AI has become one of the most powerful tools reshaping financial technology, yet not every process should be automated.
For those in RegTech particularly within governance, risk and compliance (GRC) functions, the question of what to hand over to AI — and what to keep firmly human-led — has never been more critical, claims ViClarity.
While automation promises speed and efficiency, the reality is that some compliance tasks demand the nuance, empathy and judgment only people can provide.
The nature of GRC is inherently careful and deliberate. These teams are tasked with ensuring organisational integrity, compliance, and financial soundness, leaving no room for errors driven by automation or misinterpretation. RegTech innovators are currently focused on improving efficiency in key areas like audit preparation, policy management, regulatory reporting and business continuity. Yet even in these seemingly ripe-for-automation workflows, human oversight remains essential — especially when decisions carry significant legal and ethical implications.
A prime example is the final approval of policies and procedures. Generative AI can serve as a valuable partner in drafting, editing and reviewing documents, helping to ensure consistency and regulatory alignment. Automation tools can also streamline workflows, from managing vendor due diligence to tracking compliance milestones. However, final sign-off must remain with qualified professionals.
The subtle judgements required — around tone, cultural fit, strategic alignment and board priorities — fall beyond the current capabilities of AI. Even the best GenAI tools risk hallucination or misalignment with institutional values, making full automation too risky for policy management today.
Similarly, interpreting new or ambiguous regulations demands human expertise. Laws and guidance documents are often intentionally open to interpretation, and applying them correctly requires contextual knowledge of the industry and a strong grasp of legal nuance. AI can assist by scanning for updates, alerting teams to new regulatory changes, and flagging relevant developments across jurisdictions. But determining their impact and ensuring compliance in specific organisational contexts still requires experienced GRC specialists.
Another key boundary lies in setting strategy and defining risk tolerance. AI-driven analytics can enhance risk discussions by modelling potential scenarios and offering predictive insights. Some systems now analyse third-party data to produce dynamic risk scores or forecast emerging threats. However, regulators increasingly insist that boards and executives maintain direct involvement in risk oversight and policy direction. In such cases, AI should inform rather than replace human decision-making.
Ultimately, AI’s role in GRC is best understood as a tool for optimisation rather than substitution. It accelerates processes, enhances visibility and reduces manual burdens — but the most effective RegTech deployments preserve human input where judgment, creativity and ethical reasoning are indispensable. As regulations and technology evolve, these boundaries may shift, yet for now, the most responsible GRC frameworks are those that keep people firmly in control of automation.
Copyright © 2025 RegTech Analyst
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