The rise of AI is happening across the majority of industries globally. However, it is seeing particularly powerful growth across the RegTech industry right now.
With traditional regulation and compliance processes being quite time-inefficient and burdensome, the rise of RegTech has provided new opportunities for efficiencies in these key areas. Another area that has benefitted immensely from RegTech is onboarding.
RegTech firm Sentinels recently underlined in a post some of the key ways that utilising AI in RegTech process can benefit onboarding. The company remarked that powerful AI solutions are ‘helping firms in heavily regulated markets such as finance, to achieve compliance more cheaply, efficiently, robustly and in many cases, automatically’.
During the onboarding process, new clients are screened and checked according to AML, KYC, anti-terror financing and other regulations. This is a process to ensure their clients and their funds are legitimate.
While onboarding has traditionally been a process completed manually, as Sentinels underlines, digitalisation has ‘completely flipped it on its head’. “In today’s competitive digital environment, having a simple, seamless tech-led client onboarding process is no longer an option: Firms must adopt an agile tech-led to not only please their clients and move with the times but also ensure complete compliance with rapidly changing regulations”, the company states.
Many of the leading FinTechs of today, Sentinels claim, have already merged AI with their onboarding processes by making them completely digital. How can AI be utilised in the onboarding process?
The first way is through document authentication. Clients often are required to submit documents such as passports and driving licenses to authenticate their identity as part of basic KYC checks. In this process, AI can be used to check images of identity documents and ‘passport selfies’ to check them for authenticity. AI can also help with eliminating duplication – in the sense that the technology can be used to detect and reconcile duplicated data automatically, keeping systems tidy and compliance with data protection regulations.
Sentinels also underlined that AI can benefit with detecting suspicious clients through its usage of monitoring watchlists, sanctions and other information to identity any potential problem clients from the outset. AI is also able to collect more data, as it makes it possible to identify more data that’s available from a wider range of places that a human operator may never have looked.
The use of AI in onboarding, Sentinels added, can also help in building a deeper understanding. The firm commented, “AI provides firms with a more comprehensive view of a new client’s business activities from the outset. This makes it easier for firms to avoid working with potential problem clients, particularly where problematic activities are nuanced.”
Sentinels concluded, “The onboarding process is one where it’s easy to let standards slip, yet it’s the most important of them all. With criminals employing more sophisticated fraudulent tactics to get around manual onboarding checks, it’s also a process where you need AI to have your back.”
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