How AI is Revolutionizing Compliance in Banking

Artificial intelligence is revolutionizing compliance in financial services. AI-enabled solutions are empowering banks to automate manual processes, provide real-time monitoring and detection of anomalies, and enhance visibility into the operating performance of key risk functions. These advancements are accelerating the adoption of new operating models, streamlining processes, and reducing costs across the enterprise. These benefits extend to risk management as well. AI is revolutionizing compliance in banking by enabling faster and more accurate reviews of transactions, documentation, and customer interactions so that risk managers can be more proactive and focus on identifying emerging risks before they become costly issues. Let’s take a look at how AI is helping banks automate routine checks, uncover risks faster, monitor activities in real-time, and analyze documents with increased accuracy – all while improving employee productivity at the same time.

AI for Automated Compliance Monitoring

Many compliance functions require banks to manually review customer transactions and documentation to make sure they are compliant with regulations. Manual reviews can require a significant amount of time, depending on the nature of the documents involved and the location of the individuals conducting the reviews. This can make it difficult for banks to keep up with their ever-growing volumes of data and customer interactions. AI-based solutions are already helping banks overcome these issues and address specific challenges such as customer onboarding, customer identification and due diligence, transaction monitoring, and risk-based monitoring. In customer onboarding, AI can review customer data against regulatory watch lists and customer information provided by the bank to flag potential issues. For due diligence, AI can process thousands of documents in seconds to determine if they are valid. Banks can then use these documents to onboard customers more efficiently and accurately. For transaction monitoring, AI can be programmed to flag unusual transactions. Banks can use this information to investigate and determine if the transactions are valid and compliant with internal policies and regulations. For risk-based monitoring, AI can process high volumes of data more quickly than humans can and look for patterns and anomalies that could indicate compliance issues. AI can also automate routine checks and verify results against regulatory requirements in real time. This enables banks to identify risks more quickly and resolve issues faster.

Streamline Compliance Processes

Compliance departments often process a large number of manual checks, especially around the time of an audit. AI can help banks automate these processes and reduce the amount of time employees spend on manual checks. This can help banks reduce costs and improve operating efficiency. In customer onboarding, AI can automate processes such as validating a customer’s identity and verifying their information against regulatory watch lists. This can help improve accuracy and reduce the amount of time employees spend on checking and validating customer information. In customer identification, AI can automate processes such as validating a person’s identity against government-issued IDs. This can help reduce the amount of time employees spend validating IDs. In transaction monitoring, AI can automate processes such as flagging unusual transactions. This can help reduce the amount of time employees spend on monitoring transactions and flagging unusual activities. In risk-based monitoring, AI can automate calculations and determine if certain activities are compliant with regulations.

AI for Ultra-fast Document Review

Banks use many different types of documents to onboard customers and conduct their day-to-day business. Regulations require banks to carefully review these documents for accuracy and consistency. This includes documents such as customer data, contracts, and financial documents such as invoices. AI can process thousands of documents in seconds to determine if they are valid. Banks can then use these documents to onboard customers more efficiently and accurately. They can also use these documents to make more informed decisions on a daily basis. AI can help banks automate document review and fraud detection processes. For example, AI can help banks automatically identify suspicious financial documents such as invoices, bills, and payment orders. This can help banks identify issues such as duplicate payment orders or invoices that don’t match up with a contract.

Automate Due Diligence Activities

Due diligence is the process of verifying customer information and data to help banks comply with regulations. Banks typically conduct due diligence manually through a series of questions and documents such as KYC (know your customer) and AML (anti-money laundering) questionnaires, source of funds documentation, and ownership and control documentation. AI can process thousands of documents in seconds to determine if they are valid. Banks can then use these documents to verify customer information and make sure it is compliant with regulations. AI can help banks automate due diligence activities such as validating the authenticity of government-issued IDs and verifying customer data against regulatory watch lists. This can help reduce the amount of time employees spend validating IDs and verifying customer data.

Provide Real-Time Monitoring and Detection of Anomalies

Real-time monitoring and detection of anomalies can help banks identify compliance issues and risks as they occur. Banks can build algorithms based on regulatory requirements and business rules to monitor user activities and flag any anomalies. AI can process large amounts of data and identify anomalies faster than humans can, helping banks to identify risks and compliance issues more quickly. Real-time monitoring can help banks identify the root cause of compliance issues and take corrective action, if needed. For example, AI can help banks identify fraudulent activities and stop them from occurring. It can also help banks identify internal fraud such as employees making unapproved changes to customer data. Real-time monitoring and detection of anomalies can help banks be more proactive about compliance and make necessary changes to their processes.

Enhance Visibility into Risk Events

Automated compliance monitoring and detection of anomalies can help banks identify risks and compliance issues, but it can be challenging to see the big picture and identify potential root causes. AI can help banks provide more visibility into risk events and identify potential root causes. Banks can use machine learning algorithms to analyze large amounts of data and identify trends and patterns. AI can help banks identify potential risks and better understand the impact of changes to their processes. For example, AI can help banks identify risks related to changes in customer data. It can also help banks identify risks related to a new products or services.

Summing up

Artificial intelligence is revolutionizing compliance in banking by enabling faster and more accurate review of transactions, documents, and customer interactions. AI can also help banks automate manual processes, reduce the amount of time employees spend on checking documents, and provide real-time monitoring and detection of anomalies to identify risks and compliance issues as they occur. These advancements are accelerating adoption of new operating models, streamlining processes, and reducing costs across the enterprise.