A year ago, AI for many bankers was little more than an interesting side note. Its implications were largely theoretical. Today, however, there is no question that AI is a necessity in banking. The technology’s role in improving customer relationship management is well established. Now it’s become clear that AI is absolutely critical in the fight against financial crime.
Most banks have long expected to eventually deploy AI to better recognize financial crimes in their transactions, finalize suspicious activity reports more quickly and effectively, and keep pace with increasingly sophisticated illicit activities. The most perceptive, however, are realizing that, in light of the recent spike of interest in generative AI, the time to integrate these innovative tools into their compliance departments is now.
The tipping point occurred very recently, probably soon after ChatGPT launched late last year. More banks every day are realizing that they must create a culture within their compliance departments that can harness the most innovative AI-driven tools. Most cite two reasons why. First, they need to automate and improve their operations as much as possible while improving accuracy and reducing large amounts of alerts. Second, they need AI to better spot the new financial schemes that generative AI will undoubtedly help money launderers, fraudsters, and other bad actors hatch in the coming years.
Fortunately, we have the tools to address those challenges. AI-empowered anti-money laundering, anti-fraud, and other due diligence solutions are battle-tested. They have demonstrated, for instance, that they can improve risk detection accuracy, reduce alerts, optimize reviews, make investigations more efficient, provide analytics, and confer other benefits in compliance departments. The pipeline of research, testing, and customizing products in the space is mature. Institutions deploying AI today, therefore, have the enormous benefit of the lessons learned from the earliest adopters who are now reaping the benefits of integrating AI into their workflows.
Prioritizing resources to implement AI-empowered financial crime prevention is often the first challenge that arises when bankers decide to move forward. They need experienced and trustworthy partners who can help them implement AI-driven solutions at enterprise scale. My advice is that the best partners offer more than just software. They create new AI-augmented cultures within businesses that transform operations and workflows to create new value.
A parallel with biopharma
An analogy with the pharmaceutical industry might help bankers who are considering AI-powered financial crime solutions.
If we compare the spread and variance of financial crime with that of a disease, one might say that bank compliance departments act like biomedical researchers. They test patterns against historic or predictive baselines to prevent or stop the spread of known crimes as if they were diseases. Like medical researchers, they are constantly leveraging past discoveries, keeping watch for well-worn patterns, and adding new developments to their archives to expand their knowledge and learn insights from their data.
Financial criminals using emerging technologies, however, are poised to unleash a new wave of financial crime that has no precedent. Today, criminals can generate deep fake images, text, and audio to create false identities, phishing emails, simulated voice messages, bogus financial records, and other data at scale. They could also use generative AI to automate transactions and other bank business to run their schemes. The 40,000 ACAMS-certified anti-money laundering specialists throughout the world need help to root out this extremely sophisticated financial crime.
Faced with such a dilemma, biomedical researchers would band together and share data to confront the new threat — think vaccination development during the pandemic. Banks don’t have that luxury, however. While they might disclose details of exposed financial schemes with regulators and trade associations, they rightfully don’t make their customers’ data public beyond their reporting requirements. They can, however, take a cue from researchers and drill down on the data at their disposal with the help of a partner.
What makes a good partner
A good partner and their AI-driven solutions will help banks use their data — as well as timely information garnered from regulators and other sources — to root out AI-fueled financial crime. These due diligence solutions can help compliance professionals rapidly pinpoint suspicious transactions based on past examples, assess patterns that comport to crimes, and, most importantly, forecast potential new criminal scenarios.
Banks that deploy these solutions gain the knowledge and insights that AI helps accumulate over time. As compliance professionals come to trust and integrate the software into their workflows, they optimize financial crime prevention and boost the investigations that arise when compliance officers uncover crime. They can help push back the wave of generative AI-created schemes that is now building.
Note that the best AI solutions for financial crime detection don’t replace compliance professionals. The solutions help the professionals, including those whose data science backgrounds will become increasingly valuable, rapidly sift through the mountains of complex data that distract them from the most important cases to investigate. This integration creates a new culture with new capabilities in compliance departments.
A workflow chart for AI-augmented investigators usually looked like a funnel. They need to work through a broad range of issues before drilling down into their most important cases. With AI-enabled financial crime solutions, the chart looks like a nail or the letter T. At the flat top of the chart, the software helps investigators bypass time-consuming diversions. Then the flow rapidly descends into a much narrower pipeline downstream where they can focus and bring their formidable human skills to bear on specific cases. Compliance teams, in other words, can use AI to better focus on critical work.
These capabilities are essential for banks that want to succeed in a world where their compliance departments are squaring off daily against criminals who exploit AI. Technology has raised the table stakes in these contests. Banks shouldn’t wait to reach out for the tools and partners who can give them the edge.
Mike Foster is President and CEO of SymphonyAI Sensa-NetReveal