Leading education provider Kaplan Professional and RegTech pioneer Red Marker believe greater collaboration across the Australian financial services industry will help financial advisers leverage the full potential of artificial intelligence and machine learning technology.
"The industry has been looking for automated compliance solutions for quite a while now and several vendors are developing them, which is terrific news," said Red Marker chief executive officer Matt Symons.
"However, there needs to be a mindset change in how artificial intelligence and machine learning tools can best assist the industry.
"It is important both dealer groups and vendors progress with realistic expectations, particularly around the 'pre-work' that needs to be done to ensure financial advice can become an ideal candidate for automated solutions.
"If the financial services industry wants to increase the likelihood that effective statement of advice (SoA) review solutions emerge at a faster rate, then we need to come together and collaborate … working together is going to be key to developing highly-reliable, automated review solutions," he said.
Kaplan Professional and Red Marker advocated that before the financial services industry embarked on this journey with advice review technologies built using artificial intelligence and machine learning, existing pre-conditions needed to be in place, including:
1. Expectations need to be managed – automated solutions will not be available 'off-the-shelf' to replace or meaningfully reduce the amount of supervision required.
2. Although significant training data exists, there are limitations, including:
a. Many files require optical character recognition, and the quality of data extraction is challenging for natural language processing and machine learning techniques.b. Regulations have evolved in recent times and what once might have been acceptable may not be any more, limiting the 'training' value of this data record.
3. The industry seems to be diverging, rather than converging on standard approaches to SoA construction, automatic programming language and product comparison logic.
Mr Symons added after looking at other industries where artificial intelligence and machine learning has unlocked meaningful productivity gains, there tends to be relatively stable, mature processes and standards that are well documented and consistently applied.
"Unless you have standardised inputs, you won't have standardised outputs," he said.
Kaplan Professional chief executive officer Brian Knight also pointed to the code monitoring scheme which will be mandated by the Financial Adviser Standards and Ethics Authority (FASEA) in the near future.
"With 1 January 2020 on the horizon, it is a suitable time for the industry to look to maximise the assistance of technology.
"Over the next 12 months, the industry needs to see this as an opportunity to be much clearer and crisper in its documentation and procedures.
"It needs to be down to the level where the industry can utilise these technologies to assist those on the frontline, while training the next generation and retraining existing advisers on their exact obligations," he said.
Mr Knight said Kaplan Professional will be leveraging its extensive and long-standing relationships with licensees to work towards a solution.
"We will be hosting sessions early this year where stakeholders from all corners of the industry will be invited to discuss and collaborate on a number of initiatives –
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