Artificial Intelligence (AI) is the hottest topic in service industries these days, and compliance is no exception. AI can be roughly divided into two categories: General, which we see in movies and read about in science fiction novels, and Specific, which is what will have the greatest impact in 2017. The new year is upon us, bringing promises of a variety of breakout technologies to help companies more easily comply with their regulatory requirements. Much in the way that manufacturing was forever altered by machine automation, service industries will be increasingly disrupted, resulting in significant cost savings and efficiency gains for all business owners.
- Intelligence Targeted for You
If smart data is akin to information, then smart information is equal to intelligence. Intelligent compliance programs will be targeted to your activities: you will receive specific information about regulatory changes, laws, and actions that are applicable acutely to your firm. You’ll also spend less time tracking changes and developments; instead, the rules and regulations will tell you when they change. And, with significant rule changes expected in 2017, these systems will assist you in managing the resulting regulatory delta.
- Operational Streamlining
Machine automation streamlined factories in the 20th century, and artificial intelligence is now poised to do the same for professional services. Imagine that your firm’s processes are represented as 100 stops in an assembly line. Now imagine that you are able—with just a few clicks—to replace 30 of those stops with algorithms. Increased automation in regulatory tracking, reporting, and auditing will result in fewer touchpoints and quicker work. With expected efficiencies of 30 to 40 percent, back-office procedures and compliance processes will be dramatically reshaped.
- Life Gets Cheaper
AI will directly impact on your bottom line. Operational efficiencies—fewer FTE’s dedicated to compliance, lower spending on costly regulatory consulting resources, and more seamless transmission of information to the parties with whom you work—will allow your firm to stay compliant at a far lower cost, allowing you to focus your limited resources. Firms spend at least 40 percent of their time tracking regulatory developments, reporting, amending procedures, and communicating regulatory details. Removing these hurdles through automation can save you
$100,000+ each year—money you can reallocate to your core business.
- Anomaly Detection
Automated anomaly detection and alerting will begin to ramp up in 2017 as advances in analytics and information processing enable customers to more intelligently scour their own data. Whether post-trade review, AML processes, or general compliance workflows, issues will be more readily detected and, thus, more quickly resolved. While there’s a potential challenge of data models that “overfit” results, greater accuracy will be achieved over time through refinement, and investments in working with such models will provide material yields.
- Higher Levels of Compliance
Seamless transmission of regulatory and compliance information across teams, coupled with more complete workflows, will lead firms to be more compliant than ever before. Reducing the barriers to compliance (in essence, decreasing the regulatory “tax”) will enable regulators to find bad actors quickly and protect markets more holistically, all while decreasing the burden on compliant organizations. Amongst the main regulators, there are 85 separate clauses requiring some form of supervision. Automated systems will help you eliminate issues related to supervision, as well as those related to the myriad web of additional obligations with which you must comply.
Disclosure: Brian Clark is the CEO of Ascent Technologies, a Regulatory Technology (“Regtech”) company using specific artificial intelligence to help users comply with their regulatory obligations. Learn more about Ascent by visiting www.AscentRegTech.com,or by emailing Brian at Brian@ascentregtech.com.
