Startup by SIX Is Automating Compliance

Startups aren’t just for young people. Anyone visiting the F10 FinTech Incubator & Accelerator these days will see this preconception clearly refuted. The members of the core creative quartet behind JACOB have an average age of 48 years. Thibaut Rouquette, the senior innovation manager in charge, is nearly half the age of the oldest team member. That fits perfectly, though, because the corporate startup from SIX aims to combine new technology with decades of in-depth experience in regulatory compliance and business processes. The new technology is developed by Géza Mihala, a software engineer in the business unit Innovation & Digital of SIX, among others. The decades of experience come from Jacob Gertel. He is a senior content manager in the Financial Information business unit of SIX and has been extensively involved with regulatory compliance matters for more than a quarter- century. But that’s not the sole reason why he’s the project’s namesake and figurehead.

Knowing Your Data
JACOB, which stands for Jacob’s Automated Compliance Bot, was originally intended to ease the flesh-and-blood Jacob’s everyday work. SIX supplies high-quality data on over 70 regulations and tax codes with countless different country-specific peculiarities. Many of the documents underlying that data pass across Jacob Gertel’s desk. “The number of regulations has continually increased in recent years, and existing regulations can change at any time. I thought to myself that new technologies like artificial intelligence could help to keep our data always in line with current regulatory standards.” Almost as soon as he gave voice to that thought, he became test user number one.
 

Since Jacob Gertel’s everyday routine resembles that of every compliance officer in the financial industry, he identified a problem that clients commonly face. They, too, fight their way through a regulatory jungle armed with fluorescent markers and Post-it notes. They diligently highlight, annotate, and jot comments to gain an understanding of what a regulation means for their business and to become better acquainted with their data and the associated processes. “Today, knowing your data is just as important as knowing your customer,” Alexander Dorfmann says. The senior product manager in the business unit Financial Information of SIX leads the team developing JACOB and is in charge of matters that include setting its strategic focus. “Every company should ask itself what it wants to achieve with its data, what it’s doing with it.”

“Post It!” instead of Post-its
JACOB will help to answer those questions as a regulatory service and allow clients of SIX to further automate their compliance processes. For starters, it makes fluorescent markers and Post-it notes obsolete. Highlighting and annotating happen digitally. When compliance officers highlight a term or sentence in a regulatory document, JACOB provides them with a link to a field in his database. From the second highlighting of a text fragment onward, JACOB has learned, and can thus refine its responses. It then already knows the appropriate regulation.
 

Let’s say, that data on a structured product classify it as a “complex instrument” in accordance with the MiFID II regulation. Highlighting that term links the marked data field with the corresponding paragraph of the regulation. That link makes it easier for banks to analyze why they are only allowed to sell this product to a restricted set of private investors. But JACOB can also answer questions in the opposite direction, such as: What data of ours does MiFID II affect?

JACOB creates knowledge, and since that knowledge doesn’t exist solely in the form of Post-it notes, it can benefit a community. Besides digitizing regulatory knowledge, publishing and sharing it constitutes a second important facet: “Compliance officers aren’t all interested in the same aspects. They don’t even all have the same documents. We can complement each other and quantitatively take things to a new level,” Jacob Gertel explains. “Qualitatively as well,” Alexander Dorfmann adds. “The clamoring for standards is unmistakably clear. JACOB can contribute to uniformly interpreting regulatory texts.”

Here’s where commenting comes into play. JACOB allows text to be input during the setting of links. The community can then consult and discuss them. A TripAdvisor-style rating system is still a long way off, but highlighting, annotating, commenting, and analysis will already work in an early version of JACOB. It will make its debut in late May 2019 when the startup’s time in the F10 comes to an end. Early adopters on the client side will be testing JACOB extensively until then. By that time we’ll find out just how astutely Jacob the human recognized the challenges facing his colleagues in the financial sector, and how reliably JACOB the bot masters them.