Troublemakers, Be Warned: AI Is Watching

Artificial intelligence is helping to uncover rotten apples in financial services.

That’s what Kim Crawford Goodman, CEO of Smarsh, a leader in communications compliance, argues in an interview with ThinkAdvisor.

“We’re showing institutions the bad actors they might have,” Crawford Goodman says. “We look for things like insider trading or collusion to make sure [institutions] are keeping their systems safe and investors’ money protected.”

She forecasts that digitization and AI will transform compliance and oversight for financial institutions. Such changes will protect clients’ assets more efficiently and effectively, she adds.

Smarsh, whose clients are both large and small institutions, uses AI for analyzing data at major banks, including “every single email sent in the last 10-plus years, every single text message, every trade,” says Crawford Goodman, a finalist for executive leadership in ThinkAdvisor’s 2023 Luminaries awards.

With AI, Smarsh finds evidence of insider trading, for example, by going through masses of data and connecting patterns and noting elements in many communications from the same individual.

“We’re making sure that the truth is preserved,” says Crawford Goodman, previously CEO of Fiserv and a vice president at Dell.

Financial advisors will best use AI to analyze investments they recommend to clients, Crawford Goodman, who has an MBA from Harvard Business School, maintains.

Here are highlights of our conversation:

THINKADVISOR: How will digitization and AI change compliance for financial advisors?

KIM CRAWFORD GOODMAN: That’s going to completely change compliance and oversight for financial institutions. 

Five to 10 years from now, regulators and compliance people will be inside institutions running very sophisticated models on all transactions, including trades.

The changes will bring more efficiency and protection for the institution, clients and money flows in a much more effective way.

Who’s responsible for keeping clients’ assets safe?

The institutions. Regulators just provide some oversight.

The biggest advances will be in how institutions protect themselves and their customers. But the regulators will continue to raise the bar on how the institutions will do that. 

How are you making AI available to your clients?

First and foremost we’re using AI to analyze all the data at major banks — every single email sent in the last 10-plus years, every single text message, every trade.  

How will individual financial advisors use AI best?

To reduce their risk, to analyze things as opposed to using basic analysis, like what the best investments are. They’ll build models to take their analyses to the next level.

They can use AI on a real-time basis to see trends, what kinds of things people are asking about and what sort of advice is being given out. 

But determining the best investments is the main responsibility of human advisors. Right?

The human should do it, but humans are best if they use the best tools. 

This is a great example of digitization that has happened across many industries. The best advisors are going to combine their own skill set and knowledge on top of the best tools. 

That’s going to make them more advanced and differentiated as fiduciaries.

How else is Smarsh using AI with its clients?