GenAI: Can it make your compliance and risk functions more effective and cost-efficient?

When WhatsApp launched, its rapid adoption transformed both personal and business communications worldwide. Similarly, Generative AI (GenAI) is expected to follow a similar trajectory, beginning with individual users and spreading through organisational levels. Financial services firms must adapt quickly to this shift, not just to keep pace, but to strategically enhance their compliance and risk functions.

Enhancing compliance and risk management with GenAI

Since the launch of ChatGPT in November 2022, the potential of GenAI has become increasingly clear, with new platforms and applications emerging to offer advanced AI solutions across numerous sectors. In financial services, where AI was traditionally driven by data scientists creating specific Machine Learning (ML) models for targeted use cases, GenAI offers a new approach. Now, non-technical personnel can use GenAI to perform complex tasks through natural language and written text.

To leverage the potential of GenAI, financial services institutions must take proactive steps. Currently, many firms are focusing on automating back-office processes as their initial foray into deploying GenAI solutions. These applications, including document extraction, analysis of specific documentation, and translation into different languages, enable teams to automate tasks, streamline internal processes, and enhance operational effectiveness.

Our experience shows that risk and compliance departments are at the forefront of adopting AI solutions to improve efficiency and gain a competitive advantage. This area is one of the three main pillars that Zest Reply is concentrating on, with the company already developing tailored projects to enhance clients' internal processes. These efforts allow financial institutions to exploit the advantages of GenAI effectively and safely.

One of the most significant tools developed is the Digital CMP. This tool leverages GenAI for comprehensive regulatory watch and compliance monitoring, ensuring timely analysis of new regulations. It reformulates the controls impacted by these regulations, notifying relevant teams to apply the new controls efficiently. This innovative approach allows financial institutions to stay compliant with evolving regulations while enhancing internal processes and operational effectiveness. For more information, click here.

Building a robust GenAI framework for compliance and risk

To advance the use of GenAI in compliance and risk functions, financial services organisations should consider the following key steps:

1. Generate proofs of concept: Implement small-scale projects to test GenAI applications in real-world compliance and risk scenarios. This approach, which Zest Reply is currently leading with several financial entities, is an excellent way to begin integrating GenAI wisely.
2. Train talent: Investing in employee training to work alongside AI is essential. This not only improves the effectiveness of daily work but also helps prevent security breaches, ensuring the safe and ethical use of GenAI.
3. Review internal policies and procedures: Good governance is crucial for success. While technology can drastically enhance processes, human intervention remains vital to ensure that technology is used ethically and in alignment with internal policies.
4. Foster collaboration between teams: GenAI tools are typically managed by IT teams, but leadership from CEOs is crucial to encourage innovation and the launch of AI initiatives. Developing and communicating a clear AI strategy is key to achieving objectives and facing challenges with resilience.
   
   Zest Reply's Support for Financial Institutions
   
   Zest Reply was established to assist financial institutions in deploying enterprise-level Generative AI, with a focus on solutions for risk and compliance, software development, and customer engagement. By leveraging the AI Reply framework and the group's global expertise, Zest Reply offers tailored GenAI solutions that ensure compliance with EU regulations. The goal is to empower clients to innovate while enhancing process effectiveness in a cost-efficient manner, all while adhering to regulatory standards.
   
   This proactive approach helps financial organisations overcome challenges and embrace innovation with confidence. The wave of transformation brought by GenAI is inevitable. By strategically integrating GenAI into their compliance and risk functions, financial institutions can gain efficiency, create a competitive edge, and smoothly navigate the challenges of the current technological landscape.