Advancements of AI and compliance in the financial services sector
By Martin Hartley, Group CCO of emagine Consulting, a management and technology consulting firm for the financial services sector operating from 24 locations across the UK and Europe.
It supports clients such as HSBC, the Royal Bank of Canada, the Bank of America, MUFG and other tier one investment banks and financial services companies with business challenges by providing digital, tech, and business consulting services and solutions.
In 2019 Martin joined Emagine as Enterprise Sales Director and led the consultancy into hyper-growth mode from 48 percent to 71 percent in 2021, before he was promoted to Managing Director in February 2022 and then Group CCO in March 2023. imagine posting 93% group growth in 2022.
The changing landscape of Artificial Intelligence (AI) poses a particular challenge for the financial services sector in terms of compliance. Regulation will always take time to catch up, such as the UK’s white paper and consultation on a ‘pro-innovation approach to AI regulation’ and the recently approved draft EU AI legislation which is not likely to come into force before 2026 at the earliest, and much may have moved on by then.
This leaves a hiatus of sorts, and navigating the variations between UK, US, and EU regulations will certainly pose challenges when it comes to managing compliance. However, this time also allows an opportunity to proactively prepare, with the support of expert guidance.
The sector is built on a foundation of ever-evolving governance and compliance requirements, with risk assessment and mitigation strategies forming an integral part of operating successfully in this environment. Financial institutions are, therefore, very accustomed to adapting to regulatory changes under time constraints. Those that do not, fall behind or fail.
The environment of financial services is highly technologically-driven, with businesses heavily reliant on new technologies, such as AI. AI has opened the door to a wealth of information about prospective customers and made it more difficult for criminals to succeed with fraud and anti-money laundering (AML) activity. For example, AI-powered facial recognition and biometrics technology have been helpful in mitigating fraud as they can boost efficiency in verifying customers’ identities quickly and securely, making the identity verification process quicker but also more robust. AI and automation are here to stay and should be utilized as a positive aid to help drive business growth, as well as compliance.
It is not an option for financial institutions to not embrace evolving technology, failing to do so would inevitably lead to falling behind competitors. It is up to organizations to improve their resource to capitalize on the capability that’s now available, whilst keeping in line with and ahead of the various regulation frameworks as they are built up.
AI will be the vehicle for stimulating change and will spark innovation across the financial services sector, just as the internet did many years ago.
Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.