Compliance Automation in Banking: AI-Powered Document Processing with LLMs

Challenge

To achieve operational efficiency gains and boost overall productivity, the bank identified AI as a key enabling technology that would help them drive a competitive market advantage. However, the implementation of off-the-shelf, public cloud-based large language models (LLM) solutions was constrained by the following factors:

The bank reached out to First Line Software to see how we could help them process their multilingual banking documents securely. The initial discovery phase focused on determining the technical viability and operational impact of an AI-driven, secure document processing system within the boundaries of regulatory requirements:

Research Focus Areas

1. Local infrastructure:
   • Deployment of the solution on the bank’s servers without external cloud connections.
   • Setting up a database for storing documents and processed data.
2. OCR and text processing:
   • Using local models for text recognition from image-based PDF documents.
   • Comparing the performance of different OCR solutions (in terms of speed and recognition accuracy).
3. Automated document analysis:
   • Classification of incoming requests (loan applications, regulatory documents, rules, and standards).
   • Extraction of key information (name, amounts, terms, rates)
   • Compliance checks against internal regulations and regulatory requirements.
4. Multilingual support:
   • Testing and configuration of models for multi-languages.
   • Evaluating text processing quality for rare languages.
   • Ensuring accurate translation and interpretation of data.

Conclusions from the Discovery Phase 

• The discovery phase formally concluded feasibility assessment, technical benchmarking, and created a roadmap for AI compliance automation.
• Identified RegulationAI — a fully on‑premises, compliant AI framework tailored to the bank’s needs.
• Automates document validation for loan applications, regulatory filings, and financial reports across multiple markets.
• Flags non‑compliant language, supports multilingual processing, and ensures GDPR and banking law compliance.
• Delivers up to 70% faster review times, reduced compliance costs, improved accuracy, and operational efficiency.
• Highlights opportunities for local AI solutions in strictly regulated banking environments.
• Opens path for future integration with specialized financial document analysis platforms.
• Positions on‑premises LLMs as scalable, secure solutions for evolving global regulatory requirements.

As regulatory frameworks grow more complex across jurisdictions, regulatory compliance automation with AI offers banks a scalable and secure solution. On-premises LLMs like RegulationAI empower institutions to stay compliant, reduce manual review costs, and gain a competitive edge in risk management. The potential use of LLM in banking regulation remains an important topic for further research.

Our AI Strategy Workshop helps financial institutions and regulated industries uncover viable GenAI use cases, design on-premise architectures, and chart a path toward secure, scalable automation.