Transforming the financial services industry with AI-empowered Embedded Compliance

Within the last few years, Artificial Intelligence (AI) has been gaining ground in nearly every industry, and the financial industry is no exception. Within their operations, some financial institutions are already using AI in use cases such as fraud detection and risk management. Moreover, AI-enabled compliance technology is most notable for automating repetitive tasks, making it a revolutionary tool for enhancing the customer experience in the financial sector.

Some key areas within the financial industry where AI is making significant impacts include:

  • Risk management: One major feature that AI tools possess is the capability to analyse historical data, market trends, and economic indicators. This enables AI to assist financial institutions in assessing risk and proactively putting in place risk mitigation measures.
  • Fraud detection: By implementing AI algorithms, fraudulent activity can be identified through pattern analysis of transaction data, user behaviour, and new changes. In addition, as a self-learning system, AI can recognise new data and flag patterns to protect financial institutions and their clients.
  • Customer service: Tools such as AI powered chatbots and virtual assistants help to enhance the customer experience. Many institutions are able to offer 24/7 customer support using these tools on their websites to answer customer inquiries and resolve issues, allowing staff to focus on more complex tasks.
  • Personalised investment advice: Robo-advisors are automated financial advisors powered by AI investment managers that can create and manage investment portfolios for customers. They provide digital financial advice and personalised investment strategies based on mathematical rules or algorithms to analyse individual preferences, risk tolerance, market trends, and financial goals.
  • Cybersecurity: Through continuous monitoring, AI enhances existing security measures and helps to quickly detect threats and anomalies, thus reducing the risk of cyber breaches and data theft within financial institutions.

Digital transformation and regulatory compliance

The regulatory compliance landscape for financial institutions demands a strict adherence to evolving rules that can be often a challenge to manage manually. With several firms embracing digital tools to transform their operations, staying updated with new regulations and cross-border compliance restrictions becomes simplified and sometimes even fully automated.

One such digital compliance tool is Embedded Compliance. Organisations recognise that compliance must be integrated into business operations from the start and at every step, rather than being an add-on.

At Apiax, we have developed Embedded Compliance to provide organisations with the tools they need to achieve compliance excellence and business growth.  The solution enables financial service organisations to break free from traditional compliance complexities and empowers them to do business with more clients in more countries, reduce regulatory overhead, minimise regulatory and reputational risks, and focus on innovation and creating great experiences for their customers.

Now, with the introduction of the Apiax AI policy assistant as an add-on to our Embedded Compliance tools, it signifies a significant leap forward for us and for our clients in their digital transformation journey.

Apiax AI policy assistant

Over the course of a year, the dedicated AI Lab team at Apiax has developed and introduced an innovative AI Policy Assistant. By providing precise and up-to-date answers to regulatory questions, these intelligent assistants are empowering compliance professionals to focus on strategic initiatives and enhancing overall compliance effectiveness.

The move from rule-based compliance to a generative AI-based framework

The Apiax AI Policy Assistant stands as proof to the power of AI in the realm of compliance and the transition to generative AI-based frameworks presents a pivotal moment for the financial industry. By embracing AI while maintaining regulatory compliance, financial institutions can enhance their compliance efficiency, foster innovation, and build trust with regulators and customers alike.

However, despite AI’s transformative potential, its adoption in financial institutions has been restrained by regulatory concerns. Regulators face the challenge of understanding and regulating the complexities of AI algorithms, emphasising the need for transparency and explainability in AI systems. This is crucial to ensure that AI-driven compliance decisions are fair, accurate, and accountable. Regulatory authorities would not accept a “black-box” system providing autonomous compliance guidance. Human review, for now, remains necessary.

Financial institutions that have adopted Embedded Compliance understand that it is an ongoing journey with challenges to overcome. Based on interviews conducted for our whitepaper, ‘Embedding Compliance Unlocked: Leverage AI-enabled compliance tooling now to be ready for 2025’, experts recommend a risk-based approach to transitioning compliance rules to AI-enabled policy. This involves prioritising high-risk business processes, where clear rules guarantee the highest level of compliance, while leveraging AI for lower-risk processes, such as employee trading restrictions.

To fully harness the transformative power of AI in compliance, financial institutions should embark on a strategic roadmap that encompasses:

  • Understanding regulatory requirements and expectations: This also includes implementing resources for the maintenance and review of AI-generated content.
  • Establishing a risk-based approach (best suitable use cases): Identify and prioritise the most suitable areas/use cases for AI integration in compliance.
  • Implementing robust explainability mechanisms: Foster transparency and accountability by ensuring that AI-generated compliance decisions can be explained and justified. Ensure full traceability of AI decision-making through an audit trail, facilitate the mapping of regulatory answers to their sourcing, and provide mechanisms for experts to review and verify the regulatory answers provided by the system.
  • Continuous monitoring and adaptation: Regularly evaluate the effectiveness of AI-powered compliance solutions, adapting them to evolving regulatory landscapes and business needs. This continuous monitoring ensures that AI remains a valuable and adaptive tool for compliance.


The shift to generative AI-based frameworks is a complex undertaking, requiring careful consideration of regulatory concerns, risk mitigation strategies, and the necessity for human involvement. Financial institutions that successfully navigate this transition will reap the rewards of improved compliance efficiency, innovation, and client trust. As AI continues to evolve, the role of humans in the compliance process will also evolve, transforming from rule-based enforcers to overseers and validators of AI-generated insights.

About Apiax

Apiax helps financial institutions to expand their business opportunities with compliance automation. Welcome to our blog!