With regulations on banks and financial institutions (FIs) continuing to increase and expand, compliance operations teams want to hire and/or retain high numbers of analysts. But doing so is difficult. In a recent LexisNexis® Risk Solutions study, The True Cost of Financial Crime Compliance, 6 out of 10 US and Canadian firms say they need more skilled compliance professionals to address their lack of FinCrime operations scale. In the same study, 85% of firms across the US and Canada cited ‘Growth in Volume of AML Activity’ as a top concern.
What makes it hard to retain analysts? Consider, for example, the Name Screening Alert Review process for Level 1 (L1) analysts. They must review alerts identified by screening software, clear irrelevant false positives, perform light research, and escalate any results that appear to have associated risk. The tedious nature of these tasks can frustrate any young, aspiring professional. For, while there are some instances that require compelling investigations to identify adverse entities, they are rare compared to the massive volumes of false positive alerts. So, banks and FIs have maxed-out staffs laboring at an intense pace on uninteresting tasks. This leads to a high and expensive attrition rate – typically seeing L1 AML/KYC analysts depart after just 12 months, despite going through a 2–3-month onboarding and ramp-up process.
Some organizations have attempted to address the capacity-attrition conundrum by tuning their screening software to reduce the number of alerts. However, they quickly find that their screening and alerts review begin to miss critical things. This forces them to revert to their old ways and attempt to scale up staff to meet demand in the face of high turnover rates. The cycle continues with more people performing more uninteresting work, followed by mass departures, new hiring, onboarding, etc. In such an environment, an AML/KYC team of 10 full-time L1 analysts needs to continually hire to over-staff, raising the staff level up to 13 people in some months, and average approximately 15% more employee cost than they would have with a consistent, stable team. The alternative is to cap the team at 10 full-time employees and simply react to each employee’s departure as it occurs. Yet, this approach risks a frequent dip to 60–70% capacity and relies on temporary, costly solutions like hiring external contractors, borrowing hours from other teams, or even pulling in management personnel to help.
Following are five knock-on effects of the capacity-attrition problem:
- New employees aren’t as productive and make more errors than experienced counterparts.
- High attrition rates cause inconsistency in terms of capacity and output.
- Fluctuating L1 analyst team size makes planned growth difficult to achieve.
- The difficulty of meeting known business demands makes responding to unplanned events nearly impossible.
- An unplanned government memorandum or any delay in the process causes a backlog, adding to work queues and creating more risk of attrition and erroneous reviews.
Leverage AI to fix the situation
AML/KYC compliance operations leaders should look holistically at the work which L1 analysts should really be doing. It should routinely involve high-value, complex tasks instead of the tasks which AI-based technology solutions can perform today. As an example, our AI Digital Worker, Evelyn, can automate many of the time-consuming, error-prone tasks related to adverse news and sanctions alert review. Evelyn accurately reviews and dispositions false positive alerts at superhuman speed, allowing compliance teams to identify true potential risk faster and with greater accuracy. These interesting and compelling cases get passed to L1 analysts, reducing their rote work and making their jobs more fulfilling. From there, the benefits to the bank or FI cascade:
- Lower staff turnover reduces the need to hire and onboard continuously.
- Stable staffing brings more consistency and reliability to the AML/KYC program.
- Leveraging AI helps increase capacity without incurring more salaries
- AI-driven automation performs with consistent precision and agility throughout each day.
Pre-built and delivered out-of-the-box , AI Digital Workers like Evelyn are specifically designed to alleviate capacity and attrition issues by directly addressing the major areas of FinCrime compliance, including AML/KYC operations.
AI Digital Workers transform compliance work by not just incorporating rules for rote comparisons, but also by collecting data from additional internal and external sources, enabling requests for additional information direct from customers, and leveraging machine learning to train on all available data. In the end, a compliance program can reduce by 60–80% the volume of false positives identified by sanctions screening tools, reducing the level of manual effort by 50–70% and delivering substantial capacity growth.
Among our customers, we routinely see the combination of AI and automation reducing attrition rates by approximately 50%. This longer-tenured staffing situation directly eases the burden on management, quality assurance, hiring, onboarding, and staffing – all significant factors to increased capacity.
To see Evelyn or any of our other AI Digital Workers in action, click here to request a demo.