Iain McCowan, Head of AI at Dubber
Artificial intelligence is dominating headlines and public chatter. The explosion in popularity of large language models like ChatGPT has catalysed excitement about AI’s potential across the entire enterprise landscape. However, the technology is not without its detractors, especially across the finance sector. Major financial institutions like JPMorgan Chase, CitiGroup, and Wells Fargo were quick to ban or limit employee use of certain AI tools, citing safety concerns around data privacy, security, and compliance.
Yet amid this hesitation, a key opportunity is being overlooked. The right application of AI, specifically conversational AI, could actually empower financial institutions to stay safe and compliant. Conversational AI, which uses natural language processing to understand and interpret voice data, has immense potential in the finance sector – especially in today’s complex and rapidly evolving regulatory environment. Laws like the GDPR, SMCR and the UK Financial Services and Markets Bill continue to expand compliance requirements for financial firms. Embracing conversational intelligence in areas like consumer protection and data privacy will help firms parse today’s intricate web of rules and laws to guide compliance in a previously unprecedented way.
The Evolution of Conversational AI
While many of the latest AI developments seem as if they’ve just arrived on the scene, the evolution of conversational AI has been decades in the making. As early as the 1960s, the first chatbot ELIZA was created, though capabilities were limited. Since then, major milestones have progressed conversational intelligence, such as breakthroughs in the 1990s in automatic speech transcription, laying the foundation for today’s advanced contextual comprehension. In 2012, deep learning allowed AI models to truly analyse the nuances of meaning within conversations, rather than just recognising keywords. Today’s best conversational intelligence products now intelligently listen and understand the context of a conversation in real-time, and the importance of certain topics and discussion, making them highly effective for abiding by strict compliance laws.
How Conversational AI Enables Compliance
Regulations continue to grow more complex worldwide. Rules spanning consumer protection, data privacy, capital requirements, and more, create a web difficult for humans to consistently interpret and apply. Yet failure to comply can result in major fines or reputational damage. Unfortunately, this is a problem across the board. A 2023 survey found just 53% of UK executives feel ‘very prepared’ for data privacy compliance, demonstrating the evolving complexity confronting financial institutions. The lack of preparation has resulted in one of the largest years on record in terms of penalties – money laundering-related offences, imprisonments, and actions by authorities resulted in $22 billion of fines being meted out to the sector last year.
Much of this is down to human error. Humans can easily misinterpret vague legal terminology or overlook important details buried in lengthy regulations. Fatigue, distractions, and complexity can result in compliance personnel missing key information or failing to properly apply policies. This opens firms up to regulatory and reputational risk.
Conversational AI can overcome these human limitations. Advanced natural language processing enables AI to listen in and cross reference voice data with the various stipulations of intricate regulations, legislation, and policies in real-time. This technology helps overburdened human compliance functions by giving a far better oversight of what happens in the conversations in their organisation, and advice on how to correctly handle customer information based on the situation, scaling compliance knowledge across the organisation.
The Potential for Finance
Beyond compliance, conversational AI unlocks a universe of potential applications in finance. The technology can optimise customer service by understanding conversations and helping businesses proactively address customer needs. It can analyse product performance based on customer feedback and recommend improvements. Conversational AI can also generate insights from customer data to inform marketing campaigns, credit risk models, and more. Previously, advanced AI systems required massive budgets to build in-house. Now, conversational intelligence is accessible as an ‘out-the-box’ software solution, allowing financial institutions of all sizes to benefit, levelling the playing field.
Conversational AI: An Ally, Not a Threat, to Compliance
Conversational AI represents an immense opportunity for the finance sector. This technology has been decades in the making, with continual advances in deep learning and natural language processing. Today, conversational AI can overcome human limitations and optimise compliance by adhering to complex regulations and laws in real-time conversations. With increasing regulation in the industry, leveraging conversational AI will be key for financial institutions to efficiently make sense of complex laws while delivering seamless user experiences. While unguided Large Language Models may produce concerning and unvetted outputs, this tech takes a different approach. So while the finance sector moves to restrict some AI tools, leveraging the right forms of AI could solve the very risks they aim to avoid. By adopting conversational AI, the financial services industry can avoid human error in managing exponentially complex compliance requirements.
