Can we delegate compliance to technology?

I’ve had a lot of thoughts recently about how much automation can go. In most banks, one or two people look over the shoulder of those doing the work to make sure they comply. If we could get rid of all those people checking the checkers, there would huge savings which made me beg the question: could we get rid of compliance using today’s technologies?

This ended up as a dinner conversation with a group of friends, and the key point that came out was GIGO: Garbage In, Garbage Out. It is all about whether the system is running with the right information for checking.

Interestingly, we’ve seen this go wrong in a few of the challenger banks like Monzo and N26. They didn’t have GIGO, but they did have NEIGO – Not Enough Information, Garbage Out. You cannot comply if the automated processes are non-compliant. A key point.

For older banks, one CxO delivered a great quote, which is: “our just is to polish the turd we were given”. I loved this quote – maybe because I like to stir trouble – but it summarised everything I see in traditional banks. Rather than replacing and consolidating systems to get a clear view of the customer, they keep just investing in what’s already there to make it look better.

And then another factor came in, which was NIMBYism (Not In My Back Yard). It’s all about getting turkeys to vote for Christmas. Why would a COO choose to automate a process which currently means they have 100 people working for them? Sure, you can get rid of those people, but what does that do to their stature and power base?

Tough call.

Another CxO turned to me and said: “when I hear the word compliance, my heart sinks”. Oh dear, but that’s probably how most of us think of the word. It’s all about rules and regulations and checking the checkers. It’s really boring, a massive overhead, but it’s got to be done and, if you do it wrong, it could bring down the company. Yep, tough gig.

The evening, as it went on, reminded me of a conversation I had years ago where a CEO turned to me and said: “you know, Chris, it is so sad that we have built a company of box tickers and button pushers”. How motivational is that comment?

You walk into the bank in the morning and you know you’re going to spend the day talking with hopeful people who want loans or accounts, and all you do is ask if they fit with the compliance rules. Whoopey-doo.

We ended up talking about AI and predictive analytics. What if the systems could deal with all of this admin and compliance overhead? Is it achievable?

I believe it is but, as another CxO pointed out: “what if we just automate a cracked process”. Are our processes all they are cracked up to be or are they just cracked?

And then, in a sobering moment, another friend said that the is not processes and automation and regulation. It is really four basic questions:

• Can we automate this?
• How much will it cost?
• How long will it take?
• Is it worth it?

That’s a pretty good test for any technology project, but I liked it because it is the test for all of the above. Are the processes cracked? Do we have the right data sets? What will it take fix?

Now, there’s the rub.