Public organizations, financial establishments and huge companies are investing in RegTech – a technology in the sphere of regulatory surveillance and risk management. AI-algorithms analyze and monitor the legal framework including new laws and requirements. This allows organizations to save money on lawyers’ salaries, uphold the flawless business reputation, as well as follow clients’ and partners’ activity all over the world.
A bit of statistics:
- Boston Consulting Group counted that since 2008, banks paid $321 bn for the violation of current laws.
- JWS analytics reported that there would be 300 million of new laws in three years.
- BBVA Bank claimed that 15% of financial workers deal with regulators.
- HSBC and Deutsche Bank spend more than $1 bn on a compliance-control annually.
RegTech algorithms can learn the existing legislation instead of human. They immediately ‘scan’ texts, find examples from the legal practice, analyze their outcomes for the company, predict all possible risks and give following recommendations. The companies appreciate useful functions of the AI method. Currently, they have invested more than $2.3 bn in this promising sphere of FinTech.
Legal risk problems AI solves today:
1. Conflict resolution
Financial companies save all records of conversations with clients including Messenger. In case of a conflict, the organization launches an AI-algorithm that finds the needed part. Such banks as HSBC have already put to test similar systems for investigations.
2. Intruders prevention
AI prevents money laundering. ABBYY Compreno, in particular, automatically collects the information from the client’s requests, search engines and public data bases. The algorithm can easily detect whether the client was banned by the tax office or arrested for law violation.
This function is available 24/7 and allows to replace thousands of bank workers spending time on problems with money laundering. What is more, robots are perfect at fraud and ‘false alarm’ detection.
3. Reporting to regulatory bodies
Clients often complain about banks to regulatory bodies. They ask organizations to account for their activity including income. This process requires much time and money. AI immediately finds the necessary information and helps to prepare a report.
4. Assistance to regulators
Legal bodies also face the difficulties with the big data processing. The introduction of a new law involves correction of the current regulations. Robots are perfect at adding new rules, avoiding dubious understanding, etc.
RegTech cannot replace all lawyers. It would reduce law violation caused by law ignorance or carelessness.