Optimization the Focus for Risk and Compliance

By Ajay Katara, Domain Consultant with the Risk Management practice of the Banking and Financial Services (BFS) business unit at Tata Consultancy Services (TCS)

The Banking industry has perpetually re invented itself with transmuting times to remain nimble, supple and more customers focused. The Banking function houses a number of sub functions in itself which converge to give a good Banking experience to its customers. As the Banking industry treads in to more incipient times there is a desideratum to reinvent and optimize the business functions to achieve the above mentioned objectives.

Ajay Katara

Risk and Compliance function has always remained in vogue due to its regulatory focus and withal for managing more incipient types of peril. Naturally the investments too in this function have remained perpetually incrementing to evade regulatory fines and additionally to efficiently maintain the function. Hence there is a focused effort by Banks to tap in to Technological advancements and make concentrated efforts to achieve optimization within the Risk and Compliance function.

Newer Technologies like artificial intelligence, Natural Language generation (NLG) and Robotics Process automations are being considered for solving legacy issues cognate to Business processes and additionally redefining the Risk Value Chain and Business Models in the Banking Industry.

There are many areas in Banking Risk where a lot of the above mentioned technologies are being leveraged to drive optimization .A recent example where technological advancements are making a difference is in the area of Regulatory Reporting where NLG techniques are being utilized to engender narratives and provide insights from disclosures to Business users, thereby preserving a considerable time and effort involved by the Human Capital. As per industry reports the opportunity in this area is proximate to USD 10 bn and growing. The main benefits of Artificial Predicated narratives are that it provides more insightful reporting, complementing Narratives and Critical insights for Decision making process. There are many such use cases within the Banking functions which can hugely benefit from newer technologies to procure optimization, however there are perils to be considered in the adoption journey as well.

As Spiderman quotes “with more powers comes more responsibility”, similarly “newer technologies bring in newer challenges “.As the adoption of newer technologies increase it also brings in newer risk types like cyber risks and technology risk and to contain these risks the Banking sector will require to work in coordinated way to bring in more incipient frameworks and update subsisting ones. Opportunities galore exist and the futuristic technologies have immense potential to provide the required optimization benefits to the Banking industry but what is authentically going to avail the cause are Globally accepted standards ,methodologies and practices along with Regulatory cooperation.