What is the Future of Finance? or is UBS a top performer?

 

 

“UBS never took enough interest in its risks”, Financial Times, 20.12.2012

 

Let’s start with the bad news – we did not win the Americas UBS Future of Finance challenge 2017. The good news is that we had the opportunity to pitch our RegTech vision and not less important, to get an inside look at UBS’s technology use (or lack of) in this field.

Our pitch was simple: you (UBS) need a regulatory compliance system (much like the one we’re currently offering for world laws – but much more advanced; a Smart system that can track, translate, map, compare and digest new regulatory change in less than an hour – globally. A learning system that will co-evolve with the bank systems and thus prevent future fines and minimize risk.

The justification was strait forward: according to a BCG recent report, the number of individual regulatory changes that banks must track on a global scale has more than tripled since 2011, to an average of 200 revisions per day. This is not a scale humans can handle efficiently. Hence it is no surprise that Banks paid $42 billion in fines in 2016 alone and $321 billion since 2008.

Technically speaking the Americas finals in which we participated were organized to the last detail. Though dietary options were not available (vegan, gluten-free etc.), the bank allocated relevant representatives to meet with each finalist and provide feedback on the pitch. For us these meeting felt like development meetings as the bank people offered great ideas to enhance our vision.

More importantly, it was an indication from a first-hand internal source that the bank (and other banks as well) is light years behind when it comes to RegTech and regulatory compliance. Given the bank spending in this field (in the billions) it is quite amazing and certainly was reassuring going to the pitching competition.

Inconveniently, while the mentoring session was held at the bank’s offices in Manhattan, the finals were held at the offices in New Jersey. This divide forced the candidates to move from one hotel to another and/or struggle with the massive transportation challenges that New York City has to offer.

With no expected diversity, the judges were all IT people. The America’s CEO Tom Natatil gave the opening speech but failed to stay for the actual competition. The judges were provided with feedback from the previous day mentors (ours was excellent) but did not provide any feedback or reasons for their choice of the winning pitch nor the 2nd and 3rd runners-up.

The winner, Authomate, pitched a mobile security system to allow the bank clients to log into the bank’s portal safely. While the technology may be new, this is by no means an innovative concept nor disruptive. Moreover, based on corporate logic, this will probably be the last technology UBS will adopt.

It is too early to say if the bank will be interested in our vision for the future. The same way that it was not clear whether the finalists were supposed to pitch a future venture that can be developed with the bank, or what they already have (Automate) to be used by the bank. Either way one thing was clear, as most big corporations, UBS structure is very fragmented and the chance to capture the attention of the relevant person is extremely challenging.

To summarize the experience, I would like to use the same citation I used at the end of my pitch: “Increasing regulation is here to stay – much like a permanent rise in sea level. In an era of rising regulatory seas, focus on management is mandatory, not optional. Top performers will use the opportunity to incorporate technical innovation” (BCG Report).

Whether UBS is a top performer is yet to be seen.

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Global-Regulation + RSA Archer = More Visibility into your Compliance Needs

Governance, Risk management and Compliance (GRC) platforms are the organization’s tool to help handle, among others, its regulatory affairs. This is what the RSA Archer® Suite is designed to provide through RSA® Archer® Regulatory & Corporate Compliance Management.

With most of the world laws (1.6 million laws from 90 countries translated from 30 languages) in English, in addition to complexity map and AI driven penalty identifier, Global-Regulation.com is positioned perfectly to complement the RSA Archer Suite.

This is the reason that Global-Regulation has a technology interoperability with RSA Archer Suite to offer customers an XML download of the world laws by Global-Regulation.com directly to RSA Archer Regulatory & Corporate Compliance Management, to empower customers to obtain better visibility into their compliance needs.

Now, with the launch of the RSA Archer Exchange available to RSA Archer customers, this technology interoperability can be even more seamless and easy than before.

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Microsoft Translator Case Study

After using MS machine translation (and some Google) to translate more than 750,000 laws and regulations from 26 languages, we are featured in a new MS Translator Case Study:
https://www.microsoft.com/en-us/translator/customers.aspx#textsearch=global-regulation.

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Search Ideas – Interaction with the Search Engine

What if you could discuss your search query with the search engine? well, now you can. Our new feature suggest search ideas based on the user’s query. These search ideas are extracted from our world’s laws database itself.

Here’s how it works:
1. We take the text of every law in the world and extract the most frequently mentioned word pairs, on a per-law basis. This way we create a new database of word pairs.
2. When someone does a search we check the database of word pairs and take the word pairs that occur most frequently in association with the word or word pair that the user is searching for. So a search for “coffee” will return keyword suggestions for words that appear in laws that mention “coffee” most commonly.
3. We then filter the words and take the best matches and display those to the user. These are the search ideas.

You can click on the search ideas in yellow at the top and it will be updated according to your recent search. For example, lets say you started with Coffee –> then you choose ‘Coffee Agreement’

And then choose ‘system certificates’. This is endless.

This new feature actually enable you to interact with the search engine and follow the trail that is based on the database of word pairs we created from our gigantic database of the world’s laws.

 

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Teaching with Global-Regulation

screen-shot-2016-12-03-at-8-33-00-pmI had a wonderful experience with my 4th year Law & Technology students last Thursday. I asked them to search Global-Regulation.com for privacy laws that relates to teenagers and then create a scenario that describes these rights in a way that teenagers can understand.
After creating the scenario, the students, working in groups, needed to choose the pictures for each square of the scenario and we uploaded it to a website I created for this purpose – Privacygames.com.

The results were amazing and the students were fascinated both by the legislation search in Global-
Regulation, and with creating the scenarios.
The best scenario was an illustration of legislation that is set to protect the privacy of teenagers by determining that a physician has a discretion to report a pregnancy of a girl under 16 to her parents if he feels that she is not capable of dealing with the sitscreen-shot-2016-12-03-at-8-32-22-pmuation.

Another scenario was describing new legislation in New Zealand that makes it an offence to engage in ‘revenge porn’.

Empowering teenager’s by informing them of their rights and obligations is an exciting field that should be fostered. Using Global-Regulation
for class exercise is really intriguing for the students.

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Machine Learning – Text Analytics Comparison

As part of our work engaging Artificial Intelligence and especially Machine learning into Global-Regulation‘s system, we’ve conducted a comparison between the big four providers of ML Text Analytics: Microsoft, Google, IBM and Amazon. This post is a follow up of a previous post regarding AI assisted compliance system.

MicrosoftMS ML studio allow some options of text analytics.

screen-shot-2016-11-11-at-9-50-29-am

Although not particularly helpful for the purpose of identifying segments within legislation, MS ML studio

dn781358-mccaffreymls_fig1_hiresja-jpmsdn-10 is the most friendly system among the ML tools in this comparison. It is so friendly that even a user with minimal background in programming and ML can use it (with some patience and strong will 🙂

In MS ML There is a link to new text analytics models but unfortunately it is a broken link.

GoogleTensorflow offers some text analytics features. This is not a friendly tool and the text analytics options it does offer are vague. However, the vector representation of words may be useful when analyzing legal text and training a model to identify segments within legislation. This is a different approach than the structured text analytics offered by MS and IBM – see below.

screen-shot-2016-11-11-at-10-08-39-am

In the context of a previous post about AI assisted compliance system, Tensorflow vector representation may be the solution for the first part of the challenge, i.e., manually identifying compliance clauses and training the model with these clauses. Nonetheless, new challenges arises in the implementation stage since the system will be able to identify laws that includes compliance clauses but not the specific clauses within the law.

Overcoming this challenge will require an additional stage in which the laws may be broken into chunks of text before running the model to identify the clauses. As laws are not always (and usually not) machine friendly, this process creates its own challenges.

IBM – Now offered through AlchemyLanguage, IBM now have one text analytics feature analyzing entities and relevance. Before migrating the text analytics features in July 2016, IBM offered few options of text analytics that are not available now.screen-shot-2016-11-11-at-10-20-11-am

This system analyze factor as ‘Fear’, ‘Anger’ and ‘Joy’ – not exactly what one would need to analyze legal text. In addition, IBM’s costumer service does not really work. Attempts to get access to their system failed even after stubborn emails.

Finally, it should be mentioned that Amazon’s ML platform  does not provide any text analytics options.

Conclusion

One would expect that the first step in analyzing legal text would be to use ML text analytics options. This seems like the short way towards identifying segments within legislation and the best way to ride the advancements in this field. However, upon testing these ML text analytics abilities, it becomes clear that this is not the answer and that in their present state of development, ML text analytics is not capable of doing much serious work, rather than classifying text as ‘Joy’ or ‘Anger’.

The more ‘simplified’ approach taken by Tensorflow vector representation is much more relevant for the purpose of analyzing legal text and identifying segments in big data even though it is far from the ‘Watson Dream’ where you ‘work with Watson’ and get your text analyzed with the click of the mouse.

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Top Word Pairs in Global Laws

As part of our efforts to graph the world’s laws (see previous blog posts), we created a list of the top word pairs used in global laws. Below is the top 25 word pairs. You can download the full Excel file here (contains the top 499 word pairs).

Word Pair Percentage Of Top Word Pairs No# Occurrences Countries With Word Pair as Top Word Pair
order filed 3.895957924 11473490 United States
statutory authority 3.0114618 8868673 Antigua and Barbuda, Jamaica, Singapore, Trinidad and Tobago, United States
filed effective 2.532391836 7457825 United States
repealed order 0.508982635 1498940 United States
later promulgation 0.466916032 1375055 United States
final rule 0.418250047 1231735 United States
social security 0.378933894 1115950 Antigua and Barbuda, Australia, Brazil, Canada, Chile, China, Czech Republic, Denmark, European Union, Finland, France, Germany, Indonesia, Italy, Jersey, Kenya, Korea, Mexico, New Zealand, Philippines, Poland, Russia, San Marino, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Tonga, Trinidad and Tobago, Turkey, United Kingdom, United States
royal decree 0.363138502 1069433 Denmark, Italy, Saudi Arabia, Spain
legislative decree 0.355003282 1045475 Brazil, Denmark, Germany, Italy, Spain
laid down 0.311219516 916533 Bangladesh, Brazil, Chile, Czech Republic, Denmark, Estonia, European Union, Finland, France, Germany, India, Ireland, Italy, Jamaica, Jersey, Mexico, Pakistan, Poland, San Marino, Singapore, Spain, Sweden, Switzerland, Tonga, Turkey, United Kingdom
secretary state 0.309433082 911272 Brazil, Denmark, Finland, France, Italy, Jersey, San Marino, Spain, Turkey, United Kingdom, United States
member states 0.299539612 882136 Antigua and Barbuda, Brazil, Czech Republic, Denmark, Estonia, European Union, Finland, France, Germany, Ireland, Italy, Jamaica, Jersey, Kenya, Poland, San Marino, Spain, Sweden, Switzerland, Trinidad and Tobago, Turkey, United Kingdom
member state 0.239937702 706610 Antigua and Barbuda, Czech Republic, Denmark, Estonia, European Union, Finland, France, Germany, India, Ireland, Italy, Jamaica, Jersey, Kenya, Poland, San Marino, Spain, Sweden, Switzerland, Trinidad and Tobago, Turkey, United Kingdom
ministerial decree 0.229651699 676318 Indonesia, Italy
executive order 0.224945034 662457 Denmark, Philippines, United States
northern ireland 0.216335447 637102 Czech Republic, European Union, Jersey, Sweden, Switzerland, United Kingdom
from date 0.193836427 570843 Antigua and Barbuda, Australia, Bangladesh, Bermuda, Botswana, Brazil, Canada, Chile, China, Czech Republic, Denmark, Estonia, European Union, Finland, France, Germany, India, Indonesia, Ireland, Italy, Jamaica, Japan, Jersey, Kenya, Korea, Mexico, New Zealand, Pakistan, Philippines, Poland, Russia, San Marino, Singapore, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Tonga, Trinidad and Tobago, Turkey, United Kingdom, United States, Vietnam, Zambia
russian federation 0.189857104 559124 European Union, Russia, Switzerland, Turkey
authority chapter 0.186990184 550681 United States
european parliament 0.183776911 541218 Czech Republic, Denmark, Estonia, European Union, Finland, France, Germany, Ireland, Italy, Poland, Spain, Sweden, Switzerland, United Kingdom
local government 0.169821604 500120 Antigua and Barbuda, Australia, Bangladesh, Botswana, China, Czech Republic, Denmark, Estonia, Finland, Indonesia, Ireland, Japan, Kenya, Korea, Mexico, New Zealand, Pakistan, Philippines, Poland, Russia, South Africa, Spain, Sri Lanka, Sweden, Turkey, United Kingdom, United States, Zambia
published official 0.165419866 487157 Bangladesh, Brazil, Chile, European Union, France, India, Italy, Mexico, Pakistan, Spain, Turkey
health care 0.159788235 470572 Australia, Botswana, Brazil, Canada, Chile, China, Czech Republic, Denmark, Estonia, Finland, France, Germany, Indonesia, Italy, Jersey, Korea, Mexico, Philippines, Poland, Russia, San Marino, Singapore, South Africa, Spain, Sweden, Tonga, Turkey, United Kingdom, United States
public service 0.155587517 458201 Antigua and Barbuda, Australia, Bangladesh, Bermuda, Botswana, Brazil, Canada, Chile, China, Czech Republic, Denmark, Estonia, European Union, Finland, France, Germany, India, Indonesia, Ireland, Italy, Jamaica, Japan, Jersey, Kenya, Korea, Mexico, Pakistan, Philippines, Russia, San Marino, Singapore, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Tonga, Trinidad and Tobago, Turkey, United Kingdom, United States, Zambia
effective date 0.1554921 457920 Antigua and Barbuda, Australia, Bermuda, Canada, Czech Republic, Finland, Ireland, Italy, Japan, Jersey, Kenya, New Zealand, Pakistan, Singapore, South Africa, Spain, Switzerland, Trinidad and Tobago, Turkey, United Kingdom, United States, Vietnam, Zambia
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How To Find World Laws

The majority of legal research is conducted within a single jurisdiction. But in an increasingly global world there’s sometimes a need for legal research that crosses borders. How can searches be conducted across several countries or even the world?

Global-Regulation’s search engine is one answer. It can be used to search for the majority of the digitally published laws (translated into English) for almost 50 countries worldwide. The search engine allows for comparison across jurisdictions and filtering by country/date.

Alternative to Global-Regulation include:

  • Searching each national legislation portal
  • Using products from LexisNexis and WestLaw that have cross-jurisdiction databases
  • For some regions, like southern Africa (SAFLII) and Micronesia (PacLII), there are free legal services that aggregate the laws.
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San Marino: New Source (Italian)

San Marino legislation is now searchable through Global-Regulation.com. The laws are converted to PDF and then translated from Italian into English.

Here’s an example search for “stamp taxes”: https://www.global-regulation.com/search.php?year&country=San+Marino&province&start&q=stamp+taxes&advanced=false. San Marino has quite a few laws about stamps and is a favoured country of stamp collectors.

Here’s another example for banks: https://www.global-regulation.com/search.php?year&country=San+Marino&province&start&q=bank&advanced=false.

As with all Global-Regulation searches, clicking the search result sends the user to the official publication.

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