The widespread accessibility of ChatGPT and other generative artificial intelligence (Gen AI) tools has brought forth a wave of innovation. With new AI models offering the ability to absorb boundless amounts of data to generate content, or parse through and analyze complex information to make predictions, the possibilities of evolving technologies are seemingly limitless. In the financial industry, these tools can support with processes like data analysis, risk assessment, and insight summarization.
Though the uncertainty surrounding Gen AI means that some firms are not yet ready to integrate it into business and compliance processes, employees may be eager to reap the rewards of advancing technologies, leading to the use of unapproved platforms.
To avoid the risks that come along with unmonitored use, firms should consider investing in Gen AI platforms and creating governance around these technologies to regulate their use within operations and workflows.
Integrate AI, or roll the dice
As we’ve seen with off-channel messaging applications use within firms – which has led to billions of dollars in fines – employees are likely to take advantage of whichever latest tools are available to increase productivity and maximize convenience.
A survey from Deloitte has found that, in the UK, nearly a third of employees who use Gen AI tools pay for it themselves. Of these employees, nearly half are using free publicly available technology to assist in their roles.
In addition to posing huge compliance risks by possibly compromising sensitive information, this means that copious amounts of data creation and analysis would be going unrecorded, which can lead to employees violating regulatory recordkeeping and data completeness rules. While Gen AI retention rules are being built out, it’s critical that firms maintain comprehensive records and data sets to satisfy regulatory expectations.
Considering that Gen AI only continues to grow in popularity, firms can take preventative, proactive measures to guard against the risks of unchecked evolving technologies by addressing and regulating them early and substantially.
Strike while the (A)Iron is hot
It’s easy to understand why firms are approaching AI with caution, as regulators themselves are still developing guardrails for these technologies. In our 2024 Industry Insights report, 42% of surveyed respondents said that they would integrate AI into their compliance processes throughout the year, while 57.4% said they would not.
Yet, as has been the case with modernizing messaging platforms, banning AI tools won’t effectively resolve the problem, and will likely lead to heightened risk as employees utilize the tools without data being recorded or monitored.
To avoid a situation where employees decide how AI should be used with no direction from the top, firms should invest in AI tools personnel are interested in employing, and build a framework for these tools to ensure they are used compliantly. By investing in new technologies and circulating well-developed, transparent governance dictating how to manage them, firms are in a better position to maintain compliance.
AI investment undoubtedly helps safeguard compliance and enhance employee productivity, though to maximize its potential, firms must address compliance challenges that contribute to uncertainty around its use. Alongside matters like data privacy and best interest standards, one major concern when approaching AI technologies is explainability.
Regulators have highlighted explainability in multiple statements, emphasizing the importance of understanding how the AI models a firm utilizes work. Firms must dedicate resources to building out robust policies that support all the tools their organization employs. In addition, it’s crucial to be able to rationalize how these platforms make decisions.
Further, weighing third-party solutions to store and retain structured AI data is critical. Data completeness is an significant priority, and as AI platforms are used more frequently to support business processes, information generated from those platforms will need to be captured alongside other critical data. Utilizing a provider that captures all information and securely stores it is key to meeting regulatory requirements and retaining a full audit trail.
Comply with GenAI
AI applications have transformative capabilities, making them a coveted tool for employees who want to optimize processes and workflows. For example, AI tools can be used for risk management to examine large amounts of unstructured data and offer insight by identifying trends that relate to fraud detection and misconduct. This allows compliance teams to notice potentially risky behaviors and flag them.
Due to its increasing prevalence, regulators are continuing to hone in on Gen AI. The Securities and Exchange Commission (SEC) recently released its 2025 Examination Priorities, which include an increased concentration on the use of evolving technologies like AI. For example, the priorities state when performing examinations, the SEC will confirm that AI capabilities are accurate and procedures are in place to supervise its use.
Clearly, Gen AI has already proven to be tremendously advantageous. With the copious amount of financial data that needs to be organized and analyzed, evolving technological platforms that support in managing information will change the industry as we know it. However, firms first need to fully embrace AI platforms and enable personnel’s use within operations.
