Artificial Intelligence and It’s Positive Impact on Risk Management

Use Case: Benefit of Artificial Intelligence technologies within the 1st and 2nd Line of Defences.

Terence Pong
November 23, 2021

Enhancing client experience, front-facing activities and operational functions are the drivers for financial institutions to permanently seek for improvement in customer journey and at same time new technology adoptions to reduce compliance costs. Automation alongside the value-chain, development of quality control and better risk management are also among others that drive financial institutions in their technology adoption. Greater focus onto risk management and high compliance costs have been a key trend observed in the financial world for the last years, due to the constant and numerous new or updated regulations to implement modifying framework asking the financial institutions to constantly (re)adapt themselves.

The importance of implementing those guidelines, circulars and new regulations the right way have asked the financial banks and especially the compliance function to revisit their traditional way of preventing and detecting risks within their organization: manual processes are higher source of operational risk and do not enable effective risk management,  for example fraud management. For instance, this can include  manual efforts that are required to listen to and analyse conversations through multiple and complex channels for first and second line of defences – be it an independent control function or a compliance/investigation department; where only a small percentage of the recordings are analysed.  


In financial institutions, inbound and outbound calls  still remain a significant channel by which client-facing staff interact on a daily basis with their customers. Those Interactions generate massive amount of unstructured data that needs to be analysed. Traditional processes incur in higher labour costs for a QA representative that can only monitor between 2-3% of the total calls. The risk of regulatory breaches with potential fines and lawsuits as consequence of not addressing a compliance issue in a timely manner are also challenges that financial institutions facing commonly.

The adoption of artificial intelligence (“AI”) has helped financial institutions to improve different functions from the front to the back office, supporting them into their daily risk management, and in the meantime having direct impact on increasing customer acquisition supporting the revenue growth. AI can help financial institutions on identifying possible risks much sooner and at the same time reduce processing time and costs.

Use Case: Benefit of Artificial Intelligence technologies within the 1st and 2nd Line of Defences.

With advanced AI technologies, calls can be imported from the recording system, for offline analysis and also for real time analysis. The system monitors all real-time call activities, enabling higher efficiency and better risk management enabling detection of any issue at an early stage but also more prevention within financial institutions.

Both approaches ensure 100% of the conversations are automatically monitored at a lower cost.

Quicker calls evaluation results for management easier review

Using Speech Recognition, Segmentation, Diarization (speaker separation) and other speech-related technologies, audios can be converted from speech-to-text ("STT"). With Natural Language Processing ("NLP") technologies, this component is able to understand and analyse the text generated by the speech engine, including intent classification, entity detection, text/speech pattern and sentiment analysis.

Use Case: Better control over compliance failures and risk management.

Contact centre managers don’t have the time to check through all the recordings and using speech analytics solutions can help the management to not only go through the calls, but also check the speech pattern and service behaviour of the representatives; which can greatly enhance their control over the service quality, compliance and risk management.

Below offline call viewer image showcase how management can have access to the calls’ transcriptions and at the same time access to the score cards results through the system. Managers can detect effectively where are the failures and just with one click the call section can be highlighted for further review.

Offline Call Viewer

Similarly, below real time call viewer image shows how management can view the real time transcription of the ongoing calls separated by windows, along with the agent name and ID. The system will alert the manager once failures are detected, so that the manager can address back to the agent right in the moment.

Real Time Call Viewer

Real Time Recordings Viewer

The results of STT and NLP will be passed to the scoring engine to see how much the call is compliant with the score card set up by the managers, spotting out which compliance sections need to be addressed properly and the areas where the agents are underperforming, to set up additional trainings to only those underperforming agents.

Reduction on customer complaint follow up costs and/or penalties from regulators can also be achieved as possible risks will be identified sooner with the automation of the process.

Real Time Recordings Dashboard

Risk and Compliance processes and operating model are being directly impacted by how technology can influence the way to drive decisions. Comparatively to few years back, the role of such technology is key in the day-to-day business of financial institutions: this enables to know their own business in a better way; moving from a reactive to a pro-active approach in how to perform risk management.

While cost of compliance has kept increasing due to permanent review of guidelines and/ or new regulatory agenda, financial institutions have been forced to adapt themselves quickly while technology helps to better manage complexity of risks. Technology appears as a key enabler to first lower down the cost & at same time identify & prevent some of the key risks be it internal or external.

Artificial Intelligence technologies within Risk Management & Compliance function has empowered them in managing their business & operational risks: technology and AI are seen as a game changer within Financial Institutions, pushing them to rethink how to operate more effectively. It is now more than ever becoming a value differentiation across the financial institutions on who will be better positioned from a technology and AI standpoint.

About Fano Labs

Fano Labs is an AI company specialised in Speech Recognition and Natural Language Processing technologies. Focusing in a variety of languages, dialects and mixed languages, specially Cantonese and languages in Southeast Asia. Our solutions help enterprises from various sectors with customer service, compliance and other lines of business.

Fano Labs’ solutions can greatly enhance service quality, by accurately identifying potential compliance risks while detecting and analysing the sentiment of the customers. Also, it will allow enterprises to reduce costs and uncover potential sales opportunities with valuable business insights.

For more information about our- solutions and organization, please visit

B. Eng (1997), Queen’s University. 15+ years experiences in contact center solutions. Worked in several international speech companies, specializing in NLP and analytics technologies.