Two of the Nordics' biggest banks, Nordea and Danske Bank, expect to significantly reduce the number of staff employed in its compliance and financial crime departments and instead turn to robotics and artificial intelligence.
The comments, which were reported by Bloomberg, follow a recent hiring spree by both banks which has added hundreds to their respective compliance departments. However, both Nordea and Danske, have said that the additional headcount will be temporary and will be sizeably reduced due to the greater use of robotics and AI technology.
Nordea's head of financial crime prevention, Mikael Bjertrup, said that the bank currently uses alogorithms and machine learning to identify and close suspicious transactions but the majority (80%) are still handled manually. Given the increasing volume of transactions and the need to monitor and report more transactions due to regulations like MiFID II, the use of manual processes continues to be a source of inefficiency.
Consequently Bjertup is looking to reverse the ratio of manual handling of transactions monitoring so that 80% are managed by algorithms.“We’ll be fewer people in the future, but our defense will be better,” he told Bloomberg. “We won’t need as many as 1,500 employees in the future, as technology improves.”
Meanwhile, Dankse Bank's head of compliance Philippe Vollot said that he expects headcount to be scaled back once "the technology kicks in".
Both banks have been pressured to bolster their compliance departments after falling foul of anti money laundering (AML) rules. Nordea was fined in 2015 for AML weaknesses while Danske was embroiled in a money laundering scandal in 2018 that has already cost several leading executives their jobs but is also expected to lead to long-term reductions in staff numbers as banks look to have a greater reliance on robots, AI and other advanced technologies.
Vollot told Bloomberg that the bank is currently having to add a lot of resources and people because the technology is not yet there to support widespread automation in the compliance department. But, once the technology matures, the bank will benefit from "proper systems, algorithms, scenarios, case management platforms and ultimately AI and robotics", he said. “And usually this is the phase where you start to reduce the number of people you need.”