A global bank is faced with a regulatory change somewhere in the world every 12 minutes.
I had, some time back, mentioned in one of my blogs that a global bank is faced with a regulatory change somewhere in the world every 12 minutes.
How can you possibly keep up with that pace of change? Maybe technology will help.
This year alone, we see a new direction in the UK’s payment structure, the National Payments Vision (NPV), alongside a revised Payment Services Directive in Europe (PSD3). I wrote about these regulations the other day, but they offer only a narrow view of compliance and regulation focused on payments.
If you look around, there are many more: Markets in Crypto-Assets (MiCA) Regulation, Digital Operational Resilience Act (DORA), Financial Data Access (FiDA) Regulation and the AI Act. And that’s just Europe. After Brexit, the UK has its own versions of these acts, while America is changing things dramatically with the GENIUS Act and now the CLARITY Act.
Every one of these creates another compliance workflow that teams must absorb: New checks, new reporting requirements, new monitoring obligations. And most banks are bolting each one onto systems and processes that were already struggling to keep up, raising a larger question around AI for regulatory compliance in banks and whether it can move beyond experimentation.
When Compliance Breaks Trust
It’s no wonder that things are hard for financial institutions. Because of their fear of having their licence removed, they often implement these regulations in a heavy-handed way, as evidenced by my recent experience with one particular credit card company.
In this case, tighter Know Your Customer (KYC) regulations led to the sudden suspension of my account, followed by a month-long process to provide documentation to prove my identity. The frustrating thing is that this is as much about how the bank operates internally as it is about regulation. Different systems, different teams, none of them talking to each other, and a simple identity check turns into a month-long ordeal.
A simple identity check turns into a month-long ordeal.
This is not unusual. In fact, it is something that is occurring more and more often and breaking customer trust. There are many online communities of people sharing how their banks closed their accounts without notice and, in some cases, kept the funds in those accounts, leaving customers unable to pay bills, buy food or live their lives.
It is unacceptable!
This is Not Just an Analytics Problem
The implementation of regulations, compliance, risk and customer journey has become a melting pot of issues that many institutions are struggling with. The question is: Could this be solved by the latest AI tools? Can they change how banks actually execute compliance and risk, not just the analytics, but the operational workflows underneath?
This isn't just an analytics problem. It’s an operational one.
Obviously, banks already have huge access to data. Not just internal data, but everything from credit scoring companies to corporate directories to media and social media. Could banks use analytics more effectively to mine these mountains of data? Specifically, could banks use data mining to deliver a better customer experience while complying with all regulatory requirements and managing risk?
The answer is yes, but it’s not easy.
Trust is the Real Currency
We work in an industry where the core principle is fides, trust. I learned this principle in insurance, where the whole industry is focused on seller, rather than buyer, beware. We talk about caveat emptor, buyer beware, as customers, but uberrima fides is the heart of insurance, seller beware. You have to be able to trust that the customer is telling the truth.
This means that the onus is on banks and insurance firms to increase their data-gathering capabilities to better trust their borrowers and insured, but in a way that is far less intrusive than arguing with the customer. This is one of the key benefits of AI in risk and compliance, wherein it can leverage the customer data the institution already has collected and make sense of it.
Data Fragmentation is a Key Problem
The issue with this is that most financial institutions have no idea what customer data they have, because it is spread across multiple systems built over decades and product-focused, owned by different business divisions. That fragmentation doesn't just affect customer experience.
Most financial institutions have no idea what customer data they actually have.
It slows down onboarding.
It creates blind spots in transaction monitoring.
It turns regulatory reporting into a manual, error-prone exercise.
Compliance teams end up firefighting across disconnected systems.
Increasingly, banks are realizing this isn't just an analytics problem, but an operational one. How do you connect KYC, transaction monitoring and regulatory reporting into a joined-up process rather than a set of disconnected tasks? I've seen firms like WNS helping banks do exactly this, joining up compliance and oversight workflows end-to-end with AI and shared data, so the whole chain actually works as one.
Banks That Join It All Up Will Win
The critical thing here is that rationalizing and consolidating customer data is only half the battle. The real differentiator will be the ability to connect compliance, risk and operational oversight around that data, turning fragmented regulatory processes into intelligent, joined-up execution. This will, in turn, answer whether AI use cases in banking compliance can scale across the enterprise.
The financial institutions that get this right won't just be more compliant.
They'll be faster.
They’ll be more trusted.
And they’ll be harder to compete with, demonstrating that AI can reduce regulatory burden in BFSI when applied to execution, not just analytics.
About the Author
Chris Skinner
Independent Commentator on
Financial Markets & FinTech
Chris is an independent commentator on financial markets, known for his blog TheFinanser.com and as the author of the bestselling book Digital Bank. He chairs the Financial Services Club and is recognized as one of the most influential voices in banking and FinTech.