How Artificial Intelligence can streamline compliance for the financial services sector

How Artificial Intelligence can streamline compliance for the financial services sector

By Rami Cassis (pictured), CEO, ieDigital, Connect and ABAKA


It is fair to say that the financial services sector is one of the most heavily regulated industries on the planet.

Constantly changing and ever-evolving government mandates, which are often specific to a particular country or geography, means that providers must dedicate vast resources to ensuring all relevant rules and regulations are adhered to.

However, this is just the tip of the iceberg. Merely following the rules is almost universally seen as not stringent enough. Providers, such as banks, building societies and credit unions must today go many steps further. They must concentrate on building confidence among customers, investors and the public, showing that far more than the bare minimum is being done.

Add to this the much bigger picture that the world’s economy is in a state of constant flux, increasing geo-political issues are leading to spiralling costs and ever-increasing levels of competition are all resulting in financial services providers facing more pressure than they have done in many years.

The simple fact is that despite compliance being one of the main priorities of financial services providers, their resources are often becoming stretched as they must juggle multiple, competing priorities. As a result, many are on the lookout for a way of streamlining their compliance processes – with Artificial Intelligence (AI) rapidly rising in prominence as an ideal solution, especially as it can shoulder the pressure across all three main regulatory areas of financial stability, prudent operations and resolution.

Traditional compliance methods

The so-called traditional way of managing compliance for the financial services sector comes as a vast material and physical cost.

According to Deloitte, the cost of compliance and risk mitigation over the last eight years has jettisoned almost all discretionary funding available to firms. Compared to pre-financial crisis spending levels, operating costs spent on compliance have increased by over 60 percent for retail and corporate banks.

At one point, Citigroup is estimated to have had 30,000 risk and compliance staff – yet even this was not enough to prevent it from being fined $400 million.

Traditional methods need so many resources because they are driven by the need to manage a complex regulatory environment, continually invest in technology and specialized staff, and continuously monitor and adjust operations to mitigate compliance risks. Failure to comply can result in financial penalties, litigation costs, and reputational damage that can be hard to recover from.

How AI can save time – and money

One of the biggest drains on resources for the financial services sector when it comes to regulatory compliance is determining what, exactly, needs to be reported, where the data is located, and how to condense it into a timely report which is presented in a pre-determined manner.

By streamlining and automating regulatory reporting using AI-powered technology, the ability to save both time and costs is more than achievable.

There are many ways AI can help – for the sake of brevity, we will concentrate on the top 10.

  1. Automated Monitoring and Reporting: AI systems can continuously monitor transactions and activities, identifying potential compliance issues in real-time. Automated reporting tools can generate the necessary reports for regulatory authorities efficiently and accurately.
  2. Data Analysis and Pattern Recognition: AI can analyze large volumes of data to identify patterns and anomalies that may indicate fraudulent activities or compliance breaches. This helps in early detection and prevention of financial crimes such as money laundering and fraud.
  3. Natural Language Processing (NLP): NLP technologies can process and analyze regulatory texts, helping institutions stay updated with the latest regulations. They can also assist in extracting relevant information from legal documents and ensuring compliance with new rules.
  4. Regulatory Change Management: AI tools can track regulatory changes and assess their impact on the organization. They can automatically update compliance programs and processes to align with new requirements, reducing the manual effort involved.
  5. Risk Assessment: AI models can evaluate the risk profiles of customers and transactions more accurately by considering a wide range of data points. This leads to more effective risk management and compliance with regulations such as Know Your Customer (KYC) and Anti-Money Laundering (AML).
  6. Intelligent Document Processing: AI can streamline the processing of compliance-related documents through intelligent data extraction and validation. This reduces manual processing time and errors, ensuring that documents are correctly filled and filed.
  7. Predictive Analytics: AI can predict potential compliance issues before they arise by analyzing historical data and trends. This proactive approach allows financial institutions to address potential problems early and avoid regulatory breaches.
  8. Enhanced Audit and Investigation: AI can facilitate more thorough and efficient audits by automatically checking compliance records and identifying discrepancies. It can also assist in investigations by quickly analyzing large datasets to find relevant information.
  9. Personalized Training: AI can deliver personalized compliance training programs to employees, ensuring they are aware of the latest regulations and best practices. This helps maintain a high level of compliance awareness within the organization.
  10. Cost Reduction: By automating repetitive and time-consuming compliance tasks, AI reduces the need for extensive manual labour, leading to significant cost savings for financial institutions


If a financial institution fails to stay on top of its regulatory compliance requirements, it could quite easily be closed and banned from ever operating again. The consequences of this would be devastating, including job-losses and reputational damage, not just of the provider itself, but quite possibly the entire financial services sector.

Therefore, compliance remains high on the agenda for all financial services providers. However, in an era defined by rising costs, continuous operational pressures and ever-demanding consumers, resources are often facing competing challenges.

AI can greatly enhance the efficiency and effectiveness of compliance processes by automating monitoring and reporting, improving data analysis, staying updated with regulatory changes, and reducing costs.

As a result, AI is rapidly becoming used as a compliance tool – a pattern that will continue to gather momentum in the months and years ahead.