Where and how should financial institutions start the compliance automation process? Bank Automation News spoke with Pam Perdue, chief compliance officer at the $1.5 billion Heritage Southeast Bank for the answer, and found that it hinges on standardization and employee training. Here are the major takeaways from the Premium Plus webinar with Perdue.

1. Standardization is key

“The big challenge that the innovators face is that there aren’t specific prescriptions for how you do compliance work steps, and therefore it makes it very tough to automate — you’ve got to standardize before you automate,” said Perdue, who also runs her own regulatory and compliance consulting business, Perdue Group Consulting.

This lack of standardization has kept most institutions from implementing machine learning and automating compliance at scale. However, the industry is now beginning to adopt more user-driven rules engine technology, whereby banks use tools to gather individual transactional data and then run that data against rules engines to ensure they have complied.

For example, a bank could analyze a batch of conversational data from online chats between customers and virtual assistants or live agents. Along with natural language processing techniques, the bank could run the data against specific compliance rules to scan for anything said that may not have been compliant. This would allow for the bank to proactively police conversations at scale, rather than wait for the problem to happen, then have regulators or a customer complaint bring any lack of compliance to light.

2. Data vs. documents

Another key step in moving compliance into the 21st century with automation is adopting a shifting mindset around data and documents, which is especially true of the mortgage space, Perdue said.

“The [consumer mortgage] forms obviously are a lot more standardized than they might have been 10 years ago, but the industry is also starting to catch up to where banks and mortgage companies understand that what they’re looking at is a data point, not a document,” Perdue said.

A decade ago, the innovation was centralized around using a machine to analyze documents more efficiently. Now, the industry is beginning to make progress in infrastructure automation by validating data points between terminals or systems, rather than having a human intervene as the intermediary in that process.

As an example, Perdue pointed to the typical process banks and mortgage companies use to submit Home Mortgage Disclosure Act data, which is due to regulators March 1.

“When you unpack the cover of that container, of how they’re doing those data scrubs, they get a bunch of people to look at a bunch of documents in a bunch of image files,” Perdue said. She added that a data validation could compare the output to the loan application system input, eliminating the mass quantity of human effort that goes into checking documents.

3. Minding the gap

Finally, one of the biggest roadblocks on the path to compliance process automation is the knowledge gap, Perdue said.

“Even at the largest organizations, we’re still training people in traditional ways. We’re still treating compliance as an obligation, not a competitive advantage,” Perdue said. Staff readiness is a major barrier to adoption now, and it will take work on the part of both bankers and technologists to move the industry forward together.

Financial institutions should support and encourage individuals to climb the automation learning curve, in ways that will likely vary in approach, Perdue said. Generational differences aside, there will be differences in learning style, environment, atmosphere, conditioning, background, roles and responsibilities. Technologists, meanwhile, need to “come down to earth,” to find common ground with legacy and smaller institutions, and educate the market on the technology that drives efficiency, Perdue said.

“Automation doesn’t take away your job, it transforms your job, and we’ve got to do some cultural awareness to eliminate that fear,” she said.

Bank Automation Ignite, taking place April 13-14, 2021 as a virtual experience, is the event for inspiring automation initiatives and investment in financial services. Formerly the Bank Innovation Ignite conference, this new focus creates an event where financial services professionals can discover new use cases and technologies that are accelerating automation in banking. Learn more and register for the event at www.BankAutomationIgnite.com.