01/27/2021

A new AI-led frontier for bank compliance

From front office to back, AI is reshaping financial services in a multitude of ways. If correctly integrated, the technology can allow all departments to optimise operations and increase the amount of time that humans spend on tasks that truly matter. This is leading to happier, more productive staff, and more profitable organisations.

 

Despite being one of the lesser talked about areas of financial services, compliance is benefitting, too. AI is being used by compliance leaders and their teams to do more fulfilling and more profitable work, increasing efficiencies and, importantly, improving customer protection.

 

Under the pressure  

 

In today’s mind-bogglingly intricate financial services sector, the pressure on compliance teams only grows. With the increasing complexity and speed of modern finance, compliance must do all it can to stay on top of a regulatory landscape that is ever-evolving around them.

 

Compliance is a department that has to work at top speed and at serious scale, across a vast web of geographies and regulatory frameworks. The stakes are also high, with the financial and reputational risks for being non-compliant ramping up with every passing year.

 

It’s likely that you’ve heard, in general terms, how AI can solve these problems, but there is a gulf between what AI promises and its integration, moving to a point where it is actually improving the lives of financial services workers, especially compliance. This has meant that its adoption in compliance has been a little slower than in other sectors.

 

A willingness to engage

 

One reason why this adoption has been slow is because of the disconnect between the complexity of the problems that compliance faces and the expertise of AI. Despite its many benefits, AI isn’t a great ‘do-er’. It struggles to work out problems on its own, especially ones that are as complex and manual as those commonly faced by compliance. But AI is a great ‘augmenter’, an awesome companion that allows people to improve the work they’re doing.

 

And this is how AI can help compliance – it can be a loyal partner. A worthy analogy is to compare how IBM technology powered the moon landings, but it still needed thousands of astronauts, engineers, mathematicians, scientists and technical experts to get there.

 

AI isn’t going to replace compliance, just as computational power didn’t replace the astronauts. What AI will do is augment risk management and compliance processes, leading to human practitioners being able to work faster and smarter for more sustained periods of time.

 

Theory into practice

 

Let’s look at the example of portfolio clustering and simulation. This uses internal and external data to identify treatment strategies for customers at risk of adverse credit scenarios. AI is able to order and segment customers who are at risk, rapidly sorting through vast data sets quicker than any human ever could.

 

AI does the heavy lifting before handing over to compliance and relationship managers who deal directly with those that need help before AI gets back to exploring more cases. The human-to-robot relationship builds a sense of teamwork that wins outcomes superior to those that compliance has been able to achieve to date.

 

And this teamwork doesn’t just reap rewards in times of stress or crisis. It can be put into action on an ongoing basis, with AI and compliance working together on long-term business matters, such as planning and strategy.

 

An AI-powered bank

 

AI will not run the banks of the future, but AI can allow human practitioners to achieve greater results than they’re achieving today.

 

For example, we’re looking forward to a time in the not-too-distant future when back-office operations automated through processes serve people, rather than the other way around. This means that compliance becomes a function of relationship building and customer service, rather than number crunching and regulation box-checking.

 

AI should take the mundanity out of work, flagging any complex issues that require human involvement. A machine finds the problem – a human applies a human touch. On a strategic level, compliance will be able to use AI-garnered insight that can empower them and the organisation, allowing them to make better decisions for the long term good of the company.

 

Working smarter 

 

The age of AI we are living in holds huge upside for financial services. All sector participants can look forward to a time when their jobs will be more efficient, enjoyable and productive. AI is now offering that prospect for all participants.

 

Compliance is no exception. AI looks set to usher in new possibilities for compliance in the not too distant future, freeing up compliance teams to do more work that matters more to them and their customers. Maybe, just maybe, AI might also be able to make a terrifically complex role a little more straightforward.

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