By ALISHA HOULIHAN for AML Intelligence
A LACK of skilled talent, organizational silos, and lack of C-suite support remain significant barriers to AI and automation in financial crime programmes, a new survey shows.
The new study, Driving the Evolution of Financial Crime Compliance: The People and Tech Imperative, shows only 18% of fincrime compliance (FCC) leaders are using AI and automation today.
With planned adoption expected to increase by more than 70% in the next two years, fincrime compliance leaders now face a new people and tech imperative.
The study was released by HFS Research in partnership with AML RightSource,
“Amidst expanding regulatory requirements, compliance functions are under tremendous pressure to adapt to the risks of today’s ever more interconnected and digitized landscape at speed and scale,” said Frank Ewing, CEO at AML RightSource.
“Financial services firms are showing a greater willingness than ever before to invest in regulatory risk and compliance programs,” he said
Other insights from the study include:
• Talent, organizational silos, and lack of C-suite support are the biggest internal challenges for fincrime compliance programs amid burgeoning innovation, smarter criminals, and rapidly changing financial transaction models.
• Compliance leaders expect their budgets to increase by 9.5% in 2024.
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• Many regulatory compliance leaders (41%) believe the easiest path to AI and automation adoption is through their existing platforms and systems. Using service providers and building in-house are viable alternatives.
• While the most typical model of working with third-party service providers today is on a project basis, in two years, this will shift to tech-enabled managed services.
• There is broad consistency around what regulatory compliance leaders want to outsource and what they want to apply AI and automation to. This alignment is at the heart of tech-enabled managed services—the perfect match of humans augmented by tech.
• Over half of respondents support cannabis-related businesses today (56%) and banking-as-a-service (supporting fintechs or other non-bank entities with banking services) (60%). Both business lines are driving a nearly 7% expected increase in fincrime compliance headcount in 2024.
• Tech-enabled fincrime compliance workloads will grow 31% over the next two years compared to more modest growth in human-led work.
“The imperative for advancing tech enablement is a focus on AI and automation to help augment fincrime resources. It’s about leveraging emerging technologies to help make humans better at fighting financial crime, scaling the focus on judgment and specialized skills over rote documentation and manual tasks,” added Brad Breslin, Chief Delivery Officer of AML RightSource.
According to the study’s author, Elena Christopher, Chief Research Officer at HFS, “There aren’t enough fincrime professionals to meet new requirements, let alone manage remediation or enforcement. These resources need to be amplified and augmented by AI and automation to help increase time spent on judgment-based requirements and strategic decisions, and minimize time spent on routine repetition and documentation.”
HFS Research CEO and Chief Analyst Phil Fersht, agrees, “Fincrime leaders need to be willing to change, consider partnering with third-party providers, and cultivate innovation with industry peers to effectively manage risk and compliance.”
- The survey was based on a study of 500 fincrime compliance professionals across North America, the United Kingdom, Europe, and Asia-Pacific which creates a definitive baseline and clear vision of wants and needs of financial services fincrime leaders for automation, AI, and outsourcing.
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