PODCAST: The impact of digital transformation on banks’ financial investigation

Digital transformation is impacting every field, and the world of financial investigation and AML compliance is no different. We’re still near the beginning of the digital revolution for banking and finances, so there’s still uncertainty regarding the use of advanced digital tools for financial crime compliance, or their abuse by money-launderers for financial crimes.

Rio Miner, Head of Intelligence at Refine Intelligence, talked to Brian Kindle, VP of Product Development at ACFCS, about the digital transformation in AML compliance and financial investigations, what this could mean for financial crime investigators, and much more.

The explosion of digital financial tools

Banking technology and digital tools are in an “interesting place,” says Rio. It’s typical to see an innovation in a certain type of tech, and then an explosion of use cases and a lot of overlap between companies doing similar things, until the industry gels around new solutions. For example, audio tech moved from records to cassettes to CDs, and then stayed stuck with CDs for a while before music streaming came along. As Rio puts it, banking technology is “still stuck in CDs. We’ve just started to figure out this technology that we’ve been using.”

Banking technology is at an explosive point, with a lot of new ideas reaching the market. Part of this is because banking is now a very competitive environment, with financial institutions competing for customer attention. They need to offer a well-curated customer experience, with digital tools that can customize interactions as well as Amazon or Instagram does.

What will digital transformation mean for a financial investigation?

The financial crime space is seeing a ton of new companies with innovative solutions, but many banks are still using 2008 technology to address financial crime investigations. That’s something that will have to change, especially since financial regulations are increasing. “As banks and customer bases grow, the workload is overwhelming. We’re at that point where people are starting to search for solutions and different things are coming out. I think we’re going to see some really great innovation in the years to come,” Rio says.

That said, too many banks are still using outdated tools and workflows, instead of trying new tools that could ease the workload for their AML team. High on the list is robotic process automation (RPA) software, which can automate time-consuming, repetitive, and tedious tasks. For example, an RPA robot could draw data from a statement and populate it into a report, and repeat that process every month when the statement comes out. “That’s a time consuming and painful process for a human to do, but nothing for a robot to do.”

Will digital tools take over the job of financial investigation?

Many people fear that robots could take jobs away from the humans who are now doing them, but that’s not a likely scenario. Instead, robots will carry out tasks that are already fairly robotic, like sifting through wire transfers or examining images of checks, and humans will repurpose their time for other things, like analysis.

Today’s financial investigators are overworked, understaffed, overstressed, and burning out. They don’t want to do repetitive work of populating spreadsheets and comparing images. “RPA allows the robot to do what a robot is good at, which is something repetitive and mindless like data entry, and human to do with the human is good at, which is analysis and person to person communication and things like that.”

Bear in mind that compliance jobs are ballooning with the increasing regulatory burden. Banks are struggling to fill positions for AML and compliance teams, because people are burned out and the work is endless. Instead of taking jobs away from people who want them, robots will take away work that people don’t want to do and leave them with better job satisfaction, helping reduce churn among financial crime investigators and speed up the investigation itself.

Financial compliance is at an exciting place

Digital transformation promises exciting things for banks and financial institutions in general, and for AML and compliance in particular. Although it’s hard to predict how things will evolve, greater adoption of automation could make financial crime investigations more efficient and improve job satisfaction for overworked financial investigators.

Click here to listen to the whole podcast