemail is no longer just voicemail. It’s a piece of data that needs to be preserved and hosted—and that means that its cost isn’t just $10 a month per line. Banks now need to consider the costs of storing, preserving and (potentially) reviewing voicemail. Audio data often costs more to analyze than electronic communications such as emails and chats, and it’s clear that the type of data, not just its content, is an increasingly important factor in corporate decision-making. Furthermore, in the world of data management, all data that exists is a potential liability. Why create unnecessary risk?
JPMorgan’s decision to cut voicemail so far has been limited to its consumer bank division, a business unit for which Dodd-Frank requirements for the preservation of audio data do not (yet) apply. However, it’s likely that other banks will follow JPMorgan’s lead and look to mitigate the considerable and varied cost and risk. Expect companies to keep close tabs on how much data they generate. Expect to see data reports landing on the desk of CEOs, next to the P&L, that read, “Our business unit generated 4 terabytes of data this month.” With entire policies currently being drafted around institutional data, it wouldn’t be far-fetched to predict a day when training manuals encourage employees to put down the phone when an email may suffice.
Corporate data is growing at an unprecedented rate, with spending on big data hardware, software and services estimated to reach a total market size of $114 billion by 2018. At the beginning of the big data revolution, the world thought that data’s utility lay in customer insights. But every rose has its thorn. Companies, particularly financial services companies, have learned the hard way that their own data can return to haunt them.
Though such regulatory requirements have not yet touched every industry and every department, their scope could expand, forcing companies to preserve even more data. As a result, companies face tough decisions. Do they restrict the usage of mobile devices among their employees? Do they implement training with the aim of minimizing the generation of useless data? Do they cut voicemail?
When they write about these decisions, media pundits would do well to ask themselves if it’s really just about penny-pinching. There may be more behind the curtain.
Varun Mehta is the vice president of legal and compliance solutions at Clutch Group, a global provider of litigation, investigation, compliance and other legal services for Fortune 500 companies.