The corporate regulator wants to use natural language processing technology to detect problematic financial advice and misleading internet advertisements for financial products, as it looks to artificial intelligence to identify misconduct which in the past could have slipped through the cracks.
Ahead of the annual regtech industry event this week, Australian Securities and Investments Commission commissioner John Price said there are plans to roll out the sophisticated technology systems that ASIC uses to monitor trading in financial markets more broadly. But data quality will need to improve for any AI system to become reliable, he added.
Armed with $6 million in new funding to experiment with regtech, Mr Price said ASIC is preparing a trial that will identify ways for the detection of misleading promotions via internet banner advertising to be automated. Given a lot of internet advertising is served to viewers based on browsing histories, ASIC has been concerned it is not seeing the full gamut of online promotions for financial products. It reckons AI could help it monitor content more broadly by teaching its systems to look for particular words, or excessive rates of return, that then throw up red flags for ASIC investigators.
ASIC Commissioner John Price. "We want to show a leadership role by using regtech ourselves." Ryan Stuart
"Promotions can be just as important as selling through a prospectus, and we can look for excessive promotion of benefits without sufficient talk about risks," Mr Price said.
ASIC also wants to develop AI systems to read financial advice. He said it is preparing to host an event with regtech start-ups that will provide them with ASIC data to develop systems that can read statements of advice and spot disclosure problems. This will help improve ASIC's regulation of the advice sector in the wake of the banking royal commission.
ASIC is also using natural language processing to monitor insurance sales teams' calls, and Mr Price said compliance departments in advisers should consider doing the same to ensure they are responding to risks as they emerge.
ASIC is also preparing to put out a tender for a law firm and technology firm to design user-friendly guidance on small business licensing and Mr Price said natural processing language applications could be deployed to help small businesses navigate complex legal regimes and reduce their compliance costs.
The AccelerateRegTech event this week in Sydney is expecting 300 delegates. The local RegTech Association now has more than 100 members, including US technology giants Microsoft and Salesforce.
Mr Price said the biggest challenges for the emerging sector is the quality of data. "What natural language processing does not do is transform poor-quality data into high-quality data, and that's a challenge not only for us but the industry more broadly," he said.
"For regtech to reach its full potential, it needs to be focused on making high-quality data in sufficient quantities."
At Ausloans Finance, we specialise in Digital Marketing and able to execute, track and control the messages across all platforms. We help you capture your sales pipeline efficiently and confident in delivering returns back to your bottom line. For more information please contact Ivan Lovos on 0423 082 767.
*article original published at The Australian Financial Review