It Takes Two To Tango: The Interdependence of Data and Technology

2018-September-18

Everyone’s talking about artificial intelligence and machine learning (AI and ML). But what’s often overlooked is the degree to which they depend on good data in order to be effective. It’s a symbiosis that is particularly relevant to compliance, where AI and ML have huge potential to reduce costs and risk. 

We recently published a whitepaper aimed at clarifying these “cognitive technologies” and illustrating how they can be applied in different business settings.

Let’s dig a little deeper and discuss the tight interdependence of data and ML in the context of anti-money laundering and regulatory compliance. As their name suggests, ML algorithms need to learn – a process that begins by “training” them on specific datasets. You can’t just use any data for this. It needs to contain the correct answer or actual outcome, otherwise known as the “target”. As the algorithms are run over and over, they find patterns in the data that map the input data to the target. The result is a “machine learning model” that captures these patterns and relationships, and can then be used to generate expected outcomes for new data sets. To recap, a truly accurate, trained model requires excellent data as well as highly advanced algorithms. Hold that thought for now.

Take a look at the financial services industry. Here, the continuing rise in both financial crime and government regulations means financial institutions need to know a great deal about the money they’re taking in and paying out. All of this screening and probing creates mountains of false positives, which are burying compliance departments around the globe. Naturally, firms are rushing to see whether they can apply AL and ML to relieve the pressure on their analysts and drive efficiency – while still maintaining a high level of protection.

However, many risk and compliance executives encounter solution providers that offer either the data or the algorithms, but not both. Data providers can deliver tremendous amount of raw material – about watchlists, sanctions, adverse media and politically exposed persons – to help provide deeper insight around potential customers and partners. However, without a true ML model, all of this data is just that. More data. And more data can create more workload, not less. Conversely, technology companies with powerful AI engines offer platforms that claim to be ready to dramatically reduce false positives, but their algorithms are completely untrained. For customers, this means a tremendous amount of work is needed just to validate that the resulting model is accurate.

So neither data companies nor AI engine providers alone can fully solve the KYC/AML screening challenge. Each brings half of the solution. But if you can apply advanced, purpose-built algorithms to great data, you have the answer.

This is what RDC does. Over the past 15 years, we have amassed the industry’s largest risk-relevant database with curated and indexed content, transforming it from raw data into highly tailored risk profiles. Our algorithms have also learned from one trillion screens. All of this data is fuel for the Compliance Cloud, a SaaS platform that leverages ML, natural language processing and neural networks to dramatically change how screening is done – reducing it to risk-tolerance matching based on mathematical probabilities.

By bringing together data (including the outcome or target data) and leading-edge algorithms purposely developed for KYC/AML screening, we can dramatically improve screening efficiency, eliminate false positives and improve the productivity of compliance analysts worldwide.

It’s a perfect illustration of how in compliance, perfect performance depends on two elements – data and technology – working together in harmony

11

October

2018

Eight Reasons Why Search Engines Are Not Due Diligence

By Michael Kerman | October 11, 2018 Search engines are free, easy to use and powerful. Could you use them […]

View more
11

September

2018

Combating Modern Slavery and Human Trafficking: What Financial Institutions Should Know

The issue of modern slavery continues to be a sensitive topic within the private sector. A lack of experience of […]

View more
03

August

2018

Using Cognitive Prediction to Confront Terrorist Financing

Traditionally, the approach to dealing with terrorist financing starts by breaking it down into two kinds of needs: supporting organizational […]

View more
24

July

2018

Tracking Risks Regarding Marijuana Related Businesses: Seed to Sale Monitoring

With conflicting opinions from state and federal legislation and limited guidance from the Department of Justice and FinCEN, financial institutions […]

View more

Best in Class Onboarding

Sarah Kocianski: Best in Class Onboarding | June 12, 2018 (A version of this article was originally published on 11:FS […]

View more
26

June

2018

Insurers turn to artificial intelligence in war on fraud

By Steven Melendez | June 26, 2018 (A version of this article was originally published on FastCompany.com) Using artificial intelligence […]

View more
26

June

2018

Modern Slavery Typologies for Financial Services Providers

by The Mekong Club   | June 26, 2018 This project aims to equip financial service professionals with an understanding of […]

View more
19

June

2018

Surfing Uncertainty To Confront Terrorism Financing

by Thomas M. Obermaier, RDC   | June 19, 2018 Keynote presentation to the FinTech FinCrime Exchange (FFE) in London, UK […]

View more