Automation, AI and People – The Cost of Controlling the Financial Crime Epidemic

Man v machine – the future.  The UK Office of National Statistics recently estimated that automation could cost the UK 1.5 million jobs.  How many of those will come from the Financial sector?  Despite what the UK Labour party says about turning back the clock and opening new bank branches, the digitisation/automation genie is now well and truly out of the bottle.  However, that does not mean “Robots Rule”.  Physical presence and the human touch are still differentiators in customer experience and that includes Financial services.


Despite what our geeky friends in IT will tell you, driving solutions from multivariate digital and data testing while keeping you safe in the middle ground, extinguishes creativity and original thinking.   It also limits social inclusion and personal responsibility - “the computer says….”.  The challenge is to reconcile the high touch low value output of humans with the need for high value low touch automation.  A good example of this is fighting the increasing incidence of financial crime by conducting AML checks for transaction processing where a poor customer experience can drive business away; man, or machine?


Robotic process automation, machine learning and AI are all moving rapidly forward.  The human elements of control and innovation are in danger of not keeping pace, stifling the benefits that can be achieved through automation through over control.  In a regulated environment such as FS, it is easy to see why with hefty fines and individual/firm’s reputational risks, people are running scared of their regulators.  The results are super cautious risk appetites and a reluctance to let the robots do anything without a human checking.  Checkers checking checkers ……?


So, what can be done to better balance the risks of automation (job losses and risk) with the customer experience needs of speed and safety?  As ever, there is no single silver bullet solution but rather a combination of actions.  It’s a team game.  Firm foundations are key to building any solution.  Regulators look for clear Risk Policies including a statement and justification of Risk Appetite to set the tone from the top.  Don’t forget the key word is “proportionate” despite the potential reputational risk mentioned earlier.  It takes strong leadership to overcome fear of the regulator. With these foundations in place, now we can use automation to help deliver.


On the team we need a straight through risk-based processing system that can score individuals and entities according to potential risk and risk thresholds.  The system needs to create actionable MI that is used not only to ensure system does not go rogue, but also provide Compliance with the wherewithal to apply the required controls in accordance with your risk policy and of course, the regulations.  And finally, and arguably still the most important, the people element.  Instead of 600 case managers, we need multi-dimensional compliance folks that understand not only the regulation but also the systems, and that have the experience to apply the right controls on MI.


When it comes to cost, which is more expensive – the systems, or the people, or the reputational risk and regulatory sanctions or loss of customers?  Unfortunately, it’s all four.  Cut back on one and for sure the others will suffer.  Salami slicing always results in death by a thousand cuts.


Altergaia believes that as with any epidemic, prevention is better than cure. This means early diagnosis with simple treatment is more effective than long winded interventions or drastic amputation.  For the Financial Crime epidemic, First Line of Defence are the Paramedics, Compliance are the Specialists and Regulators are the Surgeons.  Altergaia’s simple solutions tied in closely with CRM systems enable that early diagnosis so the first line of defence can move quickly forward growing the business.  It provides the MI tools for the specialists to apply their judgement and help the regulators with the history to justify their drastic conclusions.  While automatic diagnosis takes over  (this is already the case in Health Services AI), new roles are created requiring more skills and experience.  Skills are a result of good training and education but experience takes time.  In the meantime, reliance on tools such a Altergaia’s AFC suite provide a path to automated, effective and proportionate managing the risks of Financial Crime - for everyone.

For more information contact us






Altergaia Design