Nine of the top 20 U.S. banks are using WorkFusion AI Agents to perform end-to-end processes in financial crime compliance (FCC) operations. At the same time, financial institutions in the EU and the Middle East are also leveraging WorkFusion AI Agents to align with both their own regional regulations and those of the U.S.
The question is, “Why did it take so long to adopt a technology solution that performs so well, streamlines FCC operations, and most importantly, turns the bane of the industry—reducing false positive alerts—into an irrelevant issue for FCC teams?” This post answers that question.
Almost nobody wanted to go first
Despite the successful use of machine learning and other early forms of AI within FCC operations technology, compliance leaders viewed the handing over of entire processes to AI as a risky move. Traditionally conservative by nature (and rightly so), few compliance leaders were willing to fully embrace AI, choosing instead to follow longstanding strategies of using Temp workers and outsourcing services to handle capacity fluctuations and shortfalls.
The influence of powerful outsourcing service providers
The practice of outsourcing FinCrime compliance operations has always been a losing proposition, for many reasons. Yet, perform a Google search on the pros and cons of FCC ops outsourcing, and you will see search results full of articles that convince readers that the pros far outweigh the cons. These “advice” articles are mostly presented by the largest, most powerful service providers. The message they eventually all come around to is this: ‘If your outsourcing services are not delivering their intended or promised ROI, it’s probably because you, the customer, failed to properly prepare to outsource.’ Talk about blame shifting.
But the reality is far different than that. Most outsourcing services fail to deliver for these reasons:
- Inconsistent service delivery
- Outsourcer not taking enough responsibility for risk, confidentiality, and security
- Lack of flexibility, leading to rigid contracts that fail to evolve with changing customer needs
- Use of overseas personnel, introducing communications issues, timezone problems, and nuanced cultural issues
- The need for continuous training in a high-turnover industry
The failure of outsourcing showed itself in the results of a recent Celent study of bank compliance programs, Technology Transformation in Financial Crime Compliance: Improving workforce efficiency to manage risk and add value. A full 77% of study participants said they were using outsourcing services in FCC operations, and yet, 2 out of 3 organizations only improved their workload capacity by a miniscule 5 to 25%.
So why did (and does) the outsourcing continue?
Simple answer: Fear, uncertainty, and doubt (FUD). The fact is, large and influential service providers have dominated industry thought leadership for years, and in turn, held sway over their target audience.
Service provider FUD was difficult to resist
The steady drumbeat of paid advertising and marketing content dominate the content to which banking compliance leaders are exposed. It almost became a kneejerk reaction whenever a bank had resource issues – “We need to get help from our outsourcing provider.”
The ECB (European Central Bank) raised the alarm about this overdependence on powerful service providers in its Supervision Newsletter of 21 February 2024. Here are a few of the ECB’s main points:
- “Supervised [financial] institutions need to tackle vulnerabilities stemming from their increasing operational reliance on third-party providers”
- “over the last three years 20% of non-compliant contracts have not been subject to a proper risk assessment and 60% have not been audited.”
- “This is a clear sign that the banks concerned are not giving sufficient consideration to their outsourcing risks. ECB Banking Supervision will follow up on this to ensure that these banks comply with the regulations.”
All that being said, we cannot blame service providers for performing their services the best they can or for selling those services to all prospects, whether they deliver ROI or not. That’s their business. No, technology solution providers also fell a bit short in alternative offerings prior to 2022.
Cobbled solutions used to reign
Prior to WorkFusion introducing AI Agents in 2022 (then named “AI Digital Workers”), the world had not experienced an AI Agent that could perform an entire end-to-end compliance process on its own. This left FCC leaders who wanted to use AI no choice but to cobble together their own blend of technologies – machine learning (ML), robotic process automation (RPA), intelligent document processing (IDP), etc. Even when it was all in place, such a solution still lacked exception handling, four eye checks, human-in-the-loop, closed-loop features, and automated narrative creation for audits and regulatory reporting.
Lacking a true end-to-end process solution, the AI story was a tough one for compliance leaders to sell internally.
The tides have finally turned with complete AI Agents
Today, AI Agent solutions from WorkFusion have not only caught up, but far surpassed the capabilities of outsourcers. Below is just one example. It is the AI Agent named Evelyn. Evelyn performs Names Sanctions and PEP Alert Review, reducing manual labor around alert reviews by 60-80 percent. She does this by automatically identifying and disposing of 50-70 percent of all false positive alerts.
The entire process, driven by Evelyn, is automated, incorporates humans in the loop as needed, and fulfills the role of an L1 analyst. Performing 60-80 percent of L1 analyst work delivers far greater benefit than the 5-25 percent which most banks struggle to receive from their outsourcing services. Not only that, but an AI Agent eliminates the need for ongoing communications and training, further reducing costs and valuable resource time.
By using AI Agents, 9 of the top 20 U.S. banks and numerous other financial institutions, including FinTechs, are saying goodbye to the following:
- Inconsistent results
- Expensive and repetitive training
- Servitude to market-dominating service providers
- Risk
- Service rigidity
In exchange, they receive a controlled, in-house solution that brings greater consistency, scale, and auditability to FCC operations.
To learn more, experience your own personal demonstration today.
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