Commonwealth Bank and Westpac cautious on using AI for compliance

“I have had some really good and tough conversations with people across the group after the experiment with Ascent – people in [information security], procurement, legal and risk management. There are plenty of stakeholders when it comes to regtech.”

Australian trial

A trial last year found the system could deconstruct regulations with a 95 per cent accuracy rate, better than humans. The trial has now been extended to Australian regulations, and is one of several CBA “experiments” with regtech start-ups nationwide

“We are making some great headway dealing with constraints in productionisation of Ascent more broadly across the group,” Mr King-Jayawardana told the AccelerateRegTech event in Sydney.

“Over the last six months, there has been a material difference in how many people at very senior levels are talking about regtech. Over the next couple of months, we are going to get more clarity on group strategy in the space.

“I am pleased some of the things we have started has crystallised to a more cohesive and senior view on this.”

Similarly, Westpac’s head of innovation, Kate Cooper, said Westpac had “really sought to accelerate in this space”.

It now takes less time to get to a proof of concept, which if accepted typically would include a clear roadmap to delivering scale across the bank, she said.

Westpac six months ago established a dedicated “lab” to focus on partnering with regtech start-ups. It is also rolling out the concept of “minimum viable procurement” in the regulatory technology space, having developed it to make it easier for start-ups owned by its corporate venture capital fund Reinventure to work with the bank.

This has included cutting the standard form procurement contract for start-up proof of concepts from 24 pages to four. This “simplifies the process for the supplier, who does not to have to wade through treacle of paperwork to get something off the ground”, Ms Cooper said.

Little room for failure

Westpac is working with at least two artificial intelligence start-ups: Red Marker, which automatically identifies and analyses digital marketing content for compliance risk, and Daisee, which uses natural language processing to improve call-centre compliance.

“Regtech is at an early stage in its life cycle, but we are trying to get it mature, make it understood and get it linked into the strategic core – that is a big focus for us,” Ms Cooper said.

At the regtech event, a key frustration from start-ups was the time it took for new, outside technology to be considered by the ultimate decision-makers.

“It’s extremely hard. I’ve probably been in Westpac’s building 30 times in the last year and a half or so,” said SimpleKYC founder Eric Frost, whose system is being used by American Express to reduce customer on-boarding times. Neither he nor Westpac said they could disclose whether Westpac had started using the system.

Ms Cooper said Westpac’s senior management was encouraging collaboration with start-ups, but at the same time, compliance was an area where there was little room for failure.

“There is a very strong strategic focus, right form the top, on partnering, not sitting in our ivory tower thinking we can build it ourselves, which creates the conditions for us to do things like ‘minimum viable procurement’,” she said.

“[But] the space within we are all operating, the margin for error is zero. That’s the reality of the environment we work in.”

Source link Finance News Australia

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