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AI tightens grip on European financial landscape – Ocorian

Many alternative fund managers are already using AI within their compliance and risk procedures


Pete Carvill

Alternative fund managers are increasingly willing to use AI as a part of their risk and compliance procedures, according to research by Ocorian.

The fund administration and fiduciary services business said some two-thirds of alternative fund managers had been using AI in this area for the last couple of years, with almost three-quarters (72%) of the remainder indicating they intended to start making use of the new technology within the next six months.

Of those who already use AI as part of their risk and compliance procedures, the survey also found, one in nine (11%) started doing so more than two years ago; more than half (55%) started two years ago; and a quarter (24%) started between one and two years ago.

“AI is revolutionising almost every aspect of financial services,” said Joe French, managing director and head of financial crime at Ocorian. “Our survey results show the majority of alternative fund managers have already been using AI within their compliance and risk procedures for around two years. When used for the right type of tasks, AI can transform the ability of over-stretched, under-resourced compliance teams.”

He added: “AI promises to create transformational changes in our industry but human input is going remain critical. Take algorithmic trading – the FCA require humans to intervene in machine processes for vital checks and to stop runaway errors potentially taking down global markets.”

Transaction monitoring

Ocarian’s research highlighted a number of areas where alternative fund managers think AI could be used to enhance risk and compliance procedures, including transaction monitoring (identified by 28% of respondents), staff filings (21%), internal capital and liquidity monitoring (20%), monitoring communications (19%) and financial promotions (13%). The company said the results were based on interviews with more than 100 “senior executives  regulation and compliance executives at alternative fund manager firms.”

Earlier this week, Euronews published a feature that considered how much value AI technology would inject into Europe’s financial landscape. The answer, it suggests, will be €11tn by the end of the decade, with 60 million jobs created by next year and the piece continued: “In a concerted effort to match global tech leaders, the European Union is intensifying its push to integrate and advance AI, with a particular emphasis on bolstering digital infrastructure and capabilities across its member states.”