Human in the loop: unlocking AI value in RegTech

The evolution of regulatory compliance has entered a new phase—one where artificial intelligence (AI) plays a central role in managing complexity, speed, and scale.

Yet, according to experts like Shwetha Shantharam of 4CRisk.ai, the technology alone cannot guarantee success. With more than 20 years’ experience in compliance and risk, she stresses that AI must enhance—not replace—the expertise of professionals guiding regulatory processes.

MIT’s recent report, The Gen AI Divide, found that over 95% of generative AI deployments fail to deliver measurable value, despite enterprises investing between $30bn and $40bn. While 60% of organisations evaluated enterprise-grade systems, only 5% reached full production, with most struggling due to poor integration, brittle workflows and limited contextual learning. The study highlights a “learning gap” where users resist AI tools that fail to fit established workflows or lack adaptability.

However, the Marketing AI Institute’s founder and CEO Paul Roetzer argues that MIT’s conclusions overlook broader business benefits, including cost reductions, efficiency gains and customer retention. Despite these differing views, both sides agree that successful AI adoption depends on human input and effective enterprise alignment.

For compliance leaders, Shantharam’s message is clear: involve human expertise early. Line managers and subject matter experts should guide deployment, define ROI metrics and measure real-world impact through pilots. Human oversight helps refine AI outputs, strengthens trust and encourages cultural change across organisations.

Findings from the 1LOD 1st Line Risk & Control Benchmarking Survey 2025 reinforce this point. It reports that 72% of firms face technology limitations, 70% cite poor data quality, and 62% struggle with legacy system integration. 1LOD recommends modernising controls, automating compliance and embedding predictive analytics to enable proactive risk management.

Ultimately, Shantharam concludes that human collaboration is the foundation of successful AI adoption. By empowering professionals to guide and improve AI systems, firms can unlock sustained compliance value.

For more insights, read the full story here. 

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