A process can be improved when incremental changes help to optimize the existing processes. The changes involved have low business disruption and are mainly low risk changes.eg; automated data validation checks in  existing clinical trial data-entry system to reduce errors. Whereas re-imagine involves implementations of data transformation like creating data meshes or data products which often require changes in business model to redefine how work is done. eg; creating virtual replicas(digital twins) of processes to simulate and optimize real world operations in a factory.

KYC domain is composed of different process such as CDD (Customer Due Diligence), Transaction Monitoring, FATCA & CRS, and various Screening processes. All of these processes were aimed in combatting money laundering, terrorist financing, and other financial economic crimes.

 

I would like to focus on CDD process which is more complex of all other processes that requires comprehensive review of both onboarding and existing client profile, mostly private corporations and financial institutions. CDD review require investigation skills and technical mastery on Office Due Diligence, Name and Adverse Media Screening, Syndicated Lending, Corresponding Baking, etc. These reviews were rule-based in approach. At the end of this arduous process, the CDD Investigator need to make a decision whether to accept and/or continue doing business with the client – so long as the client is clean and is not potential FEC violator.

 

Overtime, Operational Excellence folks made various study to improve CDD’s processing time and they’d been quite successful on this journey. Meanwhile, understanding some AI solutions, applying the power of Expert Systems in AI will create a revolutionized solution to enhance the speed of processing, improve quality of reviews, while utilizing human resources on other valuable tasks - particularly risk-based decision-making approach.

 

Expert Systems in AI was designed to emulate human decision-making while leveraging on its components such as Knowledge Base, Interference Engine, and User Interface. CDD process have a wide range of repository of facts, policy, procedure, and rules as an input to Knowledge Base and through the Interface Engine logical rules will be applied suggesting whether the client under review is FEC compliant or violator. The User Interface is where the CDD Investigator gets the advice and will make a decision using risk-based approach.  

 

 

 

We go ahead with process improvement when we have a stable but inefficient  process, where we want to use lean/six sigma techniques to improve these processes

we use lean six sigma when we can identify gaps using traditional tools such as RCA, SIPOC, HLPM,, FMEA, FPY, Pareto, etc which can yield us incremental process optimization

 

We reimagine processes with AI when

1. Budget and client tech approval for AI implementation are available

2. We have exhausted gains from lean six sigma initiatives and traditional improvement techniques

3. Decision making steps which cannot be done by RPA ( pattern recognition/prediction etc.)

3.We identify potential to automate judgement based cognitive work which can be done by AI

A Process to be improved when the inputs, outputs & the metrics of the process is clearly defined, documented & completely understood. The errors or issues in the process are increasing rapidly without any specific patterns. Also, check if this process is the core activity of the operations and not having impact on the overall strategy of the Business.

 

On the other hand a Process can be reimagined with AI when the process performance is poor and we can’t derive any meaning insights from the data, where AI can be helpful in deriving patterns from the data. Also AI assist in processes where undetermined predictions to be made with complex decisions. Also, when we expect our outcomes to be a radical enhancements or breakthrough results in our process, AI will assist to have a game-changing impact. When your process is not so flexible for changes or contains more manual interactions or our regular Lean/Sig Sigma improvements are not providing results, we may look for AI solutions.

All the answers are a must read. Appreciate the respondents taking time to write good answers. 

 

The answer that stood out for me is from Kishor. Well Done.