Machine-Readable Regulation - Jo Ann Barefoot Interviews Compliance.ai CEO
"What if regulations were machine-readable? What if, when regulatory changes come out, financial companies wouldn't have to download hundreds or thousands of pages of rules and read them all? What if they didn't have to rely on lawyers - their own, and also the legions of legal experts and consultants who translate rules for the industry as a whole, to help them understand what to do? What if instead they could run new rules through a machine-based review, and get all those answers automatically? For very little money?"
At the Comply 2018 conference in New York earlier this year, Kayvan Alikhani, Co-founder and CEO of Compliance.ai had a chance to sit down with Jo Ann Barefoot to discuss the many issues that are plaguing compliance departments in the financial sector.
Despite today's RegTech solutions comprising mostly of point solutions for particular use cases, they are beginning to converge and will soon meet up with other new and innovative ways of capturing and using data. We are already seeing huge breakthroughs when these connections take place, such as cloud computing and blockchain.
By implementing this new technology and businesses are now able to harness the power of AI and save massive amounts of time and money in their compliance processes. After speaking with Kayvan, Jo Ann has no doubt that AI and machine learning are the future of regulation and compliance. But it is a lot easier said than done. Kayvan describes the journey of implementing this new technology in the financial sector. The first obstacle is that the industry and regulators are both reluctant to adopt AI they do not fully understand. Kayvan's approach is to gradually build up their understanding and trust by assuring that AI meets the standards that are needed for accuracy and fairness.
Today, regulators are finding themselves working on machine-readable regulations. In particular, the UK's Financial Conduct Authority (FCA) is aiming to "digitize the rulebook" by tagging regulations with machine-readable markers. In the US, the Commodity Futures Trading Commission (CFTC) is exploring the same concept.
With the surge of technology becoming increasingly more accepted in their workplace, many compliance professionals are beginning to worry that they are going to be replaced by robots and AI. Kayvan hopes to quell these fears, by saying that there is a mountain of human compliance work to still be done. The machines are going to take over the very tedious and manual tasks compliance officers are having to do, which will give them more time to do more meaningful work. Thus reducing the frustration and boredom, while increasing their efficiency in achieving the bigs goals that our laws and regulations were written for.
Towards the end of the podcast, Jo Ann asks Kayvan to help paint a picture of the day in the life of a compliance professional in the future. His response was something we do not normally associate with regulation and compliance. "It's going to be beautiful."
Compliance leaders are going to emerge as heroes in their companies as they produce better results, cut costs, cut risks, and help lead their organizations, especially banks, into the 21st century.