Michael Berman, the founder and CEO of Ncontracts, is pictured on the left, while Ginger Devine, the Senior Vice President and Senior Risk Officer at Citizens First Bank, is on the right. Berman expressed his belief that this development will empower financial institutions to better grasp control factors at an earlier stage in the process.
Banking executives engaged in negotiations with fintech vendors, whether new or existing, must meticulously scrutinize contract terms. However, as the number of partnerships increases, the task of ensuring compliance with current regulations and maintaining continuous monitoring can become overwhelming.
Adhering to the evolving standards set by regulators is an essential aspect of conducting business for fintechs and financial institutions alike. Therefore, banks and credit unions meticulously evaluate every third-party relationship to mitigate any potential risks associated with risk management.
Ncontracts, a company specializing in risk management software based in Brentwood, Tennessee, has dedicated considerable effort over the past year to train its new Ntelligent Contracts Assistant. This tool aims to automate the review process by analyzing vendor contracts from financial institutions, learning critical terms such as “notice permissions” and “business continuity.” The Ntelligent Contracts Assistant was recently introduced to the market.
Utilizing optical character recognition, the assistant meticulously scans through documents, identifying clauses like price adjustments and renewal dates through entity extraction. It employs a proprietary model driven by generative artificial intelligence to generate a comprehensive score and summary, highlighting the extent to which the agreement complies with regulatory standards.
Michael Berman highlighted the significance of this innovation, emphasizing that for organizations dealing with numerous vendors, the ability to automatically process and identify exceptions in contracts is far more efficient than manual review. The Ntelligent Contracts Assistant, integrated into Ncontracts’ Nvendor platform on Microsoft Azure, serves as a valuable tool for conducting preliminary checks on contracts and pinpointing potential issues early in the negotiation process.
In response to the escalating concerns surrounding cybersecurity breaches and third-party challenges within the banking sector, regulatory bodies such as the Federal Reserve and the Federal Deposit Insurance Corporation have issued guidance emphasizing the importance of overseeing relationships with external vendors.
Ginger Devine, from Citizens First Bank, shared her positive experience with Ncontracts in managing vendor relationships. By leveraging various products offered within the Nvendor platform, the bank effectively handles internal and external audits, conducts tailored risk assessments, and stays informed about regulatory updates.
The emergence of AI-powered contract assistants, including offerings from vendors like SpotDraft and Icertis, reflects the industry’s growing interest in leveraging technology within banking operations. However, as federal agencies scrutinize the use of AI models following President Biden’s executive order, institutions are urged to establish robust governance frameworks and conduct thorough due diligence before implementing such tools.
In addressing gaps with external assistance, industry executives are advised to focus on resolving underlying issues rather than viewing technology as a temporary fix. Gilles Ubaghs, a strategic advisor at Datos Insights, underscores the importance of proactive measures in adapting to technological challenges and emphasizes the need for a comprehensive approach to governance and risk management in the financial sector.
