The Dangers of Off-channeling with WhatsApp

In March 2023, the centralized instant messaging platform WhatsApp began dominating the U.K. headlines. The WhatsApp scandal kicked off when leaked messages sent by former health secretary Matt Hancock — many of which contained unsavory remarks — resulted in widespread outrage and political embarrassment. Even more disturbing details emerged later in the year as the investigation into the handling of the COVID-19 pandemic unearthed messages from top politicians and their aides laced with profane language and toxic references to staff and civil servants.

As British publishers were quick to explain, the popularity of WhatsApp among politicians was well-established due to the app’s speed, accessibility (increasingly important in remote work environments), and the perceived security of WhatsApp’s end-to-end encryption. “It’s used by MPs needing to talk to ministers, by whips’ offices trying to keep their benches in check, by journalists confidently talking to their sources, and by everyone else for gossip and general tittle-tattle. Coups against serving prime ministers have been organised in WhatsApp groups and so have leadership campaigns and rebellions on parliamentary votes. The story’s quite simple, really: over the past decade, WhatsApp has taken over Westminster,” wrote Marie Le Conte for The Guardian.

But beyond the very valid concern that the conversational tone often adopted in off-channel messaging apps opposes professional standards and codes of conduct, the U.K. WhatsApp scandal also precipitated a larger discourse around potential security and regulatory concerns.

Big risks in banking

While the dangers of unguarded messaging in the political sphere are mainly reputational, in banking and finance the damage can be economic - and quite serious as the $549 million of penalties recently levied against Wells Fargo and some smaller banks has shown.

In this article, we take a closer look at why off-channel communication poses a threat, the far-reaching consequences of widespread WhatsApp use, and some of the emerging technological solutions.

A false sense of security

One of the major arguments for using WhatsApp to communicate is the platform’s guise of security. ABC explains that WhatsApp’s “end-to-end encryption offers users a sense of security that messages will be private,” endowing users like Matt Hancock with a “confidence” in the platform that ultimately “proved misguided.”

Undoubtedly as a result of these concerns, the U.K. Cabinet Office issued a new guidance on March 30th, 2023, that stipulated “departments should reduce the need for non-corporate communication channels, including WhatsApp, Signal, private email, text messages and private messaging on social media platforms like Facebook, ‘as far as reasonably practicable’.”

The threat to transparency

On the flip side, the end-to-end encryption WhatsApp offers also poses a significant threat to industries where transparency is paramount — like banking. As Reuters explains, “Regulations governing financial institutions have progressively been tightened since the global financial crisis of 2007-9 and companies have long recorded staff communications to and from office phones.” However, “with thousands of finance workers and their clientele still working remotely after decamping from company offices at the start of the pandemic, some sensitive conversations that should be recorded remain at risk of being inadvertently held over informal or unauthorized channels.”

As a result of this breach in transparency, the US Securities and Exchange Commission (SEC) has started bringing significant fines against banks using off-channel messaging apps to conduct business dealings. In May 2023, the SEC fined HSBC $15 million for “‘widespread and longstanding failures’ by the bank and its employees to ‘maintain and preserve electronic communications,’” according to City A.M. An investigation by the SEC revealed “employees at the bank often used platforms like Whatsapp to discuss business dealings. In violation of US record-keeping laws, these conversations were then not preserved.”

HSBC isn’t alone in these regulatory violations, either. NBC reported that in August 2023, the SEC “announced a combined $549 million in penalties against Wells Fargo and a raft of smaller or non-U.S. firms that failed to maintain electronic records of employee communications.”

A ban on WhatsApp?

With the risk of incurring such heavy fines for WhatsApp use, any convenience the platform offers is swiftly being outweighed by its economic risks. As a result, City A.M. reports, “An increasing number of banks and financial services firms have banned their staff from using encrypted messaging apps such as Whatsapp for work purposes after regulators hit banks with hefty fines for failing to stamp out the practice.”

But banning off-channel communications platforms isn’t the only means of ensuring regulatory compliance among employees.

A technological fix?

As is so often the case with technological issues, technology is also poised to be the solution to ensuring off-channel compliance. Several innovative companies have emerged to meet the growing demand for recording and managing WhatsApp messages, including:

• Symphony. Tech company Symphony has released a tool that “helps capture and retain WhatsApp messages, providing regulated users high-touch client communication with peace of mind.” Symphony CEO, Brad Levy, told Reuters, “Symphony's user base has more than doubled since the pandemic to 600,000, spanning 1,000 financial institutions including JPMorgan and Goldman Sachs.”
• Movius. AI-powered app, Movius, provides “a second, secure business number for voice, text, and WhatsApp conversations.” Movius also told Reuters that “its business lines specializing in making WhatsApp and other tools recordable have more than doubled in size in the space of a year, with sales to asset managers a growing component.”

With tools like these emerging to mitigate the risks of off-channel messaging, WhatsApp may be able to regain its popularity as a business communication platform.

One thing is certain - without measures in place that ensure transparency, security, and professionalism, the potential consequences of using off-channel messaging to conduct business now far outweigh the benefits.