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Anticipate financial regulatory trends is not magic… but science

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A standardised analysis of different regulation types: here is the real challenge

To those who work in the banking compliance sector it is well known how the landscape would change if there were adequate tools to anticipate regulatory trends and calculate their impact on business. These latter would allow to plan more precisely, therefore also have optimized plans also in respect to costs. Actually the huge amount of regulatory updates, together with the insufficiency of the analysis tools available, burden entirely on compliance experts, obliging them to a meticulous manual work. All these elements slow down the regulatory transposition process for the financial institutions, which are obliged to constantly chase after regulatory trends, not having the chance to proactively anticipate them. Some posts ago we have already written that the standardization of financial regulations is a path that has only just begun for European and Italian regulators, on one hand. On the other hand, we are forerunners in this path, thanks to Daitomic, our AI platform addressed to the RegTech market.

A specific treatments for each legal document category

As is well known, the amount of information that banking regulators daily produce, disseminate and use is really big. Besides that, these information are different between themselves for type and specifications, creating a huge variety and diversity, also due to the legal source from which they are emanated. At Aptus.AI we have been working for years to continue this standardization process, which is still underdeveloped in the FinTech world. To do this, our Data Management team has carefully chosen an international standard for the representation of legal documents in a machine readable format, which groups these documents into different categories.

Here is a brief overview:

  • bills/acts: deliberative documents with a hierarchical structure, usually produced by the European Parliament (or by other delegated bodies)
  • debates: transcriptions of assemblies or other parliamentary activities, mainly made of Q&A
  • debate reports: descriptive reports of official meetings
  • judgments: court judgements
  • docs: documents that have legal validity, but don’t follow a specific textual structure
  • document collections: collections of independent documents
  • amendment lists: documents made of amendments lists
  • Official Gazette: documents that are part of official publications 
  • amendments: documents usually presented by the Parliament members to the assemblee or to the commission to change a regulatory text 
  • statements: documents that are not necessarily regulatory, like resolutions or statements
  • portions: parts of any other document.

Do these regulations sound like a lot to you? Well, because actually the types of information produced by European and Italian financial institutions are many more. Mostly for this reason, one of the biggest challenges in the development of Daitomic has been to relate this variety of documents to the types which are handled by the chosen standard in order to obtain a machine readable version of regulatory texts. A grouping and translation work that is anything but banal.

A unique standard for a variety of regulatory sources

This diversity of documents types emanated by banking institutions is related also to the variety of the involved regulatory sources. Currently they are not really interoperable, as indexed data are not easily accessible and usable for those who carry on governance activities. Just to give an idea of the situation’s complexity, suffice it to see the list of regulatory sources on which Daitomic is constantly updated in real time:

  • Eur-Lex (European Official Journal)
  • European Banking Authority (Q&A included)
  • BankIT
  • Privacy Authority
  • Italian Official Journal
  • European guidelines EIOPA
  • Italian Insurance Supervisory Authority (IVASS)
  • ESMA
  • Banking Financial Arbitration

This list covers about 90% of the regulatory sources which need to be monitored by a financial institution both on a national and on a European level, but this is not a problem for Daitomic. Exploiting its standard for the translation of financial regulation in a machine readable format, the platform is capable of integrating any new legal source in an efficient and effective way.

Daitomic, the first AI tool that anticipates banking regulatory trends

The analysis proposed in this article shows clearly that an automatic update in real time on banking regulations represents a concrete need for all the sector’s professionals, even just to keep up with the continuous regulatory updates. Actually we made a step forward. Yes, because Daitomic allows also to anticipate financial regulatory trends. Exploiting the knowledge about the above mentioned regulations types, the platform’s AI engines are capable of analyzing also draft documents - that will become laws -, extracting the related regulatory requirements and obligations, also drawing up a first Gap Analysis, that takes into account internal processes and policies that are affected by the document itself. This feature allows financial institutions to obtain insights and essential information to predict the impact on business of regulatory changes, therefore being capable of elaborating proactive compliance strategy. Daitomic, indeed, makes banking regulations accessible and more reliable, generating a real interoperability between different legal sources and connecting them, thanks to a unique format. Exploiting Artificial Intelligence, this platform offers an electronic and machine readable version of legal documents, making them usable also for all the GRC (Governance, Risk management, and Compliance) systems used by financial institutions.

Daitomic is an Aptus.AI company solution