Published on
2/7/24 9:24 am

How Technology is Impacting the Future of Compliance

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How Technology is Impacting the Future of Compliance

Two major technologies disrupting the compliance industry today are artificial intelligence (AI) and machine learning. Contrary to popular belief, these emerging technologies are not intended to replace human jobs. In fact, they are designed to make human jobs easier and even more enjoyable. For example, robotic process automation (RPA) can carry out repetitive, tedious tasks tirelessly and more efficiently than humans can, freeing workers up to focus on the aspects of their jobs that require emotional intelligence, reasoning, and human interaction. Tasks well-suited for RPA include filling out forms, data entry, and copy and pasting information across forms and departments.

Artificial intelligence can be applied to more complex tasks and serve more valuable business functions. While RPA requires structured data in a spreadsheet or database, AI can make sense of unstructured data, such as e-mails, phone calls, meeting transcripts, and contracts. More importantly, AI is able to perform sophisticated analyses, such as detecting anomalies, optimizing routes, recognizing speech and inflection, and personalizing content. Because of this, AI has the potential to cut costs and increase efficiencies in third-party risk management, giving employees the freedom to more effectively perform their jobs.

So, what does this mean for you and your business?

It is easy to see the potential benefits, but many companies have struggled to successfully implement the technologies, partially because of the financial investment and partially because of a lack of knowledge about how and where to start. According to If Robots Report to Compliance, companies that have been successfully starting with a low-effort project to determine the value of the technology before making a larger investment. For example, most companies have accounts payable data readily available. They can then apply AI to identify outliers, patterns, and trends, such as high spend by a certain employee or in a certain region. This could help automate the risk assessment process, which would still be overseen by human data scientists but made more efficient by AI.

Human Touch Is a Big Factor in the Success of New Technologies

The potential benefits of these emerging technologies for compliance professionals are remarkable. For example, an AI-driven system can forecast issues before they actually become issues. Such a system is capable of monitoring the entire lifecycle of an account, with the ability to capture more than a thousand key risk indicators (KRIs) per account. When a transaction breaches the threshold of acceptable risk, as determined by the system, the compliance team is obligated to investigate, thus reducing false positives and focusing attention on true issues. Thanks to machine learning, the number of KRIs a system can capture is continually increasing and defining the risk appetite framework.

However, the most important element of such a system being successful is the human touch. In order to turn insights gained from the system into operational opportunities, experienced compliance professionals are needed to interpret the data and take action. And when supplemented by AI, compliance officers are able to make key decisions using real-time insights. The benefits of implementing this type of intelligence in the compliance department can reach far across the firm, including into marketing and customer service, translating to an improved experience for the customer.

The future of compliance  

What are the implications of these developing technologies for professionals? The enormous changes they’re driving, in the finance and accounting sectors in particular, certainly have the potential to enhance compliance by increasing efficiency and enabling better collaboration between departments and other entities. However, the compliance landscape itself is also rapidly evolving, leaving room for a disconnect between regulatory agencies and firms employing new technologies, potentially creating barriers to adoption.

As the technological and regulatory landscapes continue to evolve, it will be essential for leaders to stay on top of changes in both areas in order to enable their firms to cut cost and increase efficiency while also meeting their obligations to protect customer privacy and meet transparency requirements.

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