HSBC Holdings Plc – the U.K-based financial services company – has partnered with the Silicon Valley based artificial intelligence startup Ayasdi Inc. to automate some of its compliance processes in order to make its services even more efficient.
HSBC sees 20% drop in number of investigations
In an interview last week, Andy Maguire, the Chief Operating Officer of the bank, said that the financial services company is implementing the AI technology of the company to automate anti money-laundering investigations that have been conventionally conducted by thousands by humans. According to the startup, the vast majority of anti-money laundering investigations at banks do not find any suspicious activity, which results in a waste of resources.
Over the past year, the banking institutions have been hiking up their use of automation and artificial intelligence in a bid to save both time and money on complicated and manual processes ranging from customer service to compliance checks. According to the startup, the banking group ‘HSBC’ saw the number of investigations drop by 20% without reducing the number of cases referred for more scrutiny under Ayasdi tech. In January, Gurjeet Singh, the Executive Chairman and co-founder of Ayasdi, was appointed to the new technology advisory board of HSBC. The advisory board offers guidance and advice to the bank on digital strategy.
Maguire said, “It’s a win-win. We reduce risks and it costs less money.” Also, the banks have been working with young financial technology companies more closely and reducing the amount of tech that gets built in-house.
Regtech sees significant collaboration
‘Regtech’ – the technology which can assist the financial institutions in staying compliant with regulations and avoid large fines in areas like market manipulation or money laundering – is one of the financial tech areas that have seen significant collaboration.
HSBC assented to pay a $1.92 billion in fines to U.S. authorities in 2012 for allowing itself to be used to launder drug money out of Mexico and other compliance lapses. The banking institutions went on a compliance hiring spree for several years after the financial crisis in order to cope with new rules and increased regulatory investigation.
According to a report by popular news site Reuters, “Banks have recently started cutting back on compliance hiring as they start deploying new technology that can help automate some of the tasks.” Maguire noted that anti-money laundering checks is something that the “whole industry has thrown a lot of bodies at it because that was the way it was being done.”
He further said that the artificial intelligence tech can assist with compliance because it has the ability to do several things that human beings are not typically good at such as augment human capabilities or high frequency high volume data problems.