JCW Group | Blog

Will AI Replace the Compliance Manager in KYC?

Daniel Evans

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Exploring the Future of AI with Compliance Management

compliance manager is a crucial role within the Know Your Client (KYC) function of your business. However, artificial intelligence (AI) is reshaping the way in which financial institutions execute compliance. It is also evident that, eventually, employees (regardless of their education) will be faced with automation, even replaced by it in some cases. Is this hypothesis too extreme though?

According to the report ‘Will robots really steal our jobs?’ published by PwC, “Financial services jobs could be relatively vulnerable to automation in the shorter term.” PwC estimates that automation may put as many as 40% of global financial jobs at risk, in three waves:

  • Algorithmic wave (to early 2020s) – automation of simple tasks
  • Augmentation wave (to late 2020s) – dynamic interaction with technology for clerical support and decision making
  • Autonomous wave (to mid-2030s) – automation of physical labour, and problem solving in dynamic real-world situations

AI has the potential to replace many tasks that are currently managed manually, and there is uncertainty about how it may impact compliance management functions. In this article, we discuss the benefits of using AI in the KYC process, and how the role of the compliance manager may change in response.

Is AI the Future of Know Your Customer?

AI is being adopted by an impressively broad range of industries today, all benefiting from its ability to reduce repetitive tasks and remove human error. Businesses that are required to be KYC and AML (Anti-Money Laundering) compliant may choose to go with a semi-automation as a solution to gather and evaluate documentation efficiently. AI could be the key that allows your organisation to automate a plethora of tasks currently executed by KYC staff.

The main benefits offered by embedding AI include:

Time-Saving Capabilities and Efficiency

Automated features such as identity verification help create verified digital identities; ones that can be checked by AI instantly. Automated programs can work round the clock with no breaks. This allows financial institutions to save time and verify customers more efficiently.

Reduces Human Error

Data entry processes are laborious manual tasks that are prone to error. Automation of such tasks using AI technology removes human error and frees people to do more creative and interesting work.

Reduces Fraud, Security Threats, and Bias

There are huge amounts of data that are collected and collated within financial systems. AI enables this data to be analysed at breakneck speed, ensuring that suspicious activity is flagged immediately. This enables potentially fraudulent transactions to be stopped. Losses are reduced, security breaches should be identified sooner, and reputation is enhanced. Automation also reduces human bias, though how effective this is will depend on whether any bias is implied by those coding the software used.

The Changing Role of the Compliance Manager

Will AI replace the compliance manager? We suspect not, as KYC is best operated through a combination of automation and human interaction. However, the compliance manager must be progressive and well-versed with regards to the use of new technology, as well as its potential to drive how manual tasks evolve to remove human error in compliance work.

Machine learning, and AI in general, promises significant improvement in efficiency and detection of possible fraudulent activity. Because of these reasons, compliance managers must not only be commercially innovative, but must also know how to work effortlessly alongside AI to meet business objectives.

Compliance Managers must have a good grasp on the shift to embedding AI in business execution, so that they are fully equipped to deal with future trends, head-on. Clearly, with more automation, the role of the compliance manager will change, but there are human nuances that AI and machine learning cannot yet detect. Therefore, AI should be seen as a tool to be used by compliance staff to improve the work they do, and not replace them. There will be fewer repetitive manual tasks to be done, while compliance managers are likely to become increasingly involved in investigative work and ensuring the efficacy of AI solutions.

Are You Hiring the Right Compliance Manager for KYC?

AI will not fully replace human intervention anytime soon, but it will help to evolve the duties and responsibilities of the compliance manager who works in KYC. Therefore, when hiring for KYC roles, you should ensure that the candidate you select is tech savvy, adaptable, and with a greater focus on the strategic use of AI and ML within your compliance functions. Where do you find the future-proofed skills your next compliance manager needs? Contact JCW Resourcing.

If you want to discover the latest compliance hiring trends, or need to benchmark Compliance salaries to see how much you should pay your next Compliance Manager, check out our 2021 salary guide for up-to-date Compliance information.

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