Regulatory Compliance Costs

Financial institutions are highly dependent on evidence-based decision making. This has a reliance on a constant application of internal policies; these are based on external regulation(s) and are related to the business outcomes sought around customer acquisition and the envisaged transactions. Policies are used to create and present a rationale; through the collation of information, evidence gathering and an appropriate investigation. This creates an information channel.

Application of Semantic Web techniques and Linked Data principles to improve the value of the data associated with ‘know your customer’ due diligence.

The general approach of vocabulary development and application through Semantic Web techniques and Linked Data principles has value in many areas where complexity of regulation is high and consumer engagement is sought. This is because standardisation of referenced-terms improves the search and discovery of information at both a human and machine level.

Using Semantic Web techniques and Linked Data principles a unifying vocabulary can reduce internal-frictions and costs. Data can be retrieved from ‘siloes’ (internal and external) through a standardised language which is contextually ‘normalised’. Consequently the data can join a coherent and contiguous knowledge-platform.  This can offer many benefits to a range of internal and external stakeholders across many settings.

For example, this can help employees make safer and quicker decisions; so that junior staff can ask questions about compliance procedures and receive informed advice via an ‘intelligent’ system. At a group level it creates transparency, enhances operational efficiency and improves internal and external reporting.

Financial institutions are highly dependent on evidence-based decision making. This has a reliance on a constant application of internal policies; these are based on external regulation(s) and are related to the business outcomes sought around customer acquisition and the envisaged transactions. Policies are used to create and present a rationale; through the collation of information, evidence gathering and an appropriate investigation. This creates an information channel.

Financial Industry Business Ontology (FIBO)

The process can be improved with the assistance of a common (standardised) vocabulary which is ‘standards compliant’ as access across the information channel becomes more transparent, available for machine-based processing and this creates opportunities for improvements in reporting and efficiency savings.

A standardised vocabulary is a set of terms and facts which express concepts within a body of shared meaning. This assists the reconciliation of inconsistencies in data stores and supports the redesign of software; underpinning the design of information systems to improve the efficiency of capturing meanings and rules.  This can reduce the costs associated with the misinterpretation and misapplication of regulatory and governance policies, categories of risks and supports the compliance imperative.

The Financial Industry Business Ontology (FIBO) offers a robust and dynamic semantic model which improves the easy understanding of relevant data for faster and cheaper integration and analysis. This is an industry led initiative to define financial industry terms, definitions and synonyms using Semantic Web principles and moves organisations from the age of data siloes’ towards connected intelligence.

“FIBO presents the facts about financial instruments, business entities, loans, market data, transactions and corporate actions in a technology-neutral format along with precise definitions and defined business relationships. The Open Source FIBO initiative standardizes the language of financial contracts and promotes unambiguous shared meaning among all participants in the financial industry. FIBO and the Council's overall semantics initiative are based on the legal structures and obligations contained within the myriad of contracts that form the foundation of the financial industry. The Council has now constructed this content into a business conceptual ontology that formally models the reality of how the financial industry operates.”

(REF - Finextra: ‘EDM Council scores top hack at 2013 Ontology Summit’, 12 June 2013.)

This allows advanced search and discovery within documents using NLP (Natural Language Processing) to identify contextual information such as relevant people, places, organisations and concepts. Viewing references related to the content dynamically through this kind of assistive technology creates analysis capability within a bespoke interface which enhances the rationale for evidence-based decision making for ‘know your customer’ due diligence across the information channel. This ‘knowledge’ platform allows the development and distribution of an API; so many consumers can benefit as multiple applications can be dynamically driven and scaled through a single set of references. Innovation can come from internally driven new product development as well as from 3rd-parties.