Compliance.ai Uses AI to Modernize Regulatory Change Management

Compliance and regulatory issues are growing almost as fast as data and analytics presenting financial institutions and insurance companies with a liability issue as significant as a breach. Regulatory compliance is a key focus for every financial institution. The cost of non-compliance is significant, as is the negative public exposure that comes with a citation.

The volume and breadth of regulation are big and getting bigger with more than 750 global regulatory bodies producing lengthier regulations with more clauses. The Dodd-Frank Act passed in response to the 2008 financial crash with 2,300 pages of regulations with which financial institutions must comply.

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This is why Kayvan Alikhani, CEO and Co-founder, founded Compliance.ai, a financial regulatory change management reg-tech focused on helping financial institutions manage regulatory change. Compliance officers spend 20 to 30% of their time every day chasing regulatory changes. Up to now, it has been a tedious, manual, expensive, and error-prone process.  Today, regulations are changing every 10 to 15 minutes.

Compliance.ai has even created a regulatory change cost calculator for financial services firms to use. 

Financial institutions maintain the status quo by throwing bodies at the problem. Six FTEs are needed for every $1 billion in assets. The consequences for non-compliance are financial and reputational with $342 billion banking fines since 2009 and $850 billion erased profits from the top-50 global banks.

The solution Compliance.ai provides is the comprehensive and continuous organization and analysis of regulatory updates of Federal, state, international regulations, whitepapers, notices, executive orders, and other document types. Content classification and summarization with the annotation and evaluation of change tracking, topic classification, content summarization, obligation extraction, and change prioritization. Task assignment, tracking, and collaboration for members of the compliance team to include workflow, collaboration, impact analysis, and task assignment. As well as, reports, monitoring, and real-time actionable insights with personalized dashboard and enforcement tracking.

All this replaces the “old school” Excel and email manual way of doing all this.

The process of collecting data from more than 1,000 sources from US, Swiss, China, Russia – adding three to five new sources every week – is handled automatically. Compliance.ai uses AI/ML to correctly classify content as cybersecurity, money laundering, cryptocurrency, and more.

While more regulations are going to digitized availability of content with APIs, some less sophisticated have to be scraped or take OCR and scan.

There is an inventory of obligations – you have to determine what is relevant for you.

The most popular deliverable is the enforcement action tracking report of who was fined and how much. You are able to know who is being fined for what violations.

Compliance.ai employs experts in conjunction with AI for regulatory change management. The “expert in the loop” rates, ranks, and classifies content. This is more than 100 people – lawyers, regulators – to teach the model

ML and AI are used for change tracking, topic classification, content summarization, change prioritization, task assignment

Compliance.ai provides real-time, modern regulatory change management with automatic monitoring, tracking, reporting, task assignments, workflow, collaboration, summarization, and real-time actionable insights. In addition, Compliance.ai is able to highlight the difference between two selected documents to see changes in each revision or version.

Differentiating features include:

• Focused – comprehensive, specific, industry topics
• Instant access – publications, summaries, trends & insights
• Expert in the loop – classification, summarization & ranking
• Time to value – rapid & personalized user on-boarding

There is a $5 billion market for reg-tech in the U.S. Compliance.ai sells to mid-size financial services firms accessing their SaaS solution. They may provide dedicated instances for large financial institutions.

Financial institutions cannot use the same solution you used 10 years ago. They need comprehensive content and data to make informed decisions. They need explainability concerning the decisions and recommendation you are making

As a proof of concept, Compliance.ai provides access to their resources, if a prospect needs more; Compliance.ai can add those additional resources within two weeks. This enables users to see how topic classification works.

The biggest challenges to adoption is healthy skepticism about AI, the explainability of the models, and the status quo — many people continue to struggle with manual processes. Compliance teams are doing a hard job well with the resources they have, but a clean feed of information will help them do it even better.

Further Reading

Challenging the Cumbersomeness of Change Management Processes

Balancing Change Management, Its Complexity, and Agility