Regulatory Change Management

A leading global bank sought to streamline its Regulatory Change Management (RCM) process to ensure compliance with evolving global regulations. The project’s primary goals were to establish a systematic, efficient way to manage regulatory change, integrate regulatory content into the bank’s governance, risk, and compliance (GRC) system, and enhance the process of identifying and responding to regulatory changes with greater accuracy and timeliness. The challenge also involved incorporating new technologies, particularly artificial intelligence (AI), to improve the bank’s ability to track regulatory changes across multiple jurisdictions and better understand the implications of those changes.

The scope of work focused on:

• Integration with GRC System: Implementing a streamlined regulatory change management workflow as part of the GRC platform.
• Content Sourcing & Ingestion: Establishing an automated process to ingest regulatory content from trusted sources such as Thomson Reuters.
• SME Workflow: Creating a collaborative review process for subject matter experts (SMEs) to assess the materiality of regulatory changes.
• Regulatory Inventory Management: Updating and maintaining the bank’s regulatory inventory, mapping regulations to associated risks and controls.
• Advanced Reporting: Developing automated reports for dissemination to other key functions within the bank, ensuring seamless communication of regulatory changes.

Additionally, the bank recognized the need to leverage emerging technologies to enhance the management and understanding of regulatory content, particularly Artificial Intelligence and Large Language Models (LLMs).

Delivery

Arrayo was tasked with overseeing the entire RCM transformation, focusing on the integration of both streamlined processes and cutting-edge AI technologies.

1. Systematic Regulatory Change Management Process
   • Regulatory Content Procurement: Arrayo procured a comprehensive regulatory feed from Thomson Reuters to ensure that the bank had access to all applicable content across its jurisdictions. The content was then ingested into the BWise GRC platform, creating a centralized regulatory repository.
   • SME Review Workflow: Arrayo’s experts developed a sophisticated workflow for SMEs to assess the materiality of regulatory changes. The workflow enabled the bank to classify regulatory changes as “material” or “non-material,” thereby prioritizing compliance efforts and minimizing resource waste.
   • Regulatory Inventory Updates: Whenever material changes were identified, Arrayo implemented a process for updating the regulatory inventory in the system. This allowed for real-time adjustments to reflect the evolving regulatory landscape, helping the bank maintain an up-to-date record of compliance requirements.
   • Mapping Regulations to Risks and Controls: Arrayo’s team mapped regulations to corresponding risks and controls, ensuring that all regulatory changes were directly aligned with the bank’s existing risk management framework. This alignment ensured that regulatory changes were appropriately mitigated by existing controls.
2. Artificial Intelligence Integration: Enhancing Efficiency and Accuracy
   • AI-Driven Regulatory Content Analysis: Arrayo’s consultants integrated generative AI and large language models (LLMs) into the regulatory change management process to improve efficiency. These AI models were tasked with analyzing large volumes of regulatory content to extract and summarize key information. AI-driven summaries helped the bank quickly identify the material aspects of regulatory changes across jurisdictions, reducing manual review time.
   • Change Tracking and Impact Quantification: Leveraging AI models such as GPT-4 and Claude, Arrayo created a system that could track regulatory changes over time, capturing nuances and identifying patterns. By continuously ingesting regulatory updates, the AI system helped quantify the potential impact of regulatory changes on the bank’s operations and risk profile, enabling more precise impact analysis.
   • Custom Fine-Tuning of AI Models: To optimize the AI’s ability to understand complex regulatory language, Arrayo fine-tuned the large language models (LLMs) with reinforcement learning and human feedback. This custom training process ensured that the AI models became increasingly accurate in interpreting regulatory content and providing insights.
   • Retrieval-Augmented Generation (RAG): Designed a retrieval-augmented generation model that combined AI-driven text generation with the ability to pull in relevant documents and data from the regulatory repository. This allowed the AI to provide contextually accurate responses to regulatory queries, reducing the time spent on manual research.
3. Automated Reporting and Integration with Other Functions
   • We developed automated reports based on the regulatory inventory and SME assessments, ensuring that critical information was disseminated across various business units, risk functions, and compliance teams.
   • By integrating these reports into the system, Arrayo enabled automatic notifications and alerts for key stakeholders, ensuring that no critical changes were missed.

Value Creation

The implementation of the new RCM process delivered significant value to the bank by:

• Regulatory Compliance Assurance: The bank’s regulatory inventory was consistently updated, ensuring that all changes were tracked and mapped to relevant risks and controls in real-time, thus reducing the risk of non-compliance.
• AI-Powered Insights: The use of AI to analyze, summarize, and track regulatory changes provided the bank with actionable insights, ensuring that regulatory risks were managed more effectively.
• Improved Cross-Jurisdictional Compliance: AI-powered tracking and summarization of regulatory changes enabled the bank to manage cross-jurisdiction and interagency regulations with greater efficiency and accuracy.
• Efficiency Gains with AI: The integration of AI into the process reduced the time needed for manual review and analysis of regulatory changes, enabling faster decision-making and a more proactive approach to compliance.