Solving the Paradox Between AI Aspirations and Persistent Paper Requirements in Financial Documentation

The current buzzwords for progress AI and machine learning are everywhere promising a bright future. At the same time, for the latest PRIIPs KID update some of our clients included printing as part of their acceptance tests. To date, the current regulation still requires a “durable” format and presents a document made for printing. So why wait for the AI miracle instead of paving the way and moving forward with actual digitization? In our opinion, a digital document is not just a PDF, but an output that looks good in the whole digital world of websites and mobile phones that most of us already live in. Why not make all these outputs rule-based so that when we have the smart technology to take over, they can be done on a digital basis and we do not have to train robots to scrapbook paper-based documents?

Digital KID explained

In the current discussions about RIS (Retail Investment Strategy), the KID is being discussed not as a physical document, but in an electronic format and even in a layered format. So, the vision is that a KID can be presented on a website with a nicer navigation to focus on the different parts. Even the ability for a retail customer to change certain parameters and see the results immediately is being discussed. This finally moves this regulatory issue into a truly digital future. While the intention of the KIDs is to be clear, precise, not misleading and to make products comparable, from a technological point of view we are still far away. Of course, a common layout and structure will allow these documents to be printed, hung on a wall, and the descriptions, risks, etc. compared. But any other retailer, for example for mobile phones, already allows this in a much more convenient way. Side-by-side, showing only the differences, allowing true comparability. This is how we see the future of documents at LPA.

Possibility

When regulators finally realize that an elec- tronic, layered format is the way to go, it opens the possibility of a completely digital advisory process. Everything from the questionnaire to extract a client’s investment needs and knowl- edge to the presentation of the product from a marketing and regulatory perspective can be pulled together into one process. This allows for various use cases such as self-advising, product comparison, improving your sales process and the client’s user experience. Even other regulato- ry requirements for documenting the customer’s decision-making process can be met. Therefore, you can use the tedium of a document to your advantage in financial education, allowing more clients to access complicated structures. Finally, when AI can take over, the technology base is already there.