9December 2022Andreas Uremovicaround breach monitoring and documentation ­ ie, for regulatory and audit purposes. To do this, it is necessary to address what may be the biggest drawback in investment portfolio compliance systems: the incomplete and inaccurate data that leads to large workloads and additional administrative work.This is where robotic process automation (RPA) can help teams cope with a high amount of daily data and investment guideline rule results from the compliance systems. RPA is a front-end, state-of-the-art automation technology that enables software robots to replicate the actions of humans. In this case, an RPA solution can be applied to the "ex-post monitoring" process, which consists of three parts: screening the daily alerts generated by the compliance engine; recognising and classifying breaches that match specific patterns; and initiating follow-ups for the latter.The application of RPA at Allianz Global Investors has significantly improved the accuracy and quality of this critical step. With RPA, the number of errors has been reduced and processing time has decreased ­ which has been particularly helpful during the heightened market volatility of the Covid-19 pandemic. Since its implementation at the beginning of 2020, our RPA software robot (or "bot") has reviewed some 100 data points daily. The bot covers 30 percent of potential guideline and data breaches, which are now classified automatically. With part of the guideline monitoring work now done by the bot, this leaves our investment portfolio compliance team with more resources to focus on a deeper analysis of data and other more complex tasks to support the prevention of breaches.Introducing this technology involves a new way of working ­ collaboration between bot and human. This in turn enables investment portfolio compliance officers to focus on and to support the first line of defence and build a resilient control framework. RPA and its underlying automation principles have the potential to redesign the compliance function's nature and generate tremendous value in the years to come.RPA implementation helps asset managers apply an agile implementation approach and become highly effective. Furthermore, the success seen now in this area gives asset managers the confidence to try similar collaborations between bot and humans to further automate other compliance areas.For example, Allianz Global Investors is looking into using our RPA bots with artificial intelligence tools to further evolve this technology. We are exploring how AI can help us automatically identify investment guideline restrictions that appear in the investment management agreements or prospectus. Then the software can assign this information to a specific investment guideline rule in the compliance system. The entire process can then be done much more quickly and accurately, while freeing up our team members to add value in areas that definitely need the "human touch".One of the key success factors for implementing this technology lies in the close collaboration between the business and technology sides at all levels ­ from sponsors to process owners to developers. But done properly, it is of great benefit to the entire firm, since productivity, efficiency and accuracy are all improved while reputational risks and financial losses are mitigated. There is no doubt that these types of automation solutions make investment portfolio compliance activities better at what they do.
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