IBM RegTech Innovations

What does AI offer your financial institution? Lessons from SIFMA OPS 2017

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What issues are the most important to your financial institution? There are likely to be as many different answers to that question as there are institutions in the industry. In the area of regulatory compliance, however, simply keeping up with the volume and variety of new and changing regulations is high on the priority list of virtually all organizations.

In fact, keeping abreast of regulatory change was one of the most frequent concerns I heard about when speaking to clients at the SIFMA OPS 2017 conference, which was held in Boca Raton, Florida, in early May. The OPS 2017 event was presented by the Securities Industry and Financial Markets Association (SIFMA) and this year IBM was a Platinum sponsor. There, I had the opportunity to talk with dozens of senior executives and offer one of the featured presentations, “Regulatory Reform: How cognitive computing and Watson are poised to radically transform RegTech.” Along with my colleagues Marc Andrews and Elizabeth McCaul, we gave the audience a look at how the cognitive power of IBM Watson can help organizations manage their regulatory compliance duties with more confidence and with much less manual effort.

300 million pages of regulations

First, let’s consider a few statistics that illustrate the scope of the compliance challenge facing financial institutions today:

  • 300 million pages of regulations will be in effect by 2020, with 20K+ changes in just the last year.
  • $8 billion is spent per year in identifying obligations and defining controls, typically using costly,error prone manual processes.
  • $12 billion was spent last year on managing and updating controls, partly because the lack of a holistic view produces duplicative controls and added costs.

With so many regulations, even good search functions leave an enormous amount of work for those who have to examine and act on the search results. Financial institutions need practical applications to keep pace with this flood of regulations in all their complexity. That’s where Watson Regulatory Compliance Analytics comes in.

A solution “pre-trained” for compliance

Watson Regulatory Compliance Analytics couples the powerful artificial intelligence (AI) capabilities of Watson with the decades-deep knowledge and expertise of Promontory, one of the world’s top consultancies in the area of regulatory compliance and a recent IBM acquisition. While one of Watson’s greatest strengths is its ability to learn from each interaction, with Watson Regulatory Compliance Analytics, the deep expertise of Promontory is already embedded in the solution, so Watson’s learning curve is far less steep.

During our OPS 2017 presentation, Elizabeth McCaul, the Partner-in-Charge at the New York office of Promontory, explained how the solution is “pre-trained” to recognize pertinent issues and bring them to the attention of the lawyers, compliance officers and others responsible for compliance. Watson augments the skills of these professionals and streamlines their workflows so they can spot the issues quickly and take appropriate action.

When new or updated regulations are enacted, Watson Regulatory Compliance Analytics can: 1) capture the regulatory content, 2) identify potential obligations, 3) manage obligations and applicability, 4) identify and map controls, and finally, 5) manage controls and assess risks.

Bringing out the creativity of IBM customers

Yet this powerful solution is not just for tracking regulations.Watson is a tool with many potential applications and its broad utility can spark ideas that address each organization’s unique needs. For example, one of the attendees at OPS 2017 saw an opportunity to apply Watson’s cognitive insights in his company’s customer call centers. After speaking to him, it was obvious to me that the creativity of our customers would reveal the solution’s full potential.

At IBM, we try to do the heavy lifting, so to speak, and provide the practical tools and applications that give those customers the freedom to use their creativity. Then, they can focus on value-added tasks, instead of collecting and verifying data.

Few of us can remember a time of working without the aid of electronic search and a range of other capabilities. Judging from the reception we received at OPS2017, cognitive will soon be every bit as indispensable.

Visit the Regulatory Compliance Analytics web page to learn more.

General Manager for Financial Services Industry Platforms

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