Why Financial Services Institutions are Leveraging AI to Streamline Marketing Compliance and Drive Growth
In an industry as competitive as financial services, the path to success – whether measured in terms of reputation, bottom line revenue, market share or customer loyalty – is forged in large part by banks’ and other financial institutions’ marketing programs.
Now, more than ever, there’s huge pressure on brands to become more targeted, more personalized, more timely and more relevant in their communications with customers and prospects. According to Accenture in Banking Customer 2020, customers will go anywhere they can find good value; over the last six months 27% of bank customers purchased or subscribed to a new financial product – regardless of whether or not the offer came from their current provider.
In the midst of these pressures, financial services institutions must continue to adhere to an ever-expanding array of regulations to ensure they operate in the best interests of customers and the institutions themselves. Institutions are being monitored more closely and a plethora of regulations are being enforced more vigorously than ever before by multiple regulatory agencies including the CFPB, SEC, OCC, FDIC, NCUA, as well as state and other governmental agencies. In some cases, fines in excess of a billion dollars have been levied and additional accountability measures have led to personnel terminations and the end of careers.
A Time-Consuming, Costly Undertaking
Complying with the staggering volume of regulations in the financial services industry is a time-consuming and costly undertaking. It requires the involvement of a small army of legal and compliance experts working seamlessly with their marketing teams and other colleagues across their organizations to review dozens, hundreds or thousands of outgoing communications and offers to ensure they are compliant.
Compliance teams often feel that they make the same changes repetitively and have become glorified copy editors. To ensure marketing compliance, financial institutions typically have to hire more staff or allocate additional resources to the effort. The cost of doing this is reflected both directly in their bottom lines, and in workflow delays due to increased manual review cycles. The current process involves mind-numbing human proofreading and referencing regulations contained in countless spreadsheets via back and forth emails. But, as one of our clients told us recently, “throwing more bodies at this problem isn’t cost-effective or efficient. It simply does not scale.”
On the other side, marketing teams often feel frustrated by compliance teams, as marketers think compliance teams place unfair limits on their creativity and add unnecessary back-and-forth review cycles to marketing programs – thereby limiting how many promotions and offers can be delivered to customers and prospects that could attract more deposits, increase the number of new customers, and grow other lines of business.
These differing perspectives on the marketing process inevitably lead to tension between the marketing, compliance and legal teams that takes its toll in the efficiency and effectiveness of marketing programs.
AI + Humans = Growth Potential
Employing process automation, augmented by Artificial Intelligence (AI) and Machine Learning (ML), dramatically increases efficiency while slashing costs. Leveraging the power and precision of AI and ML enables marketing, compliance and legal teams to collaborate efficiently and to execute more offers, faster, and in full compliance with all applicable regulations. Implementing AI, augmented with industry-specific compliance rules, can help financial institutions reduce tedious, error-prone manual review processes, and ensure consistency and accuracy across the entire marketing workflow.
Manual content change management, compliance, and legal review processes that once took days or weeks can be reduced to hours or minutes, reducing the bank’s regulatory risk and increasing its ability to reach more business targets with more offers more rapidly. Additionally AI enables institutions to centrally manage all compliance evidence in a single, searchable file system, and to demonstrate compliance using the built-in compliance reporting functionality, essentially providing a bulletproof audit history for regulators.
As an added bonus, talented and valuable marketing, compliance, and legal staff can be freed up to advance more interesting, pressing, and valuable work.
A Case In Point
One of Naehas’ clients, a bank with a large payment card business operation, has told us that banks have always known, at least anecdotally, that there’s got to be a better way to manage marketing collateral compliance than by having humans reviewing and passing materials back and forth. This senior executive said, "At least half of what most second and third line reviews do is black and white. It’s just a yes or no type activity. We knew we could use AI for these very basic reviews and then have people fine-tune them. That would allow us to free up people to focus on developing and growing new products and lines of business, which is a much more effective use of their talents.”
"At least half of what most second and third line reviews do is black and white. It’s just a yes or no type activity. We knew we could use AI for these very basic reviews and then have people fine-tune them. That would allow us to free up people to focus on developing and growing new products and lines of business, which is a much more effective use of their talents.”
To test that intuitive assumption, this operations executive pulled four employees off of the marketing collateral disclosure review team and shifted the work they were doing to Naehas’ AI product. This allowed her to re-deploy those employees to work on a new part of her organization with a great deal of growth potential. “We always look for opportunities to shift valuable resources to areas that will produce the best return on our staff investment,” she explained. And that’s what she did in this case. The result proved that not only was the AI product able to handle their work, but it did so with greater speed.
She added, “It’s not a matter of AI replacing people. It’s a matter of AI partnering with our people, backing each other up. We believe that’s the first foundational step to our being able to achieve greater speed-to-market without simply adding more and more people. After all, consumer compliance rules are not going to get any less complex, so we have to get more sophisticated in how we ensure compliance with those rules. And yes, using AI in this way keeps our costs down, but the regulators love it too, because I can demonstrate to them that AI increases our accuracy and consistency.”
“It’s not a matter of AI replacing people. It’s a matter of AI partnering with our people, backing each other up. We believe that’s the first foundational step to our being able to achieve greater speed-to-market without simply adding more and more people. After all, consumer compliance rules are not going to get any less complex, so we have to get more sophisticated in how we ensure compliance with those rules. And yes, using AI in this way keeps our costs down, but the regulators love it too, because I can demonstrate to them that AI increases our accuracy and consistency.”
The Only Sensible, Sustainable Path Forward
Over the past several years, Naehas has helped some of the industry’s largest and leading banks and other financial institutions automate complex marketing processes and resolve the marketing vs. compliance tug of war. We have seen that the application of AI to a variety of manual workflows has produced significant results: reduced risk, increased productivity, greater consistency, and improved auditability. Compared to the alternative strategy of simply throwing more bodies at the problem to ensure compliance, it’s clear that only by implementing AI can institutions meet their regulatory responsibilities while continuing to drive growth and enhance their brands.