Most conversations about using AI in financial crime compliance programs focus on efficiency, especially reducing the rate of false positives. Most transaction monitoring programs have false positive rates above 90%, and investigating these alerts is a wasted effort. So, any effort that reduces this delivers actual savings to the bottom line.
But what about AI’s potential impact on the client experience?
We understand that financial institution clients often express concerns about how compliance-driven processes negatively impact their experience and influence their decisions about where to place their business.
Why are these processes creating such a negative experience?
One answer is that the individuals and teams involved in executed compliance processes, including CDD, EDD, account opening, payment screening, and refresh, are often disconnected. Clients are asked the same questions multiple times when the information is stored in the bank. It also leads to the customer’s expectations being missed when their requests cannot be fulfilled promptly because compliance processing takes too long.
Additionally, client-serving personnel are often unaware of the details of the compliance processes, leading them to set the client’s expectations inappropriately and erroneously blame compliance for the unfavorable outcome.
How can AI help?
The first area where AI can help is accuracy. False positives don’t just waste the bank’s time; they can also waste the client’s time. A false positive can result in unnecessary questions being sent to the client, leading to additional time spent and delays in processing their request. It’s essential to recognize that having a more accurate and efficient screening and monitoring capability reduces costs and improves your client’s experience.
The second area is risk profiling and KYC processes, including CDD and EDD. AI can help create a more comprehensive and up-to-date profile of a client’s actual FCC-related risks and behavior by continuously applying additional contextual and behavioral information. Incorrectly labeling a client as high-risk can result in further information requests and scrutiny of their transaction activity. AI can help strike the right balance between due diligence rigor and smoother customer experience.
AI can also improve the identity verification process by automating the interrogation of identity documents, which is being leveraged extensively, and providing additional layers of security through voice and facial recognition.
As financial institutions focus on improving their compliance capabilities with financial crimes, they should also consider how these capabilities can enhance their clients’ experience and make that an integral part of the design and implementation process.
