Regtech Solution Brief: Silent Eight Alert Resolution

Regtech Solution Briefs are a new report series designed to provide Celent research clients with timely updates on regtech solutions and strategies by highlighting vendor briefings we found particularly interesting.

Financial institutions spend enormous sums on technology and operations in their financial crime compliance operations, the bulk of which involves heavy manual work for investigating and resolving enormous volumes of false positives generated by their detection engines. The operational costs and investigation team sizes at financial institutions have grown exponentially in recent years as financial institutions sought to respond to increasing regulatory scrutiny by employing more human resources. This approach is proving unsustainable amid growing volumes in this era of hyper-digitalization.

Next generation technologies such as artificial intelligence (AI) and machine learning (ML) offer the opportunity to automate a large segment of the investigation process and mitigate risks by streamlining investigation steps. Silent Eight, a regtech start-up, has developed an AI-powered solution called Silent Eight Alert Resolution (SEAR) that is designed to automate the level 1 alert investigation process in watchlist screening. Silent Eight focuses on replicating human reasoning based on historical case decisions and continuous learning. Its AI models are completely supervised and governed by a financial institution’s policies and processes, with humans always in the loop. For each investigated alert, Silent Eight provides a decision supported by a narrative or rationale written using natural language generation (NLG) techniques.

An automated alert investigation solution such as SEAR should reduce inefficiencies and costs in level 1 alert investigation and make the process both consistent and free of human bias. Silent Eight's strategy of basing its analytics on a firm’s policies and past investigation offers an opportunity to mitigate risks by making the investigation process both consistent and free of human bias. Its focus on accuracy over volume reduction further highlights its emphasis on risk mitigation than mere cost reduction.

The regtech vendor space is crowded, and many players have struggled to build momentum despite early success. Silent Eight's challenge therefore will be to grow its client base which currently includes some of the largest global and regional banks, and to fully develop and operationalize a similar investigation automation solution for transaction monitoring alerts which it is currently working on.