It is hard to go a day without the talk of how AI is going to revolutionise the world and today is no different. When it comes to implementing AI, reducing tedious manual workloads and boosting efficiency are two of the most common boons and one area this is perfect for is regulatory compliance.
FinTech Global recently hosted its latest Global RegTech Summit in London, welcoming RegTech leaders for a day to network and discuss the latest trends and innovations driving the RegTech sector.
One panel, ‘From Reactive to Proactive: Redefining Compliance with AI’, featured Société Générale Investment Solutions Europe Chief Compliance Officer Jean-Marc Guiteau, Al Rajhi Capital Deputy Chief Risk Officer Layla AlAraj, Wise Global Head of Operations Rohan Basu, Global Relay Chief Strategy Officer Alex Viall and COMPLY Senior Vice President Jacqueline Morcombe. Joining the conversation as the moderator was Redcliffe Capital Managing Partner Alpesh Doshi.
Kicking off the discussion the panel painted the scene in the current market, with the consensus being that AI is no longer a pipe dream, it is a reality. While AI is living up to the hype, one panellist noted this is just the tip of the iceberg on how AI can be leveraged to improve compliance functions.
This is particularly true for is generative AI and LLMs. These have rapidly become an important area for AI innovation, with their ability to understand and generate content in a similar capacity to a human.
A current key use case of this type of technology is within the detection of financial crime. AI can be used to have targeted ways to detect and identify potential incidents of fraud. Rather than having static rules that could generate in excess of 90% false positives, LLMs can use more advanced analysis to uncover patterns and behaviour, assess all the data points associated with customers and have more targeted reviews. Ultimately this makes it much easier to complete and allows agents to spend more time on real fraudulent cases.
Another use case for LLMs, highlighted by the panel, is within the workflow. Beyond identification and detection, LLMs can help agents to identify certain red flags, typologies, trends and themes. This can then be plugged into the core system and generate the narrative for a SAR that is tailored to the relevant jurisdiction.
The panel highlighted a range of other use cases for AI within compliance. For instance, being able to query policies and procedures, such employees asking whether they can take a client to a certain event or whether they can trade a specific asset. An AI tool can be used to help teams reduce the standard friction and smooth the relationship between compliance teams and monitored departments.
Finally, one other use case to note revolves around transcription and translation. When teams have had to find dialogue, it was traditionally a manual task of downloading recordings and sifting through for anything relevant from a compliance perspective. This can be incredibly cumbersome. However, AI can now transcribe and translate this content making it much easier to identify relevant comments through video and audio files.
Assessing the ROI of AI
With so many AI solutions available in the market, it is overwhelming to identify the right fit. But once it has been implemented, understanding the ROI is vital to ensure the firm is capitalising on the full potential of AI.
According to one panellist, the main cost benefit of AI and automation is typically seen as cost efficiency, but there is a way to generate the desired outcomes much faster. For example, if a firm is required to do a ‘four eyes check’ every single SAR or case sent to a regulator. LLMs can be deployed to validate it or run it across various models to ensure it is accurate. Through this, the ROI goes beyond simply not needing to hire several people to get efficiency gains, but all the compliance objectives can be achieved ten times quicker, the panellist stated.
Another panellist noted that while AI will replace a certain level of human oversight, the technology will also allow firms to do things they have never been able to do before that have been purely manual and inefficient. They noted that many firms are now able to identify risks they didn’t know existed and are doing things the regulator has asked them to do but were unable because they lacked the technology or resources. These are net benefits, they mentioned.
However, the most notable benefit from AI is the collated data, which has been collected to satisfy regulators and regulations. The data transformation team is now excited about what is beyond compliance and what they can do with the data across the rest of the business. The panellist noted that, again, this is just the beginning for AI within compliance.
On a final note, a panellist highlighted the industry’s weird relationship with AI. It has gone from being met with scepticism to a wild desire for AI as firms feel the competitive advantage is too important. There is a sense if they don’t get involved, they will soon be so far behind, that they would never catch up. People are just throwing themselves at the technology, they said. There is also a risk that too many believe AI is perfect, and when it falls short, they are completely stunned. Concluding, they noted the industry is now at a weird point with adoption.
In September, FinTech Global will be hosting the 4th annual Global RegTech Summit USA in New York. The event is the largest gathering of RegTech leaders and innovators in the US and a great place to connect with industry experts and RegTech leaders. More information about the Global RegTech Summit USA event can be found here.
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