More than nine in ten (92%) alternative fund managers, including private equity and hedge funds, are already using AI as part of risk and compliance procedures, according to new research from regulation and compliance specialist Ocorian.
The study of senior leaders and senior compliance and risk executives at alternative fund manager firms, which collectively manage around $132.25bn AUM, found that of those who already use AI as part of its risk and compliance procedures, one in ten (11%) started doing so more than two years ago. Over half (55%) started two years ago and 24% started between one and two years ago.
Ocorian’s global study reveals that out of those who don't already, 71% say that they intend to start using AI within their risk and compliance functions within the next six months.
There are a number of areas in which alternative fund managers think AI can be used to enhance risk and compliance procedures. The top area given was in transaction monitoring (28%), followed by staff filings (21%) and internal capital and liquidity monitoring (20%). AI can also be used to monitor communications (19%) and financial promotions (13%).
In a statement, Hilton Goudriaan, Head of Systems, Regulatory & Compliance at Ocorian, said: “AI tools can process and analyse large datasets, which can assist with aiding alternative fund managers in meeting reporting standards, analysing market trends, portfolio risks, and identifying potential compliance issues. AI can be developed to streamline due diligence processes."
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