How to automate Regulatory Intelligence? Exploiting machine readable regulations


The RegTech future of compliance is called "ARI"... or better: Daitomic

Every sphere of human society is affected by regulations. Which must be available and analyzable, so that every person affected by them can get to understand them. This need is even more crucial in hyper-regulated sectors such as the banking one, where the accessibility of regulatory data is essential to ensure effectiveness and sustainability. In particular, from the 2008 financial crisis. Currently, the huge amount of regulatory updates, together with the inadequacy of the analysis tools available, burden entirely on compliance experts, forcing them to do a time-consuming manual work, which also exposes them to many risks. And also slowing down the regulatory transposition by financial institutions and their ability to develop strategies, making it increasingly needed - to the point of making it fundamental today - the possibility of receiving automatic updates in real-time, even just to keep up with the continuous regulatory changes. This is why compliance sustainability and efficiency today cannot be achieved without Regulatory Technology solutions, mostly because of the automation that they can ensure. Hence the centrality of the so-called "ARI", or Automated Regulatory Intelligence, which aims to automate the steps of the compliance workflows in which humans do not add real value. Just like Daitomic already does.

Automating the regulatory alerting to optimize financial compliance workflows

So what is the best way to introduce automation in financial compliance workflows? By carefully analyzing the sector, we managed to outline all the steps that compose these processes in the main financial institutions. And thus to identify those specific steps that can be automated, or those that fall within the so-called regulatory alerting. The latter essentially consists in the collection and analysis of regulatory updates, necessary to assess their relevance to any specific financial institution and the possible need to proceed with a risk assessment. Trying to outline the situation, it can be said that Daitomic automates the following steps of the compliance workflows:

  • Regulatory Sensing & Outlook - identification of causes of potential risks deriving from external triggering events (for example, regulatory changes) or internal ones (such as the creation of new products)
  • Legal Inventory Management - update of the corporate legal inventories
  • Regulatory Requirements Update - update of the related regulatory requirements
  • Regulatory Alert - a real customized notification system that notifies relevant updates
  • Impact Analysis - a first impact analysis as a starting point for the following steps of the financial compliance process (including Risk Assessment, Gap Analysis, Compliance Plan Update, Reporting, Process Owner Triggering, etc.)

Exploiting the automation of regulatory alerting operations, Daitomic is able to optimize compliance workflows and prepare a first basis to make impact analyzes, which instead necessarily needs humans’ skills to be completed. Yes, because an essential point to underline with respect to Automated Regulatory Intelligence is that this technology cannot - and must not - replace the human beings in compliance activities, but rather automate only the steps that are currently too slow, not very accurate and subject to operational risks. Thus helping save time and resources to allow professionals to focus on their most peculiar activity: making quick decisions based on the right information.

The digitization process of Regulatory Intelligence needs machine readable regulations

Given the complexity of the situation described, you are probably wondering: how does Daitomic manage to do all this? In a nutshell, the automation and digitization of Regulatory Intelligence activities is based on standardization. And, more specifically, from the existence of a machine readable electronic version of financial regulations. Aptus.AI’s proprietary technologies underlying Daitomic, in fact, are able to transform legal documents into a standard machine readable format and analyze them through Artificial Intelligence with a holistic - which supports any regulatory area - and multilingual - supporting all the languages ​​of the European Union - approach. In a cross-regulatory and cross-country context, this technology makes it possible not only to reduce the time and costs for the implementation of financial regulatory updates, but also to introduce various innovative services, currently impossible. An example? Daitomic is also able to automatically extract regulatory requirements and obligations, thus preparing a first impact analysis that takes into account internal processes and policies. And it can also do this on draft documents, offering for the first time the chance to anticipate regulatory trends, and therefore of developing proactive compliance strategies to support the business.