The future of financial regulations? One step behind Aptus.AI
It’s just a matter of time, but an electronic version of financial regulations will be soon necessarily introduced by banking authorities. Having regulations structured and visualizable – and so digitally accessible – is possible by creating a machine readable version of them, which will disclose many possibilities. One is banally to keep up with the unmanageable amount of regulatory updates. But another one is to allow financial institutions to make proactive compliance strategies to support the business, and not just reactive decisions to not to damage it. Well, one of the key elements needed to achieve this is the implementation of a machine readable format for financial regulations, as we’ve already anticipated at the beginning of 2021, being reflected in the following EBA’s report. And in this path, our AI RegTech solution is already a step ahead.
A machine readable format to release compliance from (pointless) risks
The issue is very clear: currently compliance operations are mainly based on manual work, therefore very time-consuming and subject to operational risks. Besides, regulatory analysis and tracking also requires many resources, which translates into constant delays in the transposition, interpretation and adoption of financial regulations. According to a PWC analysis considering the 2015-18 period, the average time needed to nationally transpose a European regulation was 8,4 months. And the regulatory detection and impact analysis operations, taken alone, represent 15% of the total compliance costs. For these, and many other reasons, in the pages of its “Study of the cost of compliance with supervisory reporting requirement (Report 15/2021)”, the European Banking Authority clearly stated the need for progress in the banking sector’s digitalization, addressing a solution: machine readable regulations. These latter would help financial compliance – and the financial sector in general – reduce the operational and strategic risks related to the impossibility of automating the collection and analysis of an ever-growing amount of regulations that cannot be longer monitored by humans. The current process of searching, downloading, reading and analysing documents is no longer sustainable, also on the environmental level, as it’s now time to leave the bad habit of printing useless sheets to limit paper waste – which has been one of the issues debated in the recently concluded COP26 (26th United Nations Climate Change Conference of the Parties). And more. Currently it is really hard to make strategies and right decisions when speaking of compliance, as financial institutions have to base them on partial information, with no possibility to spend the time required for a good regulatory analysis. To sum up: financial institutions lack tools to get precise information in a reasonable time.
Forget the financial compliance “no more” list!
But financial institutions don’t need to wait any longer. Our platform already offers them a machine readable version of regulations, exploiting its international regulatory standard and AI engines. These latter read legal PDFs – or any other textual format – in place of humans, thus offering them a first Gap Analysis that also considers the internal processes and policies affected by the documents itself. No more PDFs scrolls, no more tedious manual work, no more document printing, no more repetitive tasks and no more waste of time. Which also means no more overdue reports and delay, but mostly no more late decisions and wrong strategies. And any compliance professional can easily add many other items to this “no more” list. A list that will be eliminated, thanks to the electronic version of financial regulations, which also makes these documents integrable in all the GRC (Governance, Risk management and Compliance) systems used by financial institutions. Exploiting Artificial Intelligence, the platform is automatically updated in real-time on regulatory changes and notifies users via email about the updates in their regulations of interest, also extracting automatically all the related obligations and penalties, which will be available in a click and interactively navigable within the platform. Financial professionals will only need to get the information they need to make decisions. And, finally, also strategies, as the solution extracts obligations also from draft documents, thus enabling the recognition of regulatory trends. From slowness to quickness, from risky to right decisions, from isolated departments to effectively coordinated organizations. And, for the first time, from reactiveness to proactiveness. To create, at last, a sustainable compliance.