What is Automated Regulatory Intelligence (ARI)?

Automated Regulatory Intelligence (ARI) is the next-generation of regulatory change management, where financial regulation and artificial intelligence collide.

What is ARI? an overview

In short, Automated Regulatory Intelligence (ARI) takes existing, fragmented regulatory change processes and applies artificial intelligence and automation in order to streamline it. This means that instead of simply automating existing processes, ARI takes the end-end compliance journey, automates it, understands it in the context of a specific business and can intelligently map regulations to a firm’s policies and controls.   

The problem state: the volume, velocity and complexity of regulatory change

Prior to the global financial crash of 2008, the regulatory environment was relatively simple. Financial regulation existed, but it was patchy and allowed room for loopholes and mismanagement. Post-2008, financial regulators were – and still are – keen to ensure that every feature and facet of financial services has a regulation to match.  

In 2021/22, the volume of published regulatory insights is at an all-time high as emerging innovation (such as crypto and cyber) as well as increasing ESG factors come to the fore. New regulations are published daily, from data privacy regulations in US states to disclosure regs and those concerning the roles and responsibilities of senior managers. Moreover, financial regulation doesn’t sit still – once a regulation is published it will see frequent iterations, all of which need to be tracked, captured, and implemented by financial institutions.  

In 6 months alone there were 5,460 regulatory insights published in the UK, in the US it was 32,737, and 13,516 in China. With that in mind, it is fair to say that regulatory change is occurring at a pace that is no longer manageable without artificial intelligence in the loop.  

How has regulatory change management worked in the past?

Before ARI, financial institutions opted to manage regulatory change through manual processes. These typically involved teams of highly-skilled individuals spending hours, if not days, researching regulatory insights, tracking it in Excel documents, before making sense of it for their firm. This was time consuming, laborious and often error prone – leaving firms exposed to financial and reputational risks.  

In a bid to manage these risks, RegTech was invented which took these laborious tasks and automated them. So instead of an individual trawling the internet for regulatory change, web-crawling machines would do it. As RegTech evolved, more stages of the regulatory change journey were automated – so horizon scanning, capturing data, standardising that data and automatically creating regulatory inventories became more common place.

At present, this is how most firms manage regulatory change management – through an automated model that streamlines the manual tasks and enables highly trained individuals to do the high-value decision making. 

The birth of Automated Regulatory Intelligence

On paper automated compliance is revolutionary. And while it carries a multitude of benefits, in practice, firms still see their compliance teams working on manual tasks, patching up the gaps of ineffective systems, or making sense of the data they are presented with.

And so, Automated Regulatory Intelligence is born. ARI delivers a level of automation through artificial intelligence that can automatically identify regulatory insights and take it through every process in the regulatory change journey, without the work of a whole compliance team.  

ARI takes all the world’s regulatory content and, using sophisticated AI and highly-trained data sets, processes individual content and delivers it as applicable regulations that the compliance teams can then build policies around. ARI gives regulatory change management the tools needed to implement effective, auditable compliance – in a way that is highly relevant, tailored and manageable.  

ARI is unique because it isn’t just taking regulatory change management and automating it, it’s taking regulatory change management + AI + automation to deliver a hybrid model at a standard and pace that’s no longer humanly possible. 

With a business strategy built around ARI, firms are able to free up 30% to 40% of their compliance costs by moving humans out of the manual process and up the value chain, to focus on critical thinking and the implementation and analysis of financial regulation. 

How does Automated Regulatory Intelligence benefit financial institutions?

Automated Regulatory Intelligence carries myriad benefits for financial institutions, including but not limited to:  

• Reduce risks
• Reduce costs
• Improve efficiency and accuracy
• Mitigate errors
• Streamline the end-end compliance process
• Deliver regulatory change in seconds, not days or weeks
• Free up highly qualified individuals from manual tasks to work on valuable operations, analysis and critical thinking

What happens to the humans?

As with all AI-based innovation, there are often concerns that human jobs will be lost. ARI does not mark the end of the Compliance Officer role, far from it. Regulatory intelligence is at its most valuable when working in concert with industry experts. This is where it elevates and accelerates the capacity and efficiency of compliance teams to implement changes faster and bring a high-level of assurance to FIs. Compliance Officers are elevated to use critical thinking and thoughtful decision making, leaving the AI to do the data-based predictions.  

How CUBE uses ARI

CUBE has a long history of helping financial institutions streamline their compliance processes. We have used automation for as long as we can remember, but our AI capabilities are now taking regulatory change management to the next level.  

Not only do our products track, capture, and monitor regulatory change, ARI enables us to make sense of that regulatory change to suit our customer’s individual profiles and preferences.  

Drawing on ten years of experience, we have a mature data set which covers the length and breadth of regulatory content. This means that our AI can make accurate inferences and intelligently link regulatory changes across different books and regulators, spot trends and make predictions rooted in data. This can all then be automatically mapped to our customer’s policies and controls – leaving compliance officers to implement regulatory change across the organisation.  

If you’d like to hear more about CUBE’s products, click below.