In 2023, Artificial Intelligence is transforming the way we conduct business around the world. As new technology emerges in the financial services industry, many professionals in the investment industry are wondering how this may change Compliance and Regulatory Technology. While we may not know exactly what these changes will look like, we can make sure we are prepared and updated on changes in technology.
Implementing Artificial Intelligence tools into Compliance and RegTech activities could reduce costs and improve accuracy in the process. By automating certain workflows, companies could reduce the time and labor needed to conduct compliance operations.
Utilizing artificial technology in compliance processes will help eliminate the risk of human error. Errors can occur at all levels of the compliance process, and be caused by simple mistakes in data entry, typos, and miscommunication. Even these seemingly minor errors have proven to be costly. With the ability to leverage large sets of data, the implementation of AI would help reduce the potential for human error and its costs. AI can also facilitate the process by automating certain compliance decisions. This would decrease the time spent on these activities and therefore boost productivity.
Lastly, AI systems can be useful for market surveillance purposes. These systems can detect misconduct such as price manipulation and collusive behavior that may be difficult to catch using traditional methods. Working to prevent these illegal activities could reduce the issues and costs they incur.
Despite the potential benefits of integrating AI into compliance processes, it is also important to consider the drawbacks. One challenge that may arise if using AI-driven compliance processes is that the data quality, completeness, and standardization may impact the effectiveness of the technology. Certain sets of data, such as nontraditional or incomplete sets of data, may require significant support and intervention, decreasing overall productivity.
As we discuss the pros and cons of utilizing AI in compliance and RegTech, it is important to note that humans always have, and will continue to play a major role in these processes. While the software may collect and process the data, humans will continue to perform their key roles by analyzing the data, drawing conclusions, and making important decisions.
The use of AI technology in business and the financial services industry is expanding at a rapid pace each day. It is important for us to monitor these updates and understand how they will affect the industry. With the right support and expertise, the use of AI could improve the compliance process.
IMP is dedicated to staying up to date on changes in technology and will continually adapt our approaches in order to meet our clients’ needs.
Sources:
https://www.imf.org/en/News/Articles/2021/10/29/sp102921-ai-and-regtech
https://member.regtechanalyst.com/the-next-revolution-could-gen-ai-bring-regtech-into-a-new-age/