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Jul 08
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Preparing for FINRA’s Unique Challenges with Ascent

By Blog

A recent article in the New York Law Journal delineated the distinct challenges lawyers face when confronted with FINRA Enforcement proceedings. While on the surface, FINRA enforcement actions may seem familiar, there are elements of the process that are unique to the regulator and its proceedings — and that therefore bring unique challenges.

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FINRA Challenges

“FINRA Enforcement proceedings are designed to quickly punish or remove those who violate FINRA’s rules or the rules and regulations governing the securities industry. As such, they lack many of the procedural protections applicable in civil or criminal litigation and the rules themselves, particularly FINRA Rule 2010, make it easier for Enforcement to obtain an adverse finding. However, that makes the role of an informed advocate more, not less, important. Counsel should be prepared.”

Counsel should be prepared indeed, because the threat is very real. In the last two years alone, FINRA has doled out $100 million in fines. This is in line with a broader trend in the world of regulatory compliance, which has seen more frequent and more severe enforcement actions issued over the last decade.

Advocates, though, might struggle to feel prepared in an environment that’s as complex and fast moving as financial regulation. For law firms attempting to advise a litany of clients on their regulatory requirements or for a General Counsel trying to build and scale an effective compliance program, it can seem impossible to keep up with this frenzied regulatory pace.

Ascent for Legal Advisors Managing FINRA

Ascent helps financial firms identify their obligations, track regulatory updates, and reconcile changes. Our AI-powered platform automates the most tedious and error-prone aspects of regulatory change management and regulatory mapping, significantly reducing a company’s cost to comply and — by taking human error out of the equation — the risk of non-compliance.

Ascent empowers law firms to continually know all of the regulatory obligations for each client in their book in a few minutes time. Similarly, Ascent helps General Counsels gain a comprehensive view of their regulatory landscape, potentially at significant cost reduction (learn how Ascent helped a Global Top 50 Bank achieve 99% cost-savings in their GDPR compliance efforts).

Informed advocates play an essential role in helping businesses navigate complex enforcement proceedings like FINRA’s, and, even more importantly, in avoiding non-compliance and enforcement actions in the first place. Ascent helps provide them with the information their roles require at a scale, efficiency, and level of accuracy not previously possible.

READ MORE: How a Global Top 50 Bank Secured Its GDPR Obligations Using Ascent

 

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Jul 02
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How Ascent Helps Financial Firms Slash Compliance Costs

By Blog

Ascent helps financial services firms follow the laws, rules, and regulations more easily, both reducing overall compliance costs and helping you avoid monetary, reputational, and punitive penalties.

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Lower compliance costs, fewer fines

The leaps and bounds that AI technologies have made in recent years make it possible to automate compliance processes such as regulatory mapping and regulatory change management — which have historically been highly manual, time-intensive, and prone to human error.

A pioneer in regulatory knowledge automation, Ascent rapidly and accurately identifies every obligation that applies to your specific firm. Then, as regulators publish new rule amendments or additions, your obligations are automatically updated to reflect these changes.

Ascent’s technology helps firms save money on compliance in two key ways:

— Reduces the cost to comply. By automatically generating a firm’s regulatory obligations and keeping them updated, Ascent helps in-house Compliance teams and regulatory advisors save significant time and resources. As importantly, Ascent empowers existing staff to take on more value-add activities such as proactively preparing for regulatory change and developing regulatory strategy, thereby strengthening the business overall and shifting compliance from a cost-center to a competitive advantage.

— Prevents compliance failures and associated fines and penalties. In a world where a new regulatory update is issued every seven minutes, financial institutions can no longer afford to miss a rule change. By automatically delivering the obligations and rule changes that apply specifically to a business, Ascent helps shore up the compliance program, minimize risk, and avoid fines.

A Global Top 50 Bank achieved 99% cost savings with Ascent.  Read their Story.

 

Contact us to request a demo or learn more about Ascent.

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Jul 01
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RegulationAI™: World-Class Technology Built for Compliance

By Blog

When it comes to automating any aspect of compliance, how the technology itself is built has serious implications for your business. Here we explain the building blocks of Ascent’s RegulationAI™, what makes it unique in the industry, and how our approach ensures that you truly have what you need to eliminate regulatory gaps, avoid fines and ultimately be more competitive.

Not all automation is created equal

Ascent invented a new kind of technology called Regulatory Knowledge Automation in order to tackle one of the most intractable challenges in compliance: mining mountains of regulatory information to get to the insights that matter — in other words, the actual actions our customers need to take (or refrain from taking) in order to stay compliant with the law.

How the technology works is just as crucial as the output of that technology. As all those who work in compliance know, it is not only the destination that matters, but how you got there. 

Thanks to rapid advances in technology in recent years, compliance personnel now have a range of digital tools to help streamline this process. However, not all tools are created equal – especially when it is your firm’s reputation and financial wellbeing on the line. Other solutions may be partially automated, but depending on how they are built may actually create more work for the end user and increased risk for the business.

So while automation can seem helpful on the surface, it is crucial to understand the basis for the algorithms and the differences between solutions so you can make the right choice for your business. 

Ascent’s RegulationAI™ breaks down regulatory text line-by-line in order to pinpoint the obligations relevant to you. Conversely, other solutions rely on algorithms that act much like a search engine. Their software skims through regulatory documents in search of key phrases or specified search terms that might be related to a company’s business requirements. The result is guesswork, but scaled up – thousands of potential obligations that may or may not be relevant to you, which your team must still manually review. Manual reconciliation is required with every change in regulation, adding liability instead of reducing it.

When it comes to using automation to analyze regulatory text — a job that once could only be done by humans — how the technology works is just as crucial as the output of that technology. As all those who work in compliance know, it is not only the destination that matters, but how you got there. 

Granularity: a crucial new concept in regulatory technology

Click here to read more about how Ascent delivers granular obligations.

The magic is in our method

To understand why Ascent’s RegulationAI™ outperforms other solutions, it is important to first understand how it works. 

Ascent’s team of engineers, data scientists, and compliance officers have spent years building, training, and optimizing the algorithms that power our platform, which are built using machine learning and natural language processing technologies. Only about 35 percent of any body of regulatory text contains an actual obligation (the rest consists of definitions, clarifications, and other ancillary information) and an even smaller percentage of those obligations apply to any particular business. Our algorithms are trained to spot the difference, and immediately get to work parsing out the text into obligations and non-obligations. 

The output of this process is then verified by our in-house compliance experts as part of our humans-in-the-loop process. Their insights then get fed back into the system, making the algorithms that much smarter and more accurate as time goes on.

The output of this process is then verified by our in-house compliance experts as part of our humans-in-the-loop process. Their insights then get fed back into the system, making the algorithms that much smarter and more accurate as time goes on.

Targeting obligations to you

Once the regulatory text has been decomposed and quality-assured, our RegulationAI™ has nearly everything it needs to do its magic. The last step is input from you, our customer. 

In order for our RegulationAI™ to deliver the obligations that apply specifically to you, it needs to know some key information about your business; for example, what types of products or services you offer and in which regions you operate. This step takes the form of an online questionnaire. Once this questionnaire is complete, our RegulationAI™ rapidly maps regulation to your business profile, providing you with a clean, complete, and streamlined register of obligations in minutes. 

The true value of granular obligations

Because of how our RegulationAI™ breaks down regulatory text, we are able to offer obligations at a granular level. This means that every obligation delivered to you is the individual requirement imposed on your business, not an entire rule or large block of regulatory text that you must further analyze. Furthermore, every obligation automatically updates as rules change and is linked to the specific rule it came from, so you have full traceability into how your obligations were derived.

How Ascent’s RegulationAI™ works is the key difference that sets our technology apart. It is the reason we can provide obligations that are precise, down to the line level of regulation. It is the reason we can map obligations to your specific business with unmatched accuracy. It is the reason why we can analyze the regulatory landscape and identify the rule changes that are relevant to you, and then connect them to your existing obligations so you are never dealing with outdated information.

Do great business while minimizing risk

With the power of RegulationAI™ at its core, Ascent provides regulatory knowledge that is tailored to your company so you can effectively reduce risk and avoid regulatory infractions that could set your business back. Unlike legacy technology implementations or traditional service engagements that might take many months and thousands of dollars, Ascent has $0 implementation fees and can be set up in days. 

Great technology enables and enhances your team. With Ascent, you can shift your focus to developing a proactive, scaleable compliance strategy that makes your business more competitive  — without the constant worry of accidentally missing an important update or keeping records that will stand up to regulator scrutiny. 

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Jun 30
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The Not So Hidden Costs of Compliance

By Blog

The average financial firm has six lines of business to monitor, with each having their own set of goals, restrictions, and regulatory requirements.

To keep up with the rising tide of regulation, firms often have little choice but to throw more people, time, and resources at the problem, which can add up quickly. In this article, we highlight the growing costs of compliance – and non-compliance – for financial firms.

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What Financial Firms Spend on Maintaining Compliance

How can one calculate the cost of compliance? One option, perhaps the most straightforward, is to look at the grand sum total for key markets in the industry. The Asian-Pacific, European, Middle Eastern and African, Latin American, and North America markets spend about $181 billion per year on maintaining financial crime compliance. That number is impressively large —even incomprehensible – but it hides the burden placed on each individual firm.

50 percent of respondents to a Risk Management Association survey said they spend 6-10 percent of their revenue on compliance costs. Large firms report that the average cost of maintaining compliance runs approximately $10,000 per employee. Global banks and large brokers that have upwards of 20,000+ employees could end up spending a staggering $200 million+ in compliance every year. While smaller firms like RIAs and broker-dealers may spend less overall, the burden of regulation can still act like a regressive tax that disproportionately eats a larger portion of their bottom line.

Though startling, even these numbers show only a static snapshot. They fail to capture the acceleration of regulatory change and the level of regulatory complexity, which have both exploded over the last decade. Regulatory change has increased 500 percent since the 2008 global financial crisis and, unsurprisingly, has heightened regulatory costs in the process. Compared to pre-crisis levels, retail and corporate banks have seen operating costs spent on compliance shoot up 60 percent.

Cost of Regulatory Compliance

Regulatory change has reached such a superhuman pace that many firms simply cannot keep up. Instead of making informed decisions based on a deep understanding of their specific compliance requirements, Risk and Compliance teams are too often forced to make a best guess based on a fragmented and incomplete view of their regulatory environment. However unintentional,  this often leads to compliance failures and increased costs of non-compliance.

What Financial Firms Pay for Non-Compliance

The cost of non-compliance is most notoriously understood via the jaw-dropping fines issued by regulatory agencies every year. U.S. banks alone have been fined a staggering grand sum of $243 billion since 2008. s. 

The pace of these fines shows no signs of slowing down. 

In 2019, the Securities and Exchange Commission (SEC) alone issued 862 enforcement actions, ordering those in violation to pay more than $4.3 billion combined.

But fines actually represent the smallest cost of non-compliance for firms. Over a 12-month period, the average fine for an enforcement action is $2 million, compared to the average cost of business disruption due to an enforcement action at $5 million, the average revenue lost at $4 million, and the cost of lost productivity at $3.7 million.

In total, firms spend almost $15 million on the consequences of non-compliance. That’s 2.71 times higher than what firms typically pay to stay in compliance by building strong compliance programs. 

This difference, while dramatic, should not be surprising. After all, the system is designed to incentivize firms to comply or risk being heavily penalized. Therein lies the compliance conundrum: in an environment where the pace and complexity of regulation is increasing to a point where people cannot possibly keep up, how can firms expect to avoid the expensive consequences of non-compliance? 

‘Expense’ does not only refer to monetary loss. The true cost of non-compliance is the reputational damage that it can cause both for your organization and your compliance personnel alike. 

A study from ECGI showed that stock price reactions of negative press were 9x larger than the penalties themselves. 

According to a Deloitte survey, 87 percent of executives rate reputational risk as more important than other strategic risks. These executives say that the areas of their business that were impacted the most after a negative reputational event were revenue (41 percent), loss of brand value (41 percent), and regulatory investigations (37 percent). In line with these concerns, a study from ECGI showed that stock price reactions of negative press were 9x larger than the penalties themselves. 

Legislation in recent years such as the Yates Memo in the U.S., the Senior Managers Certification Regime (SMCR) in the U.K., and the Banking Executive Accountability Regime (BEAR) in Australia have made it clear that senior executives can be held personally liable if their firm is found to be non-compliant.

READ ARTICLE: The Evolution of Personal Liability

 

Preparing for the Next Normal

As financial firms prepare for whatever the future might hold, many will be looking to trim costs wherever they can. Yet in one department — Risk and Compliance — costs are clearly continuing to rise. As Boards continue to scrutinize compliance even further, businesses should consider the right balance of people, process and technology that will allow them to make the most of their resources. 

READ ARTICLE: How Ascent Helps Financial Firms Slash Compliance Costs

 

May 21
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Webinar | The Way Through: Shifting from Reaction to Recovery through Technology

By Blog

Watch The Webinar

About the Webinar

Watch our recent webinar, produced in partnership with Capco, to hear Peter Dugas, executive director at Capco, and Brian Clark, founder and CEO at Ascent, discuss how advances in regulatory technology can enable firms to shift out of a reactionary stance and into recovery mode.

You’ll take away tips and insights on:

  • How to better monitor regulatory change
  • How to build your rule inventory digitally
  • How to use AI to identify the obligations relevant to your business

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May 05
Love4

The Shortest Commute: How to Set Up a Fully Remote Workforce

By Blog, Culture

(6 min read)

As the global health pandemic has swept across the country (and the world), business after business has locked up its office space and moved employees to working remotely — often under government mandate. 

This transition happened much more quickly than most of us could have imagined. And while some companies might have been more prepared than others, virtually every company had to make some adjustments to accommodate this new reality. 

We recently spoke with three team members at Ascent who were critical in getting our fully remote workforce up and running — Carrie Pinkham (VP People), Sarah Samuels Taylor (Chief of Staff), and Chris Doyle (Chief Technology Officer) — to better understand what challenges this new environment poses and to share advice on overcoming them.

You can watch the full conversation here or read the highlights (edited and condensed for clarity) below.

LEARN MORE: Ascent’s Open House: Socially Distant, Virtually Connected

 

What are some of the biggest challenges facing a company when setting up a fully remote workforce?

Sarah: In general, I’d say two of the biggest challenges are maintaining seamless communication and preserving team culture. These areas are especially important given the current environment because they both help establish a sense of normalcy — something very much missing at the moment. We’ve made them specific areas of focus for that very reason.

Carrie: I’d add too that, to Sarah’s point, the actual challenges of working remotely are exacerbated by the fact that we’re doing all of this during a global health crisis. That brings a lot of new questions to any company. How do we support our customers in this new environment? How do we support our team? For those of us who are parents, how do we balance childcare with our professional responsibilities? How do we manage the stress and concerns that come with a crisis like this?

As a company, that’s been one of the biggest challenges we’ve tried to take on — how can we make sure we’re supporting our employees as people during this crisis.

How has our team tried to address those challenges?

Sarah: Thankfully, we already had a few key tools in place which helped make our transition much smoother. We already relied primarily on Slack for internal communications and had Google Meet in place as a video conferencing tool (much like other companies might use MS Teams and/or Zoom). Our task then was to figure out the best way to use those tools in the new environment. 

As the situation has evolved, our communication strategy did too. We started out with daily updates, and frequent opportunities for non-work connections, like virtual lunch-and-learns and happy hours. As it became clear that this crisis was going to be around for the near future, we adjusted that cadence. Right now, Brian Clark, our CEO and founder, provides company-wide updates three times a week. We’ve also created a handful of more long-term engagement opportunities, like Donut, an app that randomly pairs employees for get-to-know-you chats. 

The lunch-and-learns in particular have been a great way to showcase internal talent and maintain culture. We started with one hosted by teammates that were already exclusively remote, so they could share their best practices and answer questions. Brian also led a session on our company mission and values — something both helpful for our new hires and a good reminder for folks who have been with us for awhile. We’ve also had more social opportunities, including a magic show, a virtual Quiplash (a group game where players ask and answer fun questions) session, and a college spirit day. 

Are there benefits to a remote workforce?

Carrie: Again, it’s important to distinguish here between the benefits in a normal environment and our current one.

In a normal situation, there are a number of potential benefits for both individual employees and for the company. Employees can eliminate their commute and add hours back to their day. For some, depending on your home environment, working remotely can have fewer distractions than an office environment and be more conducive to deep work. And, of course, there’s also the general flexibility working from home can provide.

For companies, a remote workforce allows them to pick from a broader talent pool, rather than being limited to local candidates or those willing to relocate. Additionally, by having employees in different parts of the world, it can give your company coverage over more hours of the day.

Obviously, though, in our current climate some of those benefits are undercut. If you have small children at home, finding time for deep work is far from easy. But I do think one interesting benefit to come out is a renewed sense of community internally. We opened one of our virtual happy hours with asking people to tell us the worst job they’ve ever had and we had some really interesting, engaging conversations that probably wouldn’t have taken place otherwise.

What role does technology play in keeping a remote workforce connected?

Chris: Quite simply, you can’t have a remote workforce without tech. Here at Ascent, we rely on a handful of tools, including Google Meet, Slack, Miro (an online whiteboarding and collaboration tool), and Google Docs.

Another thing I think this crisis has really brought to the forefront is the importance of a stable internet connection. Being digitally connected is the fundamental aspect of collaboration right now. If you don’t have a stable connection, it cuts you out of the loop — whether that means you can’t access your work at all or you can’t fully interact with coworkers through tools like video chat.

But having the right tools is just a part of the equation. Just as important is how you use those tools. I think one of our strongest assets going into this was having a well established operating cadence. Having pre-existing status meetings, standups, and 1-on-1s helped prevent duplicating work and improved communication. Because that cadence was already set up — and because it was relying on digital tools, like Google Docs or Google Sheets and video conferencing like Google Meet — it helped create continued momentum as we shifted into a fully remote workforce.

Ascent’s technology is completely cloud based. What is that important — both for our customers and our employees?

Chris: Two of the biggest advantages are the flexibility and scalability it gives us. Leveraging cloud servers like AWS lets us serve companies around the world and frees us up to grow more quickly. Quite simply it allows us to keep our focus on what we are the best in the world at — building AI for regulatory compliance — without getting bogged down in logistical considerations that a cloud vendor is better equipped to manage.

Also, we’re seeing more and more of our customers moving to the cloud. Some are there already, some are still early in that journey, but cloud computing is so well established now that even many global banks are starting to make that transition. So creating cloud-based solutions helps us serve our customers better — either as they make those transitions now or for when they likely will in the future.

READ ARTICLE: “But Does RegTech Actually Work?” 3 Ways Financial Firms and RegTechs Can Bridge the Trust Gap

Modern challenges require modern tools. Interested in seeing how Ascent can help you identify your obligations and automatically keep them updated as rules change?

Contact Us

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Apr 23
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All Tech is Not Created Equal: The Difference Between “Top-Down” and “Bottom-Up” Automation

By Blog

An automation solution that’s not adequately aligned with your business needs or not properly developed can, sometimes, do more harm than good.

Technology is often touted as a panacea for our overloaded work lives. And while we at Ascent believe strongly in technology’s ability to help save firms time and money, we also know that not all technology is created equal.

An automation solution not adequately aligned with your business needs or not properly developed can do more harm than good. “Top-down” automation in particular can have significant consequences.

Below we break down the difference between “top-down” and “bottom-up” automation, define the risks that can come with top-down providers, and explain how to evaluate your options.

READ MORE: What are ‘granular’ obligations in RegTech?

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Top-Down Vs. Bottom-Up: What’s the Difference?

Imagine you are given a document about cybersecurity and tasked with analyzing how that document relates to your company’s cybersecurity policy. 

What do you do? Do you scan through the document looking for any mention of the term “cybersecurity”? Or do you read through the document thoroughly — sentence by sentence, word by word — in order to understand it as completely as possible?

These two methods can be seen as metaphors for how top-down and bottom-up automation approach the work of regulatory compliance. 

Top-down automation acts like a search, skimming through the document for a specified search term. The technology involved isn’t meaningfully different from that powering any website search bar. 

Bottom-up automation, however, uses natural language processing and machine learning models to analyze a document at a word-by-word level. Because of this, it’s able to extract a significantly greater amount of information from each document and to employ that information in many more ways.

RegTech providers often shy away from trying to develop bottom-up solutions because they can take years to initially ramp up and can require much more complex technology. But those that spend the time and are able to develop the AI end up with a far more powerful solution.

Bottom-up automation is akin to having a cybersecurity expert analyze that document for your company, while top-down is more like running a quick word search of it. One can provide a deep understanding of the material. The other can carry some hidden risks.

3 Big Risks with Top-Down Automation

Risk #1: Top-down automation creates more work, not less

The promise of any kind of automation is that it will reduce your workload.

In regulatory compliance, one of the most challenging aspects of compliance is analyzing the massive troves of regulatory documents constantly being released in order to determine which obligations apply specifically to your business. This process, if automated properly, can reduce a team’s workload by hundreds or even thousands of hours while simultaneously reducing risk and improving accuracy.

But, if automated improperly, tech providers can create the opposite result.

Rather than a select, curated list of obligations being automatically created for you, top-down automation tools can inundate you with a massive dump of results that may have only a tangential connection to your business. This happens because top-down tools return every result where a search term is mentioned — regardless of whether that mention is meaningful.

Ultimately, this adds yet more to the ever-increasing workload of Risk and Compliance teams, and further widens the trust gap many companies already have regarding AI’s capabilities. 

Risk #2: Top-down automation adds risk instead of reducing it

When teams are inundated with a massive list of “potential” obligations, it doesn’t just create more work for them. It can also create more risk. 

Let’s say a top-down automation tool provides you with a long list of search-based results. Combing through it, you realize the tool hasn’t actually streamlined your process because it hasn’t narrowed down your results at all. You decide to revert mainly to your historical, manual process, occasionally referencing the search results as needed.

But, if in your manual process you happen to miss an obligation, your top-down automation tool might have opened you up to additional risk.

Regulators, combing over the audit trail, might see that the missed obligation was buried in the massive list returned by the automation tool. Seeing this, and that the obligation wasn’t implemented, the regulator could conclude that your team disregarded it. 

This situation is far from hypothetical. Regulators are already going on record asking firms what they’re doing to leverage regulatory technology. As they examine firms’ use of tech, they likely won’t be considering whether firms chose helpful solutions or harmful ones — just whether firms effectively employed them.

Risk #3: Top-down automation undermines faith in the power of technology

Digital disruption is here to stay. 

Before the current crisis, implementing emerging technologies was a way to leverage a team’s time more efficiently and gain an edge on competition. Now, in our new tumultuous environment with its bear market budget constraints, it’s a cost-saving necessity.

But garnering executive buy-in for a new tech solution, uniting a team around it, and working through a successful implementation is no easy task. It’s made exponentially harder if the stakeholders involved have a fresh memory of a solution that didn’t live up to its promise and ended up wasting precious funds.

In pursuit of end-to-end compliance, teams will likely need to build a RegTech stack of multiple solutions — not just to stay ahead of the competitive curve, but simply to keep up with the pace of regulatory change. That won’t be possible if an institution has lost its faith in the power of technology because of a bad experience with a problematic vendor.

How to Avoid the Pitfalls of High-Risk Automation

To make sure your tech solutions actually act like a solution, we suggest the following:

Take time to vet providers. Learn about the technology behind the tools — whether its machine learning, natural language processing, or something else. The more you understand about how the technologies work, the more you’ll be able to evaluate whether they align with your goals.

Consider using a piecemeal implementation approach. It can feel like a real leap of faith to take on the cost and implementation of a new solution. But by beginning with the starter tier of a platform, you can see firsthand how the solution integrates with existing procedures, build faith in and support for the solution across the company, and see the cost-saving benefits in real time. 

Find a tool that can grow with your company. Part of finding the right tech solution is avoiding one that is too limited in scope. If you can instead leverage a robust tool offering a platform of solutions, you won’t have to rip out a more limited point solution a year or two down the road when the needs of your company have outgrown it. 

Ascent — AI Built from the Bottom Up

At Ascent, we’ve built a truly innovative, bottom-up, regulatory technology solution — RegulationAI™. This “digital brain,” trained on tens of thousands of lines of regulatory text and with hundreds of hours of human expert review, powers the entire Ascent platform.

Our machine learning models decompose regulatory texts down to their most basic units — line by line, word by word. This provides us with not just the “raw data” of a regulatory document but the connections between that data as well. Because of this, we’re able to map a company’s regulatory obligations with significantly more detail and accuracy than a simple search-based approach. We provide our customers not with a massive list of potential obligations but with a select list of requirements specific to their business needs.

READ MORE: RegulationAI™ – Why It’s Different

 

Modern challenges require modern tools. Interested in seeing how Ascent can help you identify your obligations and automatically keep them updated as rules change?

Contact Us


Apr 22
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Creating Regulatory Knowledge

By Blog

Every day in the world of regulatory compliance, humans create knowledge out of data. 

Risk and Compliance teams scan the regulatory horizon, gathering information relevant to their industry. Compliance analysts then assess those regulatory documents to extract the laws, rules and regulations within them, and then analyze those requirements to determine which might apply to their business. This manual process takes the raw data of regulatory rulebooks and other documents and, through hundreds of hours of hard work, turns it into knowledge.

Only then, finally armed with this knowledge, are teams able to begin the real, vital work of compliance — reconciling their obligations with their policies and procedures, creating controls, and implementing compliance throughout the business. This knowledge creation process is a necessary but tedious and burdensome part of regulatory change management.

And, in our current regulatory climate, it is increasingly impractical.

The Global Financial Crisis of 2007-2008 remade the financial services landscape and, in the process, ushered in a new era of regulatory oversight — one that moves at a superhuman pace. Rule changes have increased 500 percent in the last decade. In fact, a new regulatory update gets implemented every 7 minutes.

Historically, increasing personnel was the primary lever teams pulled in order to keep up with this breakneck regulatory pace. But the current global health crisis and its bear market budget constraints has made that option no longer feasible.

Instead, teams have to turn to the only remaining path forward: emerging technologies.

Regulatory knowledge automation is the process of using machines to complete the knowledge creation process. By leveraging next-generation technologies like machine learning and natural language processing, the knowledge creation work can be completed in mere minutes, at a fraction of the cost, and free from human-error. 

And most importantly, regulatory knowledge automation can liberate Risk and Compliance teams from the burdensome aspects of regulatory change management so that they can instead focus on the more critically human responsibilities of their roles. 

READ ARTICLE: What is RegTech and Why Does it Matter?

 

Automating Regulatory Change Management

Regulatory change management is composed of three stages, all of which can be simplified by emerging technology.

Stage 1: Monitor

In order to keep their finger on the pulse of the regulatory environment, track emerging trends, and identify new obligations and regulatory updates, Risk and Compliance teams have had to closely monitor the vast and fast-paced regulatory landscape.

Historically, this has meant that Compliance analysts had to become experts at finding any industry-related regulatory information and teasing out its applicability to their business. This process — often referred to as horizon scanning or regulatory monitoring — can be an extremely burdensome one, especially considering the high cost for a mistake. Like the proverbial needle in the haystack, any obligation missed among the thousands of lines of regulatory information could have severe consequences come audit time.

But, at root, this process is one of aggregation — something artificial intelligence has long since proved its expertise at. Regulatory intelligence tools now exist that can deliver up a comprehensive view of the regulatory landscape in an instant — taking human-error out of the equation and freeing up an analyst’s time.

Stage 2: Identify

Once the information has been aggregated in the horizon scanning stage, teams then have to sift through the vast troves of documentation to extract the laws, rules, and regulations within them — a complicated undertaking given the dense language and complex structure of these documents, and one that has to be repeated every time a new update is released.

This process had, historically, been the line in the sand for how automation could help with regulatory change management. A machine could aggregate the documents for review, but a human was always needed to extract the knowledge out of all that regulatory data. 

By leveraging natural language processing (NLP) and machine learning (ML) technologies, though, we at Ascent have been able to change this. It is now possible to fully automate the knowledge creation process of regulatory change management.

To understand how, we need to understand how the technologies involved function.

NLP is the combination of computer science and linguistics that allows computers to understand human language. In essence, NLP takes the dense texts of regulatory documents and “translates” them into machine-readable language. ML is the capability to “train” systems how to complete a task. Once NLP has translated regulatory text into something that can be read by a machine, trained ML systems can extract the rules and requirements from that dense text.

These technologies make it possible to automate the “identify” stage of regulatory change management, reducing a 100+ hour workload into mere minutes. 

They also revolutionize the third and final stage of regulatory knowledge creation: Analysis.

Stage 3: Analyze

Once the regulatory documents have been gathered and the laws, rules, and regulations extracted, teams must then analyze this inventory of obligations to determine which apply to their business.

This is one of the most complex parts of regulatory change management and — just as with the “identify” stage — it had previously been impossible to automate. But the same technology we used to revolutionize the extraction of laws, rules, and regulations from documents can be used to analyze those obligations.

Ascent’s RegulationAI™ is a true innovation in regulatory technologies. It uses neural networks — the same technology that powers image recognition software and self-driving cars — to automatically assess which rules apply to your business. RegulationAI™ has been trained not only to identify laws, rules, and regulations from within regulatory documents, but to also take those obligations, assess how they correspond to various businesses based on their business practices and regulatory burden, and then determine which obligations apply. 

RegulationAI creates knowledge out of regulatory data

RegulationAI™ is able to deliver up a complete list of obligations that are specific to your business in mere minutes, at a fraction of the cost, and free from human-error.

This liberates Compliance and Risk teams to perform other, more critical work, but — because the technology digitizes the regulatory documents in the process — it also makes it possible to improve processes that come after knowledge creation. 

With regulatory documents now in a machine-readable form, it is possible to turn those documents into searchable databases, to track changes and rule updates, and even to ingest the data from those documents into a workflow management tool or GRC so that teams can interact with them — marking them for review, sharing them with other team members, and more.

READ ARTICLE: How Ascent Simplifies Regulatory Change Management with Automation

 

Start unlocking the power of automation today.

Ascent’s regulatory knowledge platform offers AI-powered solutions for each stage of the regulatory knowledge creation process.

Regulatory Monitoring: Our regulatory monitoring solution allows you to view, search, and organize regulatory content from around the world, all in one place.

Dynamic Rules: With Dynamic Rules, you can examine rules relevant to you and instantly and easily identify changes.

Obligations: Our obligations management tool automatically generates your obligations for you, helping you build a sustainable, bulletproof compliance program that scales.

 

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Modern challenges require modern tools. Interested in seeing how Ascent can help you identify your obligations and automatically keep them updated as rules change?

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Apr 15
Love2

How to Win (and Fail) When Evaluating RegTech Solutions

By Blog

Compliance workers, financial advisors, risk managers, lawyers, regulatory consultants, and others who deal regularly with compliance all share a similar predicament: They bring a lot to the table in terms of expertise and experience, but are endlessly bogged down by administrative tasks such as scouring regulator websites and newsfeed to keep up with rule changes, or reading dense regulatory text to advise the business on what is required of them to stay in compliance.

The global pandemic has upended businesses across the world, and compliance leaders are now being asked to do more with the same — or reduced — headcount. As RegTech grows in both necessity and ubiquity, finding the right balance of in-house staff, contractors, and technology is more crucial than ever.

But the processes of evaluating technology providers and implementing new solutions are not easy ones. Some organizations work through them with great success — and others with great frustration. 

At a time when wins and failures have greater impact than ever, here are few examples of each to help you better plan your next technology implementation.

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Win: When Automation Empowers and Equips People

Risk and Compliance teams possess unique and significant expertise, so the point of bringing on new technology should not be to eliminate humans from the equation. Instead, it should be about determining how you can better leverage existing skills to drive better results. Where does technology fit, and where do humans fit? 

With the right balance, technology can transform once highly manual processes into ones of efficiency.

Fail: When New Tech Does Not Align with Business Objectives

Sometimes tech solutions are tasked with pie-in-the-sky objectives — which would require a significant investment and years of work to achieve (while in the meantime, most likely, new tech would appear that would offer a better fit). Other times it’s the opposite. Companies will sometimes onboard point solutions that hit only a very narrow need and that do not offer the ability to expand in functionality over time. This approach can be successful if the business does not expect this specific to evolve, but often the lack of apparent value weakens the case made for implementing it in the first place. The tool must then be ripped out and replaced down the road as business objectives expand beyond it.

This is why it the capabilities of any new tech should be as aligned as possible with organizational goals. Will the technology meaningfully automate an existing process where resources can then be redirected in service of a business objective? Do the right resources — both financially and personnel-wise — exist to make the implementation a success so the full value of the solution can be realized? Is the timing right for the business? 

Where implementations happen most successfully is when these questions have answers.

Win: Getting Buy-In from Senior Leadership

The opportunity to leverage new technologies can appear at any tier of a business — from a supervisor recognizing a way to streamline efficiencies as a team, to an analyst recognizing a routine task that can be automated. But for the application of technology to be successful, there needs to be buy-in from the top down. 

Leadership needs to not only recognize and believe in the value of a new solution, they also need to understand their role in helping to drive usage. When this happens, doors are opened for a successful implementation, and — even more importantly — culture is aligned around the importance and proper use of technology. 

READ MORE: How to Instill a Vigorous Culture of Compliance

Fail: An All or Nothing Approach

Too often, companies look at taking on a new technology as something that must be done completely or not at all. There are a few issues with this approach.

Even after thoroughly auditing a new solution, it can sometimes be difficult to know if it is a right fit for your processes until you actually adopt it and implement it. Making this a piecemeal approach, where you might implement one tier of a solution before taking on the complete version, can help make the process much smoother. You have an opportunity to gradually introduce automation into your workflow, increasing your understanding of its functionality and your trust in its capabilities.

Additionally, a piecemeal approach can make the price point less painful. Decision makers are likely more willing to sign off if this is the case, and you can begin to see the cost-saving power of the solution in real time.

Win: Thoroughly Vetting Tech Providers

The more you know about the solutions you are considering, the more you can accurately evaluate them — and trust that they work as advertised.

This includes educating yourself about how the technology works so that it does not seem like a black box. This also includes educating other stakeholders, so they can appreciate the total value offered.

Ask the vendor for references. Ask to speak to customers where the solution worked well — and where it didn’t. Ask for case studies and results that bear out the true cost-benefit. Ask to speak to the vendor’s product and operations teams. 

These questions are key to understanding at a hands-on level how the solution would fold into your team’s day-to-day activities.

READ CUSTOMER STORY: Global Top 50 Bank Achieves 99% Cost Reduction in GDPR Compliance

 

Stay Ahead of the Curve — And Your Competitors

The world will almost certainly be somewhat different after this crisis is over, but some things will undoubtedly still be the same. Organizational pressures will still exist. Competition will still be there. Companies will still see a need to be as efficient as possible. 

The right technology solution can help drive better response time to customers, optimize costs, open up new revenue streams, and create better processes to reduce risk. Consider taking the time to determine which solution is best for your business and your needs so you can stay ahead of the curve.

 

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Apr 15
Love2

Virtual Chat | In the Midst of Chaos: Shifting from Reaction to Recovery in RegTech

By Blog

Ascent teamed up with The RegTech Association for a joint Ascent Open House and #RegTechOpen4Business event!

In this video, Ascent Founder & CEO Brian Clark presents on “In the Midst of Chaos: Shifting from Reaction to Recovery in RegTech” and answers questions from the audience.

Check out the full talk above and be sure to visit our Open House page for more great conversations!

LEARN MORE: Ascent’s Open House: Socially Distant, Virtually Connected

 

 

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Modern challenges require modern tools. Interested in seeing how Ascent can help you automate horizon scanning, change management, and obligations management? 

Contact Us