2021.07.27 news

Finding a Needle in a Haystack: Automate the Processing of Corporate Disclosures

In this article, we will be examining how financial firms and regulators can improve their compliance checking activities by automating the process of extracting and organising relevant data from corporate disclosures and other sources.

What Does Compliance Checking Mean for BFSI Companies and Financial Market Regulators?

Financial regulators are responsible for ensuring that participants in financial markets conduct business fairly. They work to investigate and prevent fraud and other activities which undermine the integrity of financial systems.

Regulators act as market gatekeepers — they carry out compliance checks to ensure that financial markets are only accessible to entities that comply with established requirements, restrictions, and guidelines. This helps to ensure that financial stability is maintained, market confidence is upheld, and consumers are protected.

To do their job effectively, regulators need to gather and analyse large amounts of data from a plethora of sources, including information publicly released by corporations, stock exchanges, and news outlets, as well as documents submitted directly to the regulators or held internally by regulated entities. One of their main sources of information is corporate disclosure documents like financial statements.

Likewise, companies in the banking, financial services and insurance (BFSI) sectors must regularly carry out internal compliance checks to avoid incurring penalties. This also involves collecting and processing large piles of data from internal and external sources.

The Challenges for Financial Regulators and BFSI Companies

For both regulators and companies, the compliance checking process can be incredibly challenging due to the huge volumes of data involved. Compliance teams must search numerous disparate sources for relevant data, extract the data, and organise and treat it so that it can yield useful insights. All of this can be very time-consuming and labour-intensive.

The process is further complicated by the fact that the raw data is often contained in different formats. Compliance teams may have to obtain information from web pages, PDF files, and internal databases, for example, and amalgamate all of the information within a single location.

These issues are especially problematic for organisations that are very large or have limited human resources.  

The implications for risk monitoring are significant — financial companies that don’t adequately address these challenges will not be able to spot potential compliance risks quickly and deal with them preemptively.

The good news is that artificial intelligence (AI) technology can help. Similar to what we covered in the previous article, AI can greatly increase efficiency in data collection and processing, making it easier to:

  • extract information from any text-based files
  • add structure to collected data
  • eliminate silo-based limitations on data and knowledge

    How an AI-Driven Solution Takes Corporate Disclosure Processing to the Next Level

    Information overload is a very real problem for compliance teams. Identifying and extracting relevant data from all the available sources is like searching for a needle in a haystack.

    Fortunately, AI can scan thousands of lines of text almost instantaneously and pick out the most salient data automatically.

    ScoutAsia uses the latest advances in AI to help clients minimise the amount of time and effort they spend on processing data for compliance checks. The platform’s inbuilt AI can be trained to recognise and automatically extract important information such as media mentions of individuals or organisations implicated in unlawful financial activities or specific line-item data from financial statements.

    Our platform provides clients with a highly customisable dashboard from which they can monitor information from multiple sources according to specific risk parameters.

    All of this allows financial firms to assess compliance risk much more quickly. This means that they can take a much more front-footed approach to compliance risk instead of simply reacting to events that have already occurred.

    Likewise, our AI capabilities help regulators identify instances of non-compliance quickly so that they can take action and minimise the damage.

    To learn more about how ScoutAsia can help you carry our compliance checks more efficiently, feel free to contact us for details about our risk management solutions and case studies.