Automation will set compliance officers free

Few people grow up dreaming about a career in compliance, but that may be changing. Greater regulatory burdens and the evolving nature of financial crime have increased pressure on compliance departments around the world.

The average compliance professional is tasked with a shopping list of time-consuming requirements, such as monitoring trader behaviour, meeting intensely specific transaction reporting details, and investigating sanctions alerts.

The time and effort needed to meet the strict standards and to identify actual risk amid the din of data increases the possibility of human error, potentially causing lapses that incur fines or other legal actions.

This is particularly true in the world of anti-money laundering (AML) and fraud detection, two crucial but data-heavy and manually intensive compliance functions.

According to Dow Jones and Swift’s recent ‘Global Anti-Money Laundering Survey’, two-thirds of AML professionals (69%) said that ‘increased regulatory expectations’ were causing them problems, with 42% saying it was their main regulatory concern.

On the organisational side, 57% said ‘not having enough properly trained AML staff’ was a problem, with 48% complaining about ‘insufficient or outdated technology’. The results are clear – compliance professionals are in many cases overworked and under-equipped, facing a growing burden.

The good news is that recent technology innovations and new collaborative networks are redefining what it means to work in compliance. These technologies and associations streamline almost every part of the compliance function, helping banks and other financial groups share and analyse data more efficiently.

Meaningful work

By freeing compliance professionals from the more repetitive and time-intensive parts of their job, they can instead focus on the more meaningful ‘why’ of their work, such as building a compliance culture, protecting the organisation internally, and supporting law enforcement and regulatory agencies in mitigating crime.

As more financial groups embrace these products and services, we believe the compliance role will evolve. It will move beyond being a necessary element to uphold changing industry standards, becoming a well-regarded generator of value across the organisation for customers, colleagues and shareholders alike.

“By freeing compliance professionals repetitive tasks, they can instead focus on the more meaningful ‘why’ of their work”

One innovation that has the industry particularly excited is ‘know your customer’ (KYC) utilities, cooperative schemes where banks can upload compliance information to a central repository instead of merely sharing it bilaterally with individual banks.

For example, the SWIFT KYC Registry allows for inter-bank sharing of KYC data, which individual banks need to collect before new correspondent banking relationships can be established, as well as during regular reviews.

The registry streamlines an inherently clunky process and encourages cooperation between member banks.

It also boosts efficiency and breaks down internal silos, because it allows any authorised member of the compliance team to access KYC information during any point in their daily workflow, as opposed to routing their request through a colleague or counterparty.

Cutting the menial

The rise of automation and AI is also playing a significant role in simplifying and reducing the menial tasks that are a traditional part of the compliance function.

Transaction monitoring systems are now tailored to specific banks, generating automated alerts to suspicious activity with increasing accuracy.

AI systems that can parse video and voice recordings for irregularities are now being used at major financial institutions. The stakes inherent in compliance mean employers will have a constant financial incentive to ensure their teams are equipped with the most efficient cutting-edge technology possible.

Thanks to these technologies, compliance professionals are better placed to keep abreast of existing regulations, and are able to comply with new regulations quickly.

There are now a growing number of innovators and other third parties committed to reducing the amount of time spent on repetitive tasks, either with a new technology or a collaborative initiative.

Although there are still significant barriers to information sharing – particularly on an international, cross-border, basis – and costly inefficiencies in how data is collected, we can already see the transformative potential of these improvements, as banks focus on how to provide employees with more rewarding and useful work.

Boosting morale

Of course, avoiding needless repetition is not just good for a bank’s bottom line. Due-diligence utilities and better technology also have a demonstrable impact on corporate culture and morale.

Easier access to information means that compliance professionals do not have to spend their days chasing customers or filling out forms, removing some drudgery from the job.

Instead, these workers can focus their energy on tasks requiring more critical thinking, such as building relationships and educating customers and banking partners. In addition, more interesting work helps to attract young talent and retain high performers.

“Easier access to information means that compliance professionals do not have to spend their days filling out forms”

Reports from participants in the SWIFT KYC Registry confirmed a noticeable increase in employee engagement, as professionally trained staff spent more time analysing data and less time compiling it.

Other technologies and networks have had a similar effect, improving morale by reducing time spent on more monotonous activities.

This gift of time can be refocused on more useful work and on learning new skills, increasing value and improving job satisfaction. The new data-sharing utilities also free up time for compliance teams to build their external networks, which is particularly important given the collaborative and interactive nature of many KYC compliance activities.

No matter how the regulatory environment evolves, there will always be a need for compliance talent. Banks can help meet this demand by adopting more of these new technologies, boosting efficiency and relieving workloads across the compliance function.

In time, these innovations can help make the compliance professional one of the most sought-after job titles in financial services.

Mark Brotherton is Director, Fraud & Financial Crime, Lloyds Bank Commercial Banking