How Big Data Analytics Is Transforming Regulatory Compliance
A new technology platform is transforming compliance at Credit Suisse into an intelligence-led, risk-based operation and driving significant gains in speed and efficiency.
Identifying suspicious transactions in a global bank can be like searching for a needle in a haystack. If performed manually, it is a slow and costly process. However, Credit Suisse is now using Big Data to glean insights from mountains of records collected across the bank and achieve a quantum leap in the way this and other regulatory compliance challenges are managed.
Since deploying its advanced data analytics and technology platform in 2017, Credit Suisse has generated a 45-fold increase in the number of productive alerts from its predictive monitoring of transactions compared to last year. Resolution of the alerts is 60 percent faster despite the volume of data, and the result comes at a fraction of the historical cost of such monitoring.
Compliance is a top priority
Achieving compliant growth is a core element of Credit Suisse's strategy. With a mandate to drive efficiency and effectiveness, a Compliance and Regulatory Affairs organization (CCRO) reporting directly to the CEO was created in 2015 and given independent central control across all businesses. The head of the organization, Lara Warner, has transformed the approach to compliance with a focus on two priorities: ensuring compliant growth within the divisions and well-managed risks across the company by defining limits for risk exposures, strong controls and technology-driven monitoring.
Over the past two years we have gone from a human-led approach to compliance, where we were carrying out periodic checks, to a technology-led approach in which we are continuously monitoring activities across the bank to enable earlier prevention and detection.
Lara Warner, Head of CCRO and Member of the Executive Board of Credit Suisse
From reactive to preventative compliance
The pool of data and advanced analytics accessible to Compliance teams via the platform comprises some 4,000,000,000 records. Crucially, the data is available and can be processed in real time so that risks can potentially be spotted before they can cause any harm.
Thanks to the platform, Credit Suisse now has visibility into the different relationships a client has with Credit Suisse, allowing international client assessments to be made 80 percent faster compared to last year. Potential clients with a government connection – so-called 'politically exposed persons' – are assessed approximately 60 percent faster at approximately 40 percent lower costs. A novel set of algorithms is able to identify patterns that are almost impossible for humans to detect – the so-called 'needle-in-a-haystack' challenge – thus significantly improving the way client risk is managed. Initially designed to spot patterns of money laundering, the technology is now being adapted to detect fraud and monitor transactions. Having a single tool also enables the compliance organization to quickly and efficiently respond to changes in the global regulatory landscape. Both quantitative and qualitative compliance risk factors are taken into account, allowing the bank to channel resources at short notice towards high-risk areas.
In addition to the data platform, Credit Suisse has been deploying software "robots" to carry out certain repetitive compliance tasks. One of them, dubbed "James the Robot", is used for suitability and appropriateness checks – to ensure clients are invested in the appropriate products. James conducts these checks 200 times faster than when they were done manually. The big increase in the number of checks performed represents a significant reduction in risk for the bank.
After three years of rising compliance costs at Credit Suisse, due both to new regulation and investment in technology, the deployment of the new platform and the use of data analytics in 2017 has turned the tide.
However, the digitalization of compliance is only just beginning. Credit Suisse will stay the course, and its goals for next year include changes that should help to bring the benefits of technology to clients, meet regulatory requirements, manage risks and support compliant growth – not to mention driving significant efficiency gains across the bank.