At the recent American Bankers Association Annual Convention, technology company Compliance.ai announced a collaboration tool that aims to help the finance industry change its manual processes in order to save money and increase efficiency. The company’s solution is set to change how compliance and banking teams collaborate on regulatory content while leveraging artificial intelligence and expert curation.
Compliance.ai’s dynamic platform has been designed to simplify and streamline how compliance and banking teams monitor and track, and engage in research, on the financial regulatory content. The new initiative is an update to the artificial intelligence tool called the ‘Team’ edition, which replaces the disjointed method of manually exporting regulatory document lists, and distributing them via email to team members every time something changes in the regulatory landscape. A further add-on called ‘Expert in the Loop’ system ensures human curation is part of the tech/AI mix.
To find out more about the technology as well as the current – and future – state of regulation and compliance in finance/banking, Digital Journal spoke with the company’s CEO Kayvan Alikhani.
Digital Journal: Kayvan Alikhani, what are the major challenges facing the finance sector?
Kayvan Alikhani: Avoiding huge fines & reputational hits by meeting audit/compliance requirements is one of the major challenges facing the finance sector. The volume of regulatory content being published by various agencies poses a huge challenge, and in the absence of automation, financial services companies keep throwing bodies at the problem. This has now led to a serious shortage of skilled workers within the compliance space.
Various recent reports show that being responsive to regulatory change is considered the #1 priority for financial companies, for the foreseeable future. Additionally, the financial services industry faces cyber-security challenges; we all know of the hacks and data breaches at various institutions.
In the omni-channel world, it is challenging for firms to protect themselves and their clients evenly against cyberattacks across all channels, and to ultimately strike a balance between offering effective security measures while meeting regulations on data privacy & cybersecurity.
DJ: To what extent are these challenges the product of paper based and legacy systems?
Alikhani: Within the regulatory landscape, it is astounding how much is still being done manually, using paper and legacy systems, and thereby, inefficiently. Across global regulatory agencies, a small fraction have embraced modern information publication & exchange methods. Some are entirely paper-based, many publish and exchange content with siloed/one-to-one agreed formats, and finally a small subset have embraced web-2.0 based content publication and exchange technologies.
Ultimately, the sector has to deal with a hodge podge of international regulatory content, published randomly, on differing frequencies, in varying formats and forms, accessible using a wide-variety of methods, and containing dissimilar terminologies for the same regulatory concepts.
DJ: What are the advantages of digitalisation for finance?
Alikhani: Achieving automation and providing focused, distilled analysis to users requires “clean data” to begin with. Clean data at its best requires coherent content formats across all content providers, which can be accessed, read, parsed and processed using similar (and eventually standardized) methods. The ongoing digitization of financial services related regulatory content, across all global agencies. is a huge step in that direction.
DJ: What services does Compliance.ai provide?
Alikhani: Compliance.ai simplifies the life of compliance professionals by providing them with focused, real time access to highly personalized regulatory intelligence. Compliance.ai applies topic specific, purpose built ML models to financial regulatory content across the wide variety of content publishers, and ultimately offers a powerful regulatory research solution that includes highly curated insights into regulatory trends.
DJ: Please can you explain how your platform works? What are the key advantages?
Alikhani: The platform gathers content from a wide variety of providers (and a variety of formats); takes advantage of natural language processing to parse, normalizes and clean up the data, and to establish the applicable relevancies across the documents being processed.
The platform then uses Expert-In-The-Loop based machine learning models to classify, rate and rank the data, and finally, provides highly personalized curated content, either directly (application), or indirectly (through our API) to compliance professionals.
DJ: What were the challenges in developing the artificial intelligence aspect?
Alikhani: For Compliance.ai, the biggest challenge with the NLP process was streamlining the extraction process (cleaning, normalizing, parsing and mapping) the content across a diverse and often complex collection of financial regulatory documents. These are highly nuanced, often large legal documents that require specialized skills to understand and process.
Therefore the model required substantial training data to learn how to automatically extract key attributes, and to create normalized summaries. The good news is now that we’ve mastered the foundation of the automation process for various types of financial regulatory documents, we can swiftly add new financial services related micro-topics & content providers, include international content, and move into new verticals (such as Insurance, Healthcare and Energy) with ease.
DJ: How did you address data security concerns?
Alikhani: While SaaS based solution offerings would raise security concerns a decade ago, large-scale adoption of SaaS based solutions, and exponential improvements offered by SaaS based platforms have convinced financial services companies to increasingly adopt such solutions.
Another key aspect to providing acceptable security measures is to provide hybrid solutions: Integrate with pre-existing/on-premise enterprise specific assets and systems, rather than requiring forklift upgrades or replication/storage of on-prem, enterprise specific content to the cloud.
Compliance.ai relies on modern security measures for its SaaS Enterprise solutions. Data encryption both at rest and in transit, use of secure communication channels through-out, use of highly anonymized user-level data, avoiding any unnecessary collection of sensitive user-data during the on-boarding process, supporting social login to reduce the chance of credential compromise, and ultimately relying on standards-based access control mechanisms to restrict access to various operational and functional components of the solution, both from a Dev Ops and SaaS Ops perspective.
DJ: Are there any case studies you can share?
Alikhani: A case study we’ve published with our customer Bank of Marin highlights how they improved their regulatory change management process by using Compliance.ai’s solution. Bank of Marin’s Compliance team was able to reduce the amount of time spent on researching changes in regulatory docs, and further streamline its regulatory compliance activities.
DJ: How do you see financial technology developing in the future?
Alikhani: Decoupling of monolithic services into nimble and more manageable solutions (such as what’s happening with RegTech) will enable more effective and selective mashups of services that each financial services company most cares about. This enables highly focused and diverse offerings that do a better job at addressing specific requirements.
Sharing of anonymized usage information across financial services companies will lead to a significantly improved understanding of financial trends & patterns, which will benefit the industry as a whole by making it much more predictive of things to come. We’re already watching this unfold within the financial sector for cross-company cyber-security info-sharing.
Lastly, the industry as a whole will move into a hyper-analytical mode by having more focused & reliable analysis solutions at their disposal, leading to more agility, in a time of significant change.
Kayvan Alikhani is the CEO and co-founder of Compliance.ai. Previously he was the Senior Director of Technology at RSA. Prior to that, Alikhani was the Co-Founder and CEO of PassBan (acquired by RSA), a company focused on mobile identity assurance. Kayvan also led strategy at LiteScape (as CTO and later as CEO), creating security and mobile identity solutions for VOIP based networks. He was Co-Founder and CTO at BeNotified, a cloud mobile communication service provider. Prior to that, Kayvan co-founded AVIRNEX, a cloud-based enhanced fixed and mobile communication service provider.
