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Embracing the AI revolution in financial services compliance: striking the balance between control and innovation

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by Apiax
| 19/05/2023 15:30:00

The financial sector is witnessing rapid transformation due to artificial intelligence (AI) advancements, and compliance management is no exception. In this blog post, I will discuss the delicate balance between control and innovation in AI-driven compliance. I will also share my beliefs on how a balanced approach can help financial institutions overcome the challenges and risks associated with AI implementation in the compliance domain, while also incorporating insights from a recent Boston Consulting Group article on generative AI.

Preparing the workforce for an AI-driven future
Generative AI, such as large language models (LLMs) like ChatGPT, has the potential to enhance productivity, performance, and creativity across various industries. As BCG describes in its article, to harness the full potential of AI, organisations must strategically prepare their workforce for this transformation. This includes redefining roles and responsibilities, conducting regular pulse checks to track employee sentiment, and developing transparent change-management initiatives. In addition, organisations should focus on upskilling employees in AI augmentation and preparing supervisors to lead an AI-augmented workforce.

Adjusting the operating model for AI-driven compliance

To successfully implement AI-driven compliance solutions, financial institutions must adopt agile, or bionic, operating models. Centralised IT and R&D departments with experts who can train and customize LLMs should be implemented, ensuring employees working with similar data have access to the same datasets. Additionally, the appointment of a senior executive role, such as a chief AI officer, could oversee business and technical requirements for AI initiatives, placing small data science or engineering teams within each business unit to adapt models for specific tasks or applications.

Implementing policies to protect the business and harness AI responsibly
Generative AI presents critical risks, including hallucination, copyright infringement, leaks of proprietary data, and capability overhang. To mitigate these risks and ensure the responsible use of AI, BCG recommends implementing policies that ensure clear data ownership, establishing review processes to prevent incorrect or harmful content from being published, and protecting the proprietary data of the company and its clients. Additionally, training employees on how to use generative AI responsibly and encouraging them to retain a healthy scepticism of AI-generated content can help mitigate security and quality risks.

The power of combining digital rules and generative AI
In response to the growing demand for control and transparency in AI-driven compliance, the dedicated Apiax AI lab team has been developing an approach that combines rule-based decision-making processes with the latest advancements in natural language processing (NLP) and generative AI, such as LLMs like ChatGPT for more than two years. This balanced approach enables compliance teams to harness the power of AI without sacrificing transparency, traceability, or control.

A balanced approach to AI-driven compliance offers several key benefits to compliance teams in the financial industry:

  1. Improved efficiency and accuracy: combining rule-based decision-making processes with generative AI and NLP technologies minimises the risk of human error. As a result, compliance teams can process and analyse large volumes of data more quickly and accurately, allowing them to identify potential issues and make informed decisions.
  1. Enhanced decision-making: our solution provides compliance teams with a comprehensive understanding of regulatory requirements and their implications. By integrating AI-generated insights with traditional digital rules, compliance teams can make more informed decisions based on a broader scope of information. Furthermore, our approach ensures full traceability and transparency, enabling compliance teams to verify and validate AI-generated answers, resulting in a higher level of confidence in their decision-making process while maintaining governance and a full audit on compliance answers provided to employees.
  1. Greater adaptability and scalability: the dynamic nature of regulatory environments necessitates a flexible and scalable compliance solution. Our approach allows compliance teams to quickly adapt to changes in regulations by modifying digital rules and leveraging AI-generated insights to better understand new requirements. As the organisation grows, our solution can be easily scaled to meet the increasing demands of regulatory compliance management.

Use case 1: streamlining complex cross-border queries
Our AI-driven approach has already demonstrated its potential with concrete applications, such as providing rapid access to complex cross-border questions for relationship managers and other client-facing staff. By integrating our digital cross-border rules into an intuitive chatbot interface, we empower relationship managers to receive reliable and verified answers to their queries, significantly enhancing their ability to service their clients even in complex cross-jurisdictional scenarios while ensuring a seamless user experience.

Use Case 2: elevating policy search and compliance management
Our AI-driven approach not only simplifies cross-border queries but also revolutionises policy search and compliance management within financial institutions. With our next-level policy search solution, employees can quickly and accurately access the dos and don’ts outlined in compliance policies through an intuitive chatbot interface. This streamlined process saves valuable time and ensures employees have the most relevant and up-to-date policy requirements at their fingertips. Meanwhile, policy owners, such as compliance teams, can approve and curate the underlying policy documents, ensuring that the information provided remains accurate, reliable, and compliant.

The future of financial compliance lies in striking the perfect balance between control and innovation. By embracing a strategic approach that incorporates workforce preparation, operating model adjustments, and responsible AI policies, financial institutions can harness the benefits of AI-driven compliance while maintaining control, transparency, and traceability. At Apiax, we are committed to helping banks and financial institutions navigate the transformative landscape of generative AI and create a long-term competitive advantage.

If you are interested to discuss our thoughts and approach to AI-driven compliance or if you want to see our AI-driven cross-border chatbot for Wealth and Asset Managers in your environment in action, please do not hesitate to reach out to us.

Read the original article here.