Unleashing AI to Transform Regulatory Compliance

Our Chief Product Officer Rory McLaren recently gave a presentation at EmTech Global in London on the hot topic of Generative AI (GenAI).  He shared a five-step plan for businesses to take a strategic approach, giving examples of what we are doing at Kaizen. Rory emphasised the importance of being careful with IP and uncompromising about the security of customer data.

(Please note, the images featured in this blog are generated by GenAI with the prompt used below the image.)

What is GenAI?

Generative artificial intelligence focuses on generating new content which could be text, audio, images and video. It has the potential to significantly impact regulatory compliance in the financial services industry. It can help with streamlining tasks, enhancing detection of suspicious activities, ensuring compliance, assessing the impact of regulatory requirements, and future proofing risk and compliance.

However, GenAI is already causing concerns about privacy and questions about the integrity and accuracy of the information being created. There is also fear that GenAI might change jobs and society. As the ancient proverb goes, GenAI is like a tiger – it’s bloody dangerous in the wrong hands.

Here’s Rory’s five step approach for taming the tiger.

1. Approach the Tiger

It’s important to get started and engage with GenAI to understand how it can be used. We recommend starting with simple, safe use cases using public data only. Blocking access within your company has limited long-term benefit. Instead, focus on crafting prompts and understanding how to use GenAI, as learning how to use and understand it is a critical skill we must all get to grips with.

A monk crouching in front of and looking at a tiger

Prompt: Draw an image in the style of the Japanese artist Hokusai of a novice monk approaching a crouching fearful looking tiger.

2. Don’t get eaten

There are important precautions that need to be taken to avoid getting eaten by the GenAI beast. Firms need to be careful with company-sensitive information and personally identifiable data. Firms should also be cognisant of the regulatory landscape, including the US Executive Order (October 2023), The Bletchley Park Declaration (November 2023), and the EU’s AI Act (December 2023). The technology is changing so quickly so be aware of SAAS software with continually evolving features which may add GenAI without your knowledge.

A monk carefully placing his head inside the gaping mouth of a very large fierce looking tiger

Prompt: Draw an image in the style of the Japanese artist Hokusai of a novice monk placing his head in the mouth of a savage looking tiger.

3. Unleash the Power

To unleash the power of GenAI, it’s important to focus on areas where it can make a significant difference. There is no point in using it to make small improvements that won’t make an impact on day-to-day work.

There are examples already where GenAI is making or has the potential to make a large impact. In knowledge management, natural language processing, inference and summarisation can be used to leverage untapped resources, discover best practices and make a consistent approach available to all. This could be wealth managers accessing previous advice for new scenarios, tax companies connecting decades worth of data to gain insights via LLMs (Large Language Models), and law firms tapping into regulatory interpretation and advice they’ve previously provided. Data analysis and pattern matching can also be used to review large data sets quickly, identify patterns and surface possibilities for human review.

The sweet spot is amplifying humans with AI, not replacing them. We need to see GenAI as a useful coach or another team member that helps us to do our jobs better.

Fierce looking tiger leaping above waves

Prompt: Draw an image in the style of Japanese artist Hokusai of a savage looking tiger, leaping in an explosive and powerful manner.

4. Master the Stripes

To master the stripes of the GenAI beast, new ways of thinking about problems are required to fully take advantage of the technology. It’s as much about training staff and changing working practices as it is about selecting the right technology. Understanding how to price the value of GenAI will be critical for both customers and suppliers. Not all AI adoption will be through adding a prompt to a product.

Profile of a tiger's head stylised with geometric stripes

Prompt: Draw an image in the style of Japanese artist Hokusai of a side on view of a savage looking tiger. The stripes on the tiger should look as natural as possible, whilst at the same time looking like there is some sort of maze or hidden pattern within them.

5. Live in Harmony

To live in harmony with GenAI, it’s important to remember that it’s just another tool for people to use. It augments humans, it doesn’t replace them. Firms can successfully integrate GenAI into their processes and workflows if they think strategically about where it can make the biggest difference. It is important to strike a balance and not apply it to all tasks. Junior analysts, developers, and lawyers all need tasks in order to become senior versions of these roles. How will this happen if AI does these tasks? Who will train the models and validate the output if we become too reliant? Where will that leave us?

A large tiger sitting beside a young monk deep in meditation

Prompt: Draw an image in the style of Japanese artist Hokusai of a savage looking tiger sitting peacefully next to a novice monk who is sitting in the lotus position with eyes closed.

Where to from here?

GenAI is so fast moving, it can be challenging to know where to begin and the best way to approach it.  To summarise:

  1. Approach GenAI now to gain experience and control the way it will transform your business
  2. Ensure you are aware of the legal and regulatory obligations for using the technology
  3. Find the area that has maximum impact for you
  4. Understand how your business and people will change
  5. Embrace the change, understand the ethical implications.
  • Interested to hear more about Kaizen’s experiences with AI?  Please get in touch to arrange a call with Rory. 

  • EmTech Global is the showcase event of Engine, the Investment Association’s FinTech hub.