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The BYOM Advantage: Maximizing AI investments in financial compliance

Vivek Shankar

September 30, 2024

Artificial intelligence (AI) has become more than a ‘nice to have’ for surveillance and compliance in financial services firms. As the world changes quickly, so do the requirements and capabilities for compliances teams. But the resources involved in mobilizing AI are significant—from a small army of data scientists to validating the models they develop within the firm and with regulators, it’s no simple, or fast, task.

Yet, a curious thing happens when you try to switch communications surveillance platforms: The models are left behind. Most vendors cannot help you deploy your previously created, existing models into their solutions. This disconnect creates significant challenges.

While sunk costs are the most apparent issue, this lack of vendor flexibility puts compliance monitoring programs in a tough spot—either firms keep their models or ditch them in favor of the vendor.

In this article, we explore why this lack of flexibility exists, its downsides, and the advantages of BYOM—Bring Your Own Model.

When vendor limitations undermine in-house innovation

Many surveillance platforms do not accommodate pre-built AI models due to a mix of operational challenges, a lack of incentive, the thought that in-house innovation undercuts the value of their models, and a view that ‘they know best’. Integrating custom models requires vendors to adapt their platforms and believe in the power of customers’ own detectors, potentially leading to ongoing support and one-off feature development commitments.

Given the historical state of model development within—or how model maturity is skewed toward—large banks, vendors may also believe that the demand for such flexibility is limited. Big, global banks get all the attention and if they’re not asking for it, then should it really even be prioritized? Vendors have long prioritized their own detection capabilities rather than incorporating previously created models for this reason.

But as AI and data science investments rise at Tier 1 banks, this view is out of sync with market reality. It only puts financial firms like yours in a tough spot—write off the valuable work you’ve finished or remain in a compliance monitoring gray zone.

One of the most immediate impacts is the potential loss of valuable risk coverage.

You’ve invested considerable time and resources in developing models tailored to your communications data and risk profiles.
These models are validated by auditors and regulators and may even be ahead of the curve in terms of detection capabilities.

Why would you discard these proven models for a vendor’s offerings? You’re going back to the drawing board and opening yourself up to gaps in risk coverage. Worse, you’re not starting from the ground up but customizing an existing model that may not be as fit-for-purpose as your in-house models.

Generic vendor models, while robust, may not capture the nuances and unique characteristics of your institution’s communication patterns and risk factors. They need extensive customization. Furthermore, adopting a vendor’s models kickstarts a comprehensive validation process—one you’ve already been through when developing models in-house.

This process can be time-consuming and resource-intensive, essentially requiring you to start your model validation process from square one.

Abandoning existing AI models has a human resource side effect, too. An inflexible vendor nullifies the investments you’ve made in hiring highly skilled data scientists. While these people can validate the vendor’s models, reallocating them to tasks that challenge their skill sets is tough.

As a result, data scientists hired to develop and maintain your AI models may find themselves sidelined. Firms need these AI experts and evangelists in order to move forward with regards to all AI and data science development—sectors where demand is only set to increase.

Sidelining these professionals not only represents a waste of specialized talent but can also impact employee satisfaction and retention, as these professionals often desire to apply their expertise and see the tangible results of their work.

A lack of vendor flexibility also creates a hidden opportunity cost: Your in-house models might be ahead of the curve when detecting specific communication patterns compared to the vendor.

As regulatory stances on AI change, your in-house models might put you in a better spot to react to those changes.

While the exact financial impact may be difficult to quantify, the strategic cost of falling behind the curve is undeniably high. In an industry where staying ahead is paramount, sacrificing custom-built AI capabilities could have far-reaching consequences that extend well beyond immediate budgetary concerns.

The advantages of model deployment flexibility

But what about the advantages of abandoning everything and starting anew? Let’s try an analogy.

Think of deploying your models with a new vendor as moving houses—while you’re excited about the new space and opportunities it presents, you don’t want to discard everything you’ve carefully curated over the years.

Consider your favorite, well-made couch. It’s comfortable, fits your needs perfectly, and has stood the test of time. In the context of AI models, these are the algorithms and detection systems you’ve developed in-house, tailored to your specific risk profile and communication patterns.

Just as you’d want to bring that reliable couch to your new home, your firm benefits from carrying over the proven AI models to a new surveillance platform.

This approach allows you to keep what works rather than starting from scratch. Your existing models have likely been refined over time, validated by regulators, and optimized for your needs. By integrating these into a new platform, you maintain continuity in your risk coverage while simultaneously gaining access to new capabilities.

This flexibility doesn’t slow the implementation process when working with a vendor. While there will always be some level of integration, testing, and validation required when adopting a new system, incorporating existing models can streamline this process.

Your team is already familiar with these models, understands their strengths and limitations, and can quickly assess their performance in the new environment.

Most importantly, combining your proprietary models with those offered by the vendor takes your surveillance to a new level. You maximize protection by leveraging your institution’s insights and the vendor’s broader industry expertise. You’re not forced to choose between your tailored solutions and the vendor’s offerings—harnessing the strengths of both.

Additionally, vendors have the ability to bring models to the table that can enhance your existing coverage by leaning into new techniques and leveraging your work.

This “best of both worlds” scenario positions you to address future challenges as technology and compliance needs evolve more effectively. Given the state of AI development, we might see easily tuned off-the-shelf models suit a firm’s needs. Model flexibility helps you preserve past work and keeps you open to future possibilities.

With the freedom to integrate, modify, and deploy models as needed, you can swiftly adjust surveillance strategies without being constrained by vendor limitations.

Bring-Your-Own-Model with Shield

At Shield, we firmly believe in the power of model flexibility. Our Bring-Your-Own-Model (BYOM) approach embodies this philosophy, offering a unique solution that combines the strengths of your proprietary models with our advanced platform.

BYOM helps you:

• Retain proprietary controls: Keep your risk controls and ML behaviors built on proprietary communications.

• Expand risk coverage: Incorporate your models into Shield and leverage our AI-driven controls for stronger protection.

• Expedite integrations: Seamlessly integrate with structured datasets like control room lists.

• Improve data integrity: Use Shield’s Data Hub, designed to enhance context and insights from capture to enrichment.

You’ve already done the work developing these models, don’t just leave them behind. By choosing a solution that respects your existing investments while offering advanced capabilities, you position your firm to meet current and future challenges. With Shield’s BYOM approach, you’re not just keeping pace with the industry—you’re staying ahead of the curve.

Learn more about what BYOM and our latest AmplifAI suite of tools can do for your communications surveillance program.