Robert Jones, head of business development at BAT Software
Whilst the majority of IFAs believe that the technology can improve the service they offer – with some 72% believing it's important for AI to be implemented in their service, according to Intelliflo's Advice Efficiency Survey 2024 – one in four also state such technology raises concerns around confidentiality and data protection.
Such concerns, often stemming from a lack of understanding of AI technology, deter firms from using AI tools in the day-to-day running of their business. Yet this places them at a competitive disadvantage as the use of AI technology becomes more commonplace across the industry.
This issue is especially relevant in terms of compliance. In the age of consumer duty, advisers face the challenge of efficiently demonstrating their compliance efforts alongside managing risk.
"Most adviser firms are compliant but being able to demonstrate it clearly and efficiently is a challenge," says Robert Jones, head of business development at BAT Software. "Information is stored on multiple systems or is in storage, and if the Financial Conduct Authority asked them about it, it would take some time and work to pull the correct information together."
It is not surprising, then, that 28% of advice firms have outsourced parts of Consumer Duty compliance, a study by Core Data Insights revealed.
According to FCA review TR24-1 in March 2024, 22% percent of files breach COBS 9.2 as being unclear or incomplete.
This has been a key driver behind the structured launch of BAT AI Filechecker – an AI-based tool that sits within the group's BAT Compliance Manager. Through use of the AI File checking tool, users can automatically categorise and rename files, introducing consistent naming conventions. The first stage of release is verifying document completeness at the same time as the adviser inputting the information. The system has been designed by compliance experts, Mortgage Advisers, and IFAs from within the industry. Stage 2 which is landing imminently will grade the content of files and provide analysis on suitability, effectively replacing the need for manual file checks.
The software's real-time verification significantly reduces the time needed for manual checks, freeing advisers to focus on client relationships and solutions, Jones explains. Additionally, the group has addressed privacy and data concerns by offering a ring-fenced AI solution, specifically trained to read and interpret documentation for the advice sector.
The AI tool's first application is file checking, offering a quantifiable and tangible benefit by reducing one of the costliest components of compliance," Jones explains. "Trained on official information sources alongside a large team of file checkers, the tool accurately replicates the file-checking process. For advisers, having a system that can process information instantly and in real-time is a game changer. 100% file checking across the board should now be a standard process"
Jones argues that AI tools are meant to empower, not replace, advisers, benefiting the industry as a whole: "There are numerous applications across multiple adviser functions today. Automating these standard repetitive processes can only enhance an adviser's performance."
Although AI is still in its infancy, and its full benefits in the financial advice sector are yet to be realized, Jones believes the growing demand for these solutions will drive their development into new areas. For example, BAT Software could look to apply the knowledge from its AI fact-checker tool to new services, such as promotion checking and suitability report writing.
"All of our solutions will stem from our initial source data and learning through ongoing training. Our AI tool is being utilised already by clients and compliance teams. As more technology emerges, firms must be agile to avoid being left behind," adds Jones.
You can learn more about the applications of BAT software and the benefits it can offer advisors on the company's website.
