As AI becomes more deeply integrated into compliance and governance systems, financial institutions are grappling with a critical question: which tasks are too valuable or sensitive to automate?
In the regulatory technology (RegTech) sector, this dilemma is especially pronounced. Governance, risk and compliance (GRC) functions are already complex, and as regulatory landscapes shift, it’s becoming increasingly difficult to determine where automation ends and human oversight must remain, claims ViClarity.
Despite rapid technological advancement, GRC’s deliberate and methodical nature demands caution. Core responsibilities such as audit preparation, policy management, regulatory reporting and business continuity continue to underpin compliance operations. These areas remain the main focus of RegTech innovation, with AI and automation being applied to streamline workflows, boost accuracy, and improve user experience without compromising reliability.
Change in the GRC sphere is, by nature, slow and deliberate. Credit union compliance leaders in particular take a cautious approach, recognising the high cost of mistakes. These professionals are tasked with maintaining financial stability, ensuring regulatory compliance and safeguarding institutional integrity — a responsibility far too significant to delegate entirely to technology. This philosophy has guided many RegTech developers to view collaboration and well-defined boundaries not as barriers but as vital to building trustworthy solutions.
One clear example of this boundary is the final approval of policies and procedures. Generative AI tools can be helpful in drafting or reviewing documents, identifying inconsistencies, and flagging unclear language. Automated systems can assist by assigning tasks, tracking progress, and managing vendor relationships. However, final sign-off should always remain with human experts. Cultural alignment, tone, and strategic considerations require human judgment — and with the persistent risk of AI hallucination, full automation remains too risky.
Another area where automation must tread carefully is the interpretation of regulatory ambiguities. Regulations are often deliberately broad, and understanding how they apply to a specific institution or jurisdiction requires deep expertise and contextual awareness. AI tools can aid compliance professionals by monitoring regulatory updates in real time and alerting them to new developments, but human interpretation remains essential to ensure accuracy and compliance.
Similarly, when it comes to discussing risk tolerance and setting strategic direction, AI can play a supportive role — providing insights, analysing trends, and simulating scenarios. Predictive analytics can help boards visualise future risks. However, decision-making must still involve human leadership, not only as a best practice but often as a regulatory requirement.
Ultimately, AI’s role in GRC today is as an enhancer, not a replacement. It strengthens human decision-making by providing clarity, speed, and scalability. But the most responsible approach is one that keeps compliance professionals at the centre, ensuring that human judgment, empathy, and institutional wisdom remain integral to governance and risk management. As both regulation and technology evolve, the boundary between human and machine will continue to shift — but for now, people must stay firmly in the loop.
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