Friday, November 25, 2022

Reducing Compliance cost in BFSI using AI and Automation

By Nikhil Sonawane - June 08, 2022 3 mins read

The BFSI sector is the most secure industry and demands 100% adherence to the compliance set by the regulatory authorities to ensure smooth operations without any legal issues. For this, Artificial Intelligence (AI) and Automation can actually help to reduce compliance management costs.

With regulations, policies, frameworks, and compliances continuously evolving, traditional risk analysis methods are becoming obsolete because they are unable to process the huge volume of data generated. Enterprises need to adhere to multiple compliance policies to protect their clients and markets. It is a complex task, but highly regulated sectors like BFSI need to have stringent workflows to ensure efficient compliance management. 

Non-adherence to compliances will not only get them on the wrong side of the authorities but also impact the brand image and disrupt operations. Enterprises should consider building strong compliance operations teams, setting efficient workflows, and implementing robust tools to monitor compliance adherence. 

Fortunately, many robust AI tools and intelligent automation processes such as Robotic Process Automation (RPA) and Natural Language Processing (NLP) are available to meet this complexity. They can enhance efficiency and cut down costs of compliance and meet regulatory requirements. Here are a few ways to minimize the compliance management costs using AI and automation:

Deny privileged data access to unauthorized resources

Businesses that bank on customers’ personal information or third-party data to make strategic data-driven decisions need to be extra vigilant about granting access to privileged information. Mistakes in managing access to privileged information can expose sensitive information to unauthorized sources.   RPA helps to enter, transfer and store data without manual intervention will assist the organizations in minimizing the data errors, denying unauthorized access to sensitive data, and generating an audit trail to track and view the user activity. Which will result in the reduction of manual errors and thus help in minimizing the compliance costs. 

Also Read: Strategies to Measure the ROI from AI Adoption

Efficiently manage the compliance updates

The BFSI sector has to track and implement all the compliance changes issued by the regulatory bodies to stay compliant. It is time-consuming for enterprises to track, gather, sort, and understand the changes. Furthermore, it is challenging to map and implement the changes to the business areas impacted by the updates.

CIOs should consider implementing RPA bots to gather the compliance updates and Optical Character Recognition (OCR) to convert the regulatory text to machine-readable text. NLP tools will assist in processing the text by interpreting the complex compliance terminologies and other sentences. Implementing advanced AI applications is a perfect solution to evaluate the changes based on the previous cases and highlight the relevant regulations to the business areas impacted.

Adopting RPA, OCR, NLP, and AI in the compliance management processes will help enterprises reduce substantial time and resources, resulting in cutting down costs.

Minimizing the occurrences of false-positive

BFSI industries that embrace legacy rule-based transaction monitoring tools might generate many false positives. Integrating advanced AI tools into traditional transactional monitoring tools will substantially minimize false positive alerts and review costs. As a result, the compliance operation teams can concentrate on legitimate high-risk regulatory alerts and increase team efficiency to minimize operational costs.

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Nikhil Sonawane

Nikhil S is a Tech Journalist with OnDot Media. He is a media professional with eclectic experience in communications for various technology media brands. He brings his eye for editorial detail and keen sense of language skills to every article he writes.

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