Compliance requirements are consistently growing for businesses across all industries, driven by complex regulatory frameworks, data privacy laws, internal policies, and more. However, few areas within an organization are as resistant to much-needed digital transformation as compliance functions. Relying on manual processes can lead to costly inefficiencies and fail to keep up with rapidly evolving regulations.
As highlighted in a 2020 Deloitte survey, 21% of respondents spent over 5% of their revenues on compliance activities, with 75% spending over 2% of revenues. Manual compliance processes soak up significant time and money while lacking consistency and accuracy.
The good news is that intelligent automation solutions can create accurate, insightful compliance capabilities that meet key challenges:
Key Compliance Challenges Solved by Automation
1. Ensuring Data Privacy and Access Controls
With intensifying data regulations like GDPR and CCPA threatening steep fines for violations, restricting data access is crucial. Automation delivers precise identity and access controls to stop unauthorized data usage. RPA bots grant data access by replicating employee behaviors without human fallibility. Sessions are logged for auditing and bots alerts appropriate teams upon detecting suspicious access attempts.
2. Monitoring Transactions and Detecting Anomalies
Organizations in banking, insurance, and other sectors requiring AML and financial crimes compliance depend on analyzing transactions. But unusual activity can be difficult to catch manually. Automation continuously crunches transaction data to spot outliers indicative of money laundering or fraud. Advanced AI actually learns what typical behavior looks like to identify truly anomalous events needing further review.
3. Streamlining and Improving Audits
Audits ensure compliance controls are working as intended, but assembling required data is time-intensive. Automation orchestrates data collection to accelerate audits and make them more repeatable. Bots gather audit evidence from systems and databases while AI adds analysis identifying potential control gaps. Audit reports can be instantly generated for reviewers.
4. Adapting to Regulatory Changes
Monitoring websites for each relevant regulatory body to stay current with new laws or modified guidance is an overwhelming manual task. Automation instead tracks regulatory sites, immediately conveying impactful updates to policy owners. With a clear understanding of new requirements, compliance controls can be promptly realigned.
Leveraging intelligent automation allows compliance functions to rapidly scale while managing complexity and operating costs. Let‘s explore popular techniques bringing accurate efficiency to critical compliance processes.
The Compliance Technology Landscape
Before diving into specific compliance use cases, it‘s helpful to level set on the key technologies driving modernization and performance lift:
Robotic Process Automation
RPA allows configuring "software robots" to automate repetitive, rules-based digital tasks. Bots interact via UI with multiple IT systems faster and more accurately than employees executing manual work.
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Global RPA software revenue is projected to reach $13.74 billion by 2030 according to Grand View Research. High demand stems from significant cost savings and productivity gains.
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Leading vendors include UiPath, Automation Anywhere, Blue Prism, Microsoft, SAP, and many others. Most offer cloud accessibility and low-code ease of use even non-technical users can leverage.
Artificial Intelligence and Machine Learning
AI encapsulates different techniques enabling technology to perform tasks traditionally requiring human cognition. Machine learning specifically involves algorithms that actually improve themselves by learning patterns from data rather than relying on explicit programming.
- Per MarketsandMarkets, AI software is estimated to achieve over 20% CAGR through 2027 as more sectors recognize game-changing potential. Over 40% of organizations already implement AI in some form.
- From chatbots to image recognition to predictive analytics and beyond, AI use cases now number in the thousands with leading options from heavyweight tech companies and innovating startups alike.
Data Analytics and Business Intelligence
Turning raw data into actionable business insights depends on analytics and BI solutions performing descriptive reporting, predictive modeling, data visualizations and more.
- The analytics market globally could expand at a 13.2% CAGR through 2029 as data proliferation makes insights a competitive necessity according to Verified Market Research.
- Long-time category leaders include Microsoft Power BI, Tableau, Qlik, Sisense, but newer entrants like ThoughtSpot show constant waves of innovation in analytics tech.
While still emerging for compliance teams behind the digital curve, intelligently integrating solutions across these areas unlocks enormous potential.
Automating Data Privacy Compliance with RPA
Maintaining rigorous access controls and preventing unauthorized data use is imperative for privacy regulations like GDPR and CCPA. RPA grants or denies access by emulating employee behaviors in data systems without human limitations. The advantages abound:
- Precise access provisioning and deprovisioning following policy – Bots flawlessly execute precise entitlement procedures where human errors lead to overly broad access.
- Comprehensive session logging and monitoring – All bot activities generating audit trails to detect suspicious access attempts and inform retries.
- Automating data requests and breach notification – Bot quickly facilitates DSARs and conveys breaches to regulators within 72 hours per GDPR.
A 2018 Blue Prism survey revealed 95% of responding organizations used some form of RPA to address GDPR specifically. Top use cases included automating Subject Access Requests, updating policies, and managing data inventories. 72% of respondents said RPA helped meet GDPR standards while reducing compliance costs.
With RPA managing data interactions, organizations can trust privacy compliance while better focusing talent on high-value tasks.
Monitoring Transactions for AML and Financial Compliance
Organizations in banking, insurance, healthcare, and other sectors with significant financial transactions require strong AML and fraud protections. But keeping up with continuously emerging criminal typologies can overwhelm human reviewers. Compliance automation leverages:
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AI uncovering truly unusual transactions – Self-learning algorithms understand normal behavior to precisely detect outliers needing examination rather than every slightly deviant transaction.
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Automating repetitive transaction monitoring – Bots seamlessly perform first-level filtering of transactions against watchlists and known red flags to escalate only transactions requiring closer inspection.
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Streamlining AML investigations – Automation gathers all relevant customer data into single review dashboards rather than investigators piecing together manually.
In an ACAMS survey of over 500 AML professionals globally:
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63% cited legacy IT systems and manual processes as top AML compliance barriers.
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65% pointed to improving technology and analytics as the key opportunity to strengthen programs over the next 2 years.
Applying intelligent algorithms and bots allows organizations to spot illicit activities amidst huge transaction volumes. Compliance teams can then fully concentrate expertise on the riskiest events vs. minutiae.
Improving Audit Performance Through Automation
Though imperative for confirming compliance health, audits slow operations while yielding inconsistent results. Automation fixes this through:
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Accelerated evidence gathering – Bots systematically compile audit documents and data from various systems for reviewer access rather than auditors chasing down information.
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Enhanced risk analysis – Automation analyzes the entire population of transactions rather than small samples to expose control gaps and true risk levels.
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Automatic audit testing – Bots repeatedly execute audit scripts for reliable controls testing vs. manual inconsistency. Tests occur constantly rather than waiting for annual audits.
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Instant audit reporting – Reports integrating all relevant data and AI findings generate upon audit completion rather than getting tied up for weeks.
A 2020 Grant Thornton study explored automation opportunities for internal audits, still heavily reliant on manual effort according to respondents:
- 92% say data extraction remains at least slightly manual
- 77% report audit work programs are manual processes
But those automating are seeing major efficiency dividends – 73% reduced audit costs by over 11% while 63% accelerated audits by over 11%.
Automating enables modern continuous auditing programs that boost compliance maturity while minimizing business disruption.
Overcoming Compliance Transformation Challenges
Given the enormous potential, why haven‘t more compliance functions embraced automation? Valid obstacles include technical barriers, unclear ROI, budget constraints, and challenges adapting legacy people/process/systems.
Blended workforce models with both bots and human staff helps smooth adoption by applying automation incrementally vs. revolutionary change. Consultants can also jumpstart by bringing process excellence and technology expertise.
Further, structuring smaller proof of value pilots demonstrates tangible ROI, typically around:
- 50-70% faster process turnarounds
- 60-80% capacity increases
- 30-50% cost reductions
Winning over skeptics becomes much easier with real measures from initial targeted automation of manual bottlenecks before expanding initiatives.
Proving quick wins also informs accurate business cases and budgeting for a broader program encompassing tools, training, integration, support etc. Assignment of an automation coordinator per business unit has also helped drive disciplined value tracking and change management.
Compliance Analytics and Reporting
Historically organizations take a reactive approach – pulling basic reports tracking lagging indicators around incidents, audit issues, policy violations etc. after problems manifest.
Modern analytics and reporting platforms enable more proactive monitoring with integrated visualizations analyzing leading drivers of compliance risk across the environment. Dashboard filtering allows drilling into anomalies, emerging trends, and control gaps needing intervention.
Increasingly, advanced machine learning techniques also drive predictive insights on vulnerabilities and non-compliant behaviors based on learned patterns. Combining reactive, proactive, and predictive intelligence provides complete visibility guiding precise risk mitigation.
Rather than awaiting delayed manual reports, automating reporting workflows produces self-updating dashboards always conveying latest compliance health as data refreshes. Scheduled distribution to executives and regulators further reduces administrative workload.
Orchestrating End-to-End Compliance Processes
Thus far we‘ve explored discrete applications of automation around key pain points like data management, audits, reporting etc. But the most mature organizations take an end-to-end approach tying together compliance controls into holistic automated programs.
Instead of addressing problems in siloes, RPA bots continuously gather compliance data from across systems into unified data lakes. This powers comprehensive analytics while eliminating blindspots between fragmented systems. AI and machine learning unlock deeper insights and more predictive capabilities from integrated datasets.
Further, assembling complicated manual processes crossing department boundaries into automated workflows accelerates execution. Something as intensive as compliance audits requires contributions spanning Legal, Finance, Operations, HR, IT and more. Robotizing orchestrates hand-offs between players so proficiencies compound rather than create bottlenecks.
End-to-end understanding and ownership of compliance processes is thus easier to embed within the organization rather than obscuring responsibilities. Combined datasets also feed straight-through processing minimizing touchpoints.
Compliance Automation in Action: Industry Case Studies
The above demonstrates automation aligning tightly to major compliance problem areas for businesses generally. Bringing the concepts to life, let‘s spotlight a few compelling industry examples:
Retail – Streamlining PCI Compliance
Retailers face steep penalties for failing PCI standards guardedly protecting consumer payment data. But constantly demonstrating compliance through external assessments and evidence documentation is labor intensive.
Fashion brand LK Bennett implemented an RPA solution automating these repetitive compliance processes. Bots now execute daily PCI scans checking security controls on over 160 retail sites and internal systems. The bots validate scan results, trigger remediation for any found vulnerabilities, and document conformance.
This automated approach reduced the time for producing compliance reporting packages from 4 weeks down to 4 hours. LK Bennett also projects over $3 million in PCI compliance cost reduction over 5 years from streamlined audits and avoiding potential card brand fines.
Finance – Monitoring for Insider Trading
Protecting market integrity depends on financial services firms detecting illegal insider trading amongst employees. Reviewing communications and activity across tens of thousands of workers requires vast resources.
NatWest Markets built an automated oversight solution combining AI communications surveillance with user behavior analytics and trade reconstruction. Continuous machine learning models uncover collusion risks as well as unusual trading not explained by market events. False positives reduce thanks to understanding baseline behaviors.
These intelligent insights accelerate investigations that previously took months to resolve manually. Hidden insider risks are also proactively uncovered rather than waiting for incidents. Industry estimates suggest insider trading may cost financial firms over $15 billion annually highlighting automation potential.
Healthcare – Maintaining HIPAA Security Standards
From small clinics to large hospital networks, healthcare organizations store highly sensitive patient information requiring diligent safeguards per HIPAA. Continuously demonstrating security control protections mandated by HIPAA is trying for resource constrained providers.
Automation delivers big wins assessing hundreds of security rules. Bots regularly validate controls across systems and proactively harden vulnerabilities based on threat intelligence. Automated dashboards centralize HIPAA compliance views including risk analysis and audit preparations. Healthcare providers reduce compliance team burnout through orchestration while ensuring continuously updated HIPAA postures.
Realizing the Full Potential of Compliance Automation
As explored above, intelligently applied automation aligns perfectly with the most intensive compliance activities draining productivity around data management, transaction monitoring, audits, and policy maintenance. Tactical wins fix specific pain points, but ultimately reimagining end-to-end compliance processes in a digital-first way realizes dramatic performance lift:
83% faster compliance processing via straight through automation minimizes manual effort while accelerating velocity. Compliance keeps pace with business innovation rather than dragging it down through outdated methods.
77% increased regulatory resilience emerges from holistic data-driven insights proactively uncovering and remediating control gaps. Predictive models based on AI/ML better match complex regulatory expectations.
66% improved compliance oversight continuous compliance monitoring through automation provides comprehensive visibility rather than periodic snapshots from manual assessments. Executive-ready dashboards convey transparent views for confident directing.
55% cost reduction by automating tedious repetitive compliance tasks allows re-allocation of savings toward elevated priorities like ethical business standards, risk strategy, customer focus and ecosystem partnerships.
Creating this future does require meaningful change management and visionary thinking as compliance teams overcome valid automation anxieties. But thoughtfully integrated automation solutions yield expert insights, confident oversight, and regulatory resilience – everything businesses expect from world-class compliance programs. The modern regulatory environment leaves no alternative but automation for sustainable performance and a culture of accountability.