There has been a lot of hype surrounding artificial intelligence (AI) and its potential in different walks of life. In financial services, especially in financial crime compliance functions such as Know Your Customer (KYC), Anti-Money Laundering (AML), the hype has started giving way to reality. Last year was a big year for developing pilots and Proofs of Concepts (PoCs), some of which produced, and at times exceeded, expected levels of improvements. We expect 2018 to be a critical year for wider adoption as more use cases emerge and pilots are taken to production.
In our recent reports we have discussed several challenges in current KYC-AML operations, with limitations of current rules based technology being a key contributor. Recent conversations with banks have confirmed the crying need for intelligent automation and advanced analytics to mitigate many of the shortcomings. Recent developments in AI and advanced computation, as well as big data technologies and cloud computing, offer real possibilities of developing commercially viable solutions.
An interesting ecosystem of solution providers is developing driven by these changes. We have seen numerous startup FinTech companies emerging, developing, and fine-tuning their solutions in the last 18-24 months. Some have just completed or are at late stages of PoCs, and a few have moved even up on the adoption curve. Incumbent software providers are upping their game by adapting and adopting the new tools – by embedding these analytical tools into their current platform, and/or enhancing their offerings by building an ecosystem of tools around or on top of the core platform.