How Digital Labor is Transforming Regulatory Compliance

Posted on: October 18, 2016, by: Ann Kelly

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Today whether you operate in capital markets, banking, or the insurance industry, you need solid information to make decisions that drive a positive organization, stakeholder and customer outcomes.

The key to managing risk and improving ROI in a world where the amount of digital information continues to explode is dependent upon an organization’s ability to rapidly access, manage and make sense of that information. Unfortunately, it’s not that simple. Information is scattered throughout the enterprise, is not accessible and each department, group, and the project uses a language and vocabulary that is unique. The ability to create a common vocabulary, which can be used to apply the context and meaning to all enterprise information and leverage it to support regulatory compliance efforts is key to successful results.

Semaphore supports the concerns and requirements of today’s financial services organizations. Our ontology management, auto-classification, search and visualization tools help organizations create a culture of compliance that:

  • Provides a mechanism to secure sensitive information to comply with personally identifiable information (PII) requirements.
  • Creates consistent and transparent processes to audit and manage information that support records management policies and procedures.
  • Provides a framework that supports the rapid implementation of regulatory changes and addresses compliance requirements.
  • Reduces costs, time and resources associated with content-intensive business processes, eDiscovery, and litigation.

One customer leveraged the power of Semaphore in their technology stack to automate the processing of their information to comply with the Know Your Customer regulation.

As part of its consulting services, KPMG provides a client onboarding managed service for financial services customers who need to comply with laws and regulations. The client onboarding process can be a tedious, painstaking, paper-intensive, and manual process that often requires staff to read and analyze hundreds of thousands to millions of pages of information, depending on the type of client and type of entity they are on-boarding. The available information contains structured as well as unstructured content and customers range from small corporations to tier 1 banks.

The nature of the documentation varies; and might include articles of incorporation, SEC filings, such as 10-K reports, investor reports, fund handbooks, and trust agreements as well as others. Some of the documents are structured such as W-8 or W-9 forms that have predefined fields, boxes, and checkboxes, and others are unstructured and contain free-format text documents that don’t have predefined fields.

Typically, customers use manual processes to onboard their clients, which requires a large number of analysts, operators, and others who manually read each document and certify the content accuracy. This process is time-consuming, expensive and error-prone.

KPMG wanted to replace the extensive manual system with an automated solution that would decrease onboarding time, improve accuracy and reduce overall costs. KPMG implemented Smartlogic Semaphore as part of an onboarding managed service solution that started with either electronic or paper documents. Paper documents were converted to an electronic format using imaging systems and an optical character recognition (OCR) process. Then, KPMG’s solution used Smartlogic Semaphore to analyze and extract reference data from converted and native electronic documents. In essence, this system replaced the manual process of identifying and extracting the elements KPMG called “reference data.” The solution allows customers to set an acceptance tolerance to identify which documents should be verified by people during the client onboarding review process. This capability replaces the manual process with a semi-automated process, providing KPMG customers with an opportunity to significantly improve efficiency and accuracy.

To make the most of Smartlogic’s text analysis process, KPMG defined the types and variety of reference data needed for the onboarding process. KPMG uses industry, regulatory, and tax subject matter knowledge to identify which fields are required to meet regulations and then defines them and sends them to the Smartlogic system. Once identified, the system can extract those fields from the document automatically. The solution calculates a confidence rating for each extracted field and allows customers to set their own tolerance for flagging manual review items.

Today KPMG is reaping the benefits of the automated solution with an 80% reduction in onboarding processes (from 13 hours per client to 3 hours per client) without customization and the accuracy of the results is improved.

Semaphore is part of the Progress product portfolio. Progress is the leading
provider of application development and digital experience technologies.

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