The technological path traced by financial regulators and supervisors, both European and Italian, is really clear about the future of this sector. This trend, recently highlighted also by the EBA, has been confirmed by the “Rilevazione sull’IT nel settore bancario italiano” (“Survey on IT in the Italian banking sector”), edited by the CIPA (Interbank Convention for Automation) and the ABI (Italian Banking Association).
The Italian Banking Association took into account a sample made of 21 banking groups - which represent the 94% of total banking sector assets - and of 4 single banks, focusing specifically on two areas of investigation:
In particular, the second part of the ABI’s survey is focused on Artificial Intelligence in the banking sector, considering data and statistics of 2020. The report talks about the need of a “responsible AI”, starting from the analysis of the “banks’ strategy in the algorithmic era”. Many other business sectors have strongly approached Artificial Intelligence far before the financial one. And now also the FinTech world cannot but align, taking into account the exponential growth both of the machines computing power and of the amount of available data. Besides the already mentioned European Banking Authority - and other institutions -, also the European Commission has confirmed the AI emergence within the financial institutions world, in the pages of its “Artificial Intelligence Act”, which proposes different measures to be adopted for the development, the introduction in the market and the use of Artificial Intelligence systems, with special attention to high-impact fields, exactly like the financial one.
The RegTech market, therefore, will play a central role in the future of the European banking world, which will be a fertile ground for AI, thanks to the amount of data with a high informative potential. This trend is also confirmed by the prevision about the growth of the AI dedicated budget in respect to the total of the AI budget: the funds allocated for the only Artificial Intelligence are expected to pass from the 1,3% of 2020 up to 2% in 2021. The CIPA-ABI survey reports also that “at the end of 2020 more than half of the respondents have effectively adopted Artificial Intelligence and the trend is expected to grow in the 2021-23 three-years period”. For the moment, the functional areas which are more affected by the introduction of AI are, in that order:
Besides, the report identifies also the main criticisms encountered by banks in the introduction of Artificial Intelligence, that are the implementation complexity, the impact on existing processes and the quality of available data. Also to overcome this difficulties, nearly all the interviewed financial institutions make use of external providers, specially for the required skills in Machine Learning, data science and AI systems engineering fields. Turning to the most used technologies in the Regulatory Technology sector, they are ML, textual NLP and chatbot/virtual agents, while the fields of adoption are mostly contact center/customer service, credit and support to operations. Focusing on the 2021-23 three-years period, an expansion of AI is particularly expected in the sectors of credit, contact center/customer service, internal help desk, risk management and anti-money laundering. At the end of 2020, more than half of the interviewed banks have already adopted Artificial Intelligence solutions, while a quarter of the sample indicates that they are in a testing phase and nearly all answered they expect to increase the use of AI solutions in the 2021-23 three-years period. In short, the digitisation process and the introduction of Artificial Intelligence in the banking sector seem already unstoppable. Anyway, in the report pages, a significant absence comes out: at what point the financial compliance is in this transformation?
To tell the truth, we realized in advance that the banking compliance sector needed to accelerate in the digitisation process which is affecting all the financial market. This is why we decided to drive this change, by developing Daitomic, our financial compliance management platform, which exploits AI to make banking regulations machine readable - therefore accessible - and to automatically extract regulatory obligations. As confirmed also by the CIPA-ABI survey, analyzed in this post, compliance is exactly the sector which most heavily needs to reduce time and costs currently required to keep up with European and Italian financial regulations, also presenting the biggest technological growth potential. In this sense, Daitomic stands within a highly increasing trend, as confirmed by the EBA the EC in Europe, but also by the Italian Banking Association and Banca d’Italia on a national level. The revolution in financial compliance has started, and it is called Daitomic: are you ready to join?