How Generative AI Can Help Banks Manage Risk and Compliance

In today's rapidly evolving financial landscape, banks are under constant pressure to navigate new and complex regulatory environments.

However, with the evolution of generative AI, banks can use the technology to help them overhaul their processes.

Here are five emerging applications within Risk & Compliance for banks, according to McKinsey report “How generative AI can help banks manage risk and compliance”.

Regulatory compliance: Use gen AI as a virtual expert to answer questions on regulations, company policies and guidelines.

Financial crime: Generate suspicious activity reports based on information about customers and transactions.

Credit risk: Summarise customer information (for instance transactions with other banks) to inform credit decisions and use gen AI to help accelerate banks’ end-to-end credit processes.

Modelling and data analytics: Gen AI can accelerate the migration of legacy languages and automate the monitoring of model performance sending alerts when metrics fall outside of tolerance levels.

Cyber risk: By checking cybersecurity vulnerabilities, gen AI can use natural language to generate code for detection rules and accelerate secure code development.

Gen AI has great potential to transform risk and compliance management in banks by enabling them to manage risk proactively and ensure regulatory compliance.

Source: McKinsey