Using Big Data & AI for Compliance

by October 9, 2019

The compliance landscape is highly dynamic. Every industry, from banking to healthcare, is organized by at least one regulatory body. Be it HIPAA or PCI DSS; businesses are legally mandated to comply with a range of regulations. The multiplicity of regulatory organizations in some industries can make compliance to look like an unattainable goal. In the financial sector, for instance, there are more than ten regulatory agencies. These include the Consumer Financial Protection Bureau, and the Securities Exchange Commission.

Requirements imposed by these regulatory agencies are not meant to stifle business. Instead, they are enacted to ensure the stability and sustainability of the economic system besides promoting fairness in respective industries. To stay compliant, companies must keep up with the ever-changing regulatory requirements in their respective industries.

It’s difficult to stay compliant at a time when all industries are data-driven. To ensure that there is fair competition and that consumers don’t get exploited, regulators often amend existing compliance standards almost every day. This leads to complications for business entities in their quest to be compliant. In the current digital age, businesses should explore the possibility of using AI and big data to ease the burden of regulatory compliance.


Why Regulatory Technology Cannot be Overlooked

Regulatory technology is a rapidly growing area within the sphere of digital technology. Also referred to as RegTech, its objective is to ease the process of regulatory compliance, and ultimately, automate it. Throughout the world, regulatory bodies face the hurdle of monitoring procedures and events within their respective industries with the help of rules and laws.

Business entities under their jurisdictions are required to not only abide by the laws but also keep themselves apprised with emerging regulations. Failure to do so often results in financial penalization, reputation loss, and criminal litigation in extreme cases. The main challenge for businesses is monitoring the range of regulations spelled out by different agencies so that they make necessary changes to their operational set-ups and processes.

Often, businesses end up incurring significant expenses to abide by the regulations, something that increases their compliance costs. By leveraging big data and AI, both companies and regulators will find it easy to play their respective roles as far as regulatory compliance is concerned.


AI and Big Data in Regulatory Compliance

Businesses can leverage AI and big data as part of their regulatory technology strategy to stay compliant in today’s data-centric corporate world. The technologies can be used in several ways by business entities to capitalize on the potential and value of next-gen regulatory compliance. Here’s how you can leverage AI and big data to make your business entity compliant.


Simplification of the Compliance Process

Often, businesses fail to comply with different standards simply because they still rely on repetitive manual tasks. The regulatory compliance process primarily entails data collection from various sources, authenticating the data, and then submitting it to regulators. Without automation, this can be an expensive and labor-intensive process. Automation and consolidation of the compliance process using big data and AI can significantly reduce the resources and time used while minimizing errors.

In most cases, regulatory agencies create and share industry-specific rules and laws in the form of huge documents that ought to be thoroughly read before compliance actions are taken. Nonetheless, business leaders and compliance officers may not have adequate time to peruse the vast documents while keeping track of all changes.

AI comes in handy in such situations. You can use AI applications to peruse and interpret regulatory compliance documents. The applications can also provide actionable insights after condensing lengthy and complex compliance documentation into shorter and easily readable text while highlighting critical portions of the documents. Therefore, you get actionable insights quickly without spending long hours perusing compliance documents.


Tracking Regulatory Changes

Regulatory standards can change overnight due to various market forces. Failure to adhere to the new regulations puts you at risk of reputational loss, financial penalties, or even costly legal litigation. AI and big data applications can help you stay compliant by notifying you about regulatory changes so that you make necessary adjustments.

Typically, AI and big data tools use natural language processing and deep learning to read compliance requirements. After that, you’ll get notified about changes in regulations. By leveraging these tools, your business will stay abreast of evolving regulatory requirements. Similarly, it will be easier to align your compliance processes and reporting procedures to abide by the regulatory changes.


Improving Decision-Making

By using AI and big data, you can make your regulatory compliance process smart. Arguably, the most significant value that AI and big data offer businesses is enabling them to understand and predict intricate patterns in risk and data management. These are two of the most crucial aspects of the compliance process. In the financial industry, for instance, banks can ease their compliance process by adopting data lake architectures that enable them to store data securely.

The banks will only be able to recognize and monitor inherent risks and compliance pitfalls that they are likely to encounter through the deployment of real-time analytics tools. AI and big data are the backbones of the technology that the institutions can use to comply with various regulations, including those that relate to money laundering, financial crimes, and fraud.


AI Makes Regulatory Compliance Efficient

In recent years, there have been notable advancements in big data, AI, and cloud technology. By incorporating such technologies in their RegTech frameworks, organizations can conveniently automate workflows that hitherto require human interventions. Software as a Service (SaaS) and other similar AI automated solutions enhance the efficiency of the regulatory process, besides making it smarter, simpler, and data-driven.

Technologies such as deep learning and machine learning also enable regulatory agencies to monitor entities. Rather than performing periodic audits, which are often burdensome and time-consuming, agencies can conveniently monitor the compliance parameters of businesses. On their part, the business entities can also access such info to take preventive actions in case their processes move towards non-compliance.

AI and big data can process vast volumes of data with accuracy and speed. In the short term, you can leverage the technology to understand compliance requirements that govern businesses in your industry efficiently. In the long run, the use of big data and AI in regulatory compliance can negate the need for human actors in the process.  

There has never been a better time for business entities to incorporate AI and big data into their compliance strategy. According to a recent survey by Accenture Technology Vision, almost 50% of financial institutions had cost savings of more than 15% after incorporating AI and big data into their compliance strategy. Some entities reduced their costs by up to 80%, while time spent performing tasks reduced by up to 90%.

Regardless of the industry that you operate in, it’s advisable to leverage AI and big data to fortify your compliance stance. The adoption of AI and big data in the compliance management stage is still in its tentative phase. Nonetheless, there’s significant potential for both business entities and regulators. When you look at how regulatory compliance and reporting used to be done in the past, you will realize that the process lacked transparency besides being burdensome. The uptake of AI and big data can go a long way in streamlining the compliance process.