Generative AI "Agentics" Poised to Help Mid-Sized Banks Improve Compliance and Fraud Detection

As we all know, the financial services industry faces increased fraud and compliance pressures while dealing with complex operational inefficiencies. Whether it is a community bank, credit union, or other financial institution, the good news is that the industry has essentially reinvented the fight against fraud and financial crime using advanced analytics and other cutting-edge technologies. Clearly it is adapting new ways of solving problems as quickly as they can be proven to provide benefits.

Perhaps supreme among these innovations is generative AI and its new "agents",  commanding tools that redefine strategies for combating fraud. These agents significantly transform the strategic approach to these problems while improving performance and customer satisfaction.

In the context of financial crime, one could think about AI agents as an AI-powered team of seasoned fraud and AML analysts who never sleep, take vacation, and work alongside your analyst team to either clear or resolve alerts based on the financial institution policies.

One of the powers of agentic AI is that it alleviates the financial burden of fraud detection and compliance. For example, it usually takes 30 to 90 minutes for a seasoned analyst to triage, review, analyze, decide to make a case and then clear one alert; an AI fraud agent can clear 100,000 alerts in less than 10 seconds.

For many small and medium-sized financial institutions, credit unions and community banks the capacity to clear a fraud or resolve an AML alert is greatly limited by the number of analysts. This burden creates a competitive advantage for larger banks. Agentic AI basically enables smaller financial institutions to scale the alert workloads without having to scale their FTEs (full time employees) which in turn open opportunities to open new payments channels such as FedNow, RTPs while de-risking from Fraud and money laundering.

Serving as partners rather than just assistants, these agents enhance human capabilities and drive efficiency. Many small and medium-sized financial institutions, credit unions, and community banks spend substantial amounts on manual fraud and anti-money laundering alert management while struggling to keep pace with fraudsters and evolving regulations. This leads to growing backlogs, rising fraud losses, and increased regulatory risks.

Generative AI has the potential to shift this dynamic in favor of the institution's goals.

These innovative AI agents can also analyze thousands of alerts in seconds, reduce false positives, prioritize high-risk cases, and provide actionable insights simultaneously. Early implementations have shown a nearly 70% reduction in investigation time. This technology also allows teams to concentrate on strategic, high-value decisions safeguarding their institutions and members.

Establishing Trust Through Collaboration

Financial institutions are also addressing the important issues of alert fatigue and inefficiency. Generative AI agents introduce precision, clarity, and speed to processes historically hampered by outdated workflows. They include data analysis agents that identify patterns and reduce false positives, automation agents that manage routine tasks, conversational AI agents that facilitate communication between complex data and human understanding and learning agents that adapt to outsmart ever-evolving fraud tactics. This collaborative system of AI agents stays ahead of threats and ensures that financial institutions thrive.

Embracing this new technology can foster trust. Smaller institutions often lack the resources for extensive governance teams, and the most recently launched solutions utilizing generative AI offer clear documentation of security protocols, compliance measurement, and model explainability, empowering credit unions and community banks to deploy AI responsibly and earn trust across every interaction.

Summarizing what some financial institutions are saying about Generative AI agents, "By integrating Generative AI and agents into our operations, we are not just enhancing our fraud detection capabilities; we are transforming our entire approach to compliance. These intelligent agents empower our team to focus on strategic decision-making, ultimately allowing us to serve our customers with greater efficiency."

Credit unions and community banks can now execute a financial crime and compliance methodology that includes both agility and resilience. The benefits extend beyond operational efficiency; they encompass protecting members and customers, fostering trust, and effectively serving the community. Generative AI is reshaping the industry's fraud prevention and compliance approach, particularly demonstrating an impact among smaller institutions

Steve Jobs once observed, "Innovation distinguishes between a leader and a follower." What is next? This is the moment for financial institutions to initiate detailed health checks across their business processes and procedures and emerge as leaders in the fight against financial crime.

Author: Eric Tran-Le, VP — Head of Premier, NICE Actimize