AI optimization of regulatory compliance in finance: Ratepay.

Let’s Talk Regtech: how AI can help compliance teams stay on top of ever-changing financial regulations

"Kodex AI simplifies regulatory compliance by quickly extracting and analyzing regulations that are relevant to us. It saves us up to 10 hours on Horizon Scanning each week, reducing manual effort and helping us stay efficient in a highly regulated industry."  Denny Axt @ Ratepay

Ratepay, the leading European provider of white-label payment solutions, faced increasing challenges in managing complex and constantly evolving financial regulations. Ratepay needed a solution that could streamline this process, ensuring efficiency while maintaining full oversight. Kodex AI’s Agentic Compliance approach addressed these challenges by automating compliance across three key phases - screening, analysis, and implementation - minimizing manual effort while ensuring full regulatory alignment.

Agentic Compliance is an AI-powered system developed by Kodex AI, which is composed of specialized GenAI Agents, each designed to handle specific compliance tasks with accuracy and efficiency. These agents work together to transform regulatory management into an automated, proactive, and scalable process.

Challenges:

• High manual workload – The Compliance team spent excessive time reviewing lengthy regulatory updates.

• Difficult relevance filtering – Identifying applicable regulations required significant effort.

• Risk of non-compliance – Staying ahead of regulatory changes was critical to avoiding penalties.

How Kodex AI Helped:

• Custom regulatory library – Centralized all relevant regulations in a single, searchable platform.

• Automated horizon scanning – Saved 10 hours per week by detecting and summarizing key regulatory updates.

• Custom 97% relevance filter – Ensured the team focused only on applicable updates.

• Obligation management – Automatically generated suggested compliance action items, reducing manual effort by 80%.

• Future-proof compliance: Scalable AI adapts to evolving regulations, ensuring long-term efficiency.

With Kodex AI, Ratepay’s compliance team now operates more efficiently, stays ahead of regulatory changes, and reduces compliance risks with confidence.

About Ratepay

Ratepay is Europe's leading expert in white label Buy Now Pay Later ("BNPL") payment solutions, specializing in customizable payment services for e-commerce businesses across Europe. With a strong focus on user trust and experience, Ratepay’s white-label solution ensures that customers can complete their transactions within the brand environment of the merchant, leading to increased conversion rates, higher cart values, and greater customer loyalty. Ratepay serves a diverse array of businesses, offering tailored payment solutions that help clients optimize their sales processes and better meet the needs of their customers. 

Ratepay GmbH was founded in December 2009 in Berlin and employs more than 200 people. It is part of the Nexi Group. The company is regulated by BaFin (German Federal Financial Supervisory Authority) as a registered payment institution under the Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz – ZAG).

Ratepay and Kodex AI 

To maintain its position as the leading expert of BNPL payment solutions, Ratepay must navigate a complex and ever-changing regulatory environment. This requires the dedicated efforts of Ratepay's compliance team, who play a crucial role in ensuring that the company meets all regulatory obligations while continuing to innovate and provide exceptional service to its clients. Kodex AI has teamed up with the Ratepay compliance team to deliver an AI solution aimed to save more than 80% of time spent on their manual regulatory analysis. 

Needs and Challenges of Ratepay’s Compliance Team

It never stops

Ratepay operates in the highly regulated payments industry, where compliance with various legal and regulatory frameworks is crucial to maintaining trust and ensuring operational continuity. The company’s compliance team faces the ongoing challenge of managing an extensive and constant stream of regulatory updates from various local and international bodies. With new updates arriving non-stop, identifying which regulations apply specifically to Ratepay - rather than those relevant only to banks governed by the KWG (Kreditwesengesetz) - is a time-consuming and resource-intensive task. As a ZAG (Zahlungsdiensteaufsichtsgesetz) institution, Ratepay must focus on ZAG-specific regulations, making it critical to filter out irrelevant content efficiently.

To tackle this challenge, we developed a Screening Agent with a smart relevance filter that leverages the domain knowledge of different institution types. It automatically analyzes regulatory updates, distinguishes applicable requirements, and prioritizes legally binding regulations, saving the team valuable time and allowing them to focus on the regulations that truly matter.

It is exceptionally long (just to read)

The primary difficulty lies in the sheer volume and complexity of these updates. Due to our estimate, a week worth of regulatory updates relevant for Ratepay translates to approximately 90,000 words in size. Each new regulation or amendment requires thorough review and analysis to determine its relevance to Ratepay’s operations. The compliance team must not only read through extensive documentation but also quickly assess how the changes impact existing processes, systems, and procedures. This often involves distinguishing between applicable and non-applicable updates, interpreting legal jargon, and summarizing complex regulatory language into actionable insights.

By automating this process with our Insight Agent, we save the team considerable time, allowing them to focus on higher-priority tasks, ensuring compliance is maintained efficiently.

It’s a race against the clock 

Once the updates are deemed relevant, the team needs to identify and list the obligations that Ratepay must comply with, which requires careful attention to detail and a clear understanding of both the regulatory landscape and the company’s internal processes. This manual, time-consuming task was becoming increasingly difficult to manage as the regulatory environment evolved at an accelerated pace, putting strain on the compliance team’s ability to stay ahead of new requirements. The pressure is immediate, as fines can be as high as 10% of total annual turnover, making it crucial to ensure all obligations are met on time. 

Automating the identification of regulatory obligations with our Governance Agent can, therefore, be of great help. By alarming the team about required changes and suggesting obligations and controls, users can save valuable time on an already lengthy compliance process.

How KodexAI helped Ratepay automate their compliance processes 

Step 1: Identifying Regulatory Updates with the Screening Agent

The first challenge for Ratepay’s compliance team was managing a constant influx of regulatory updates from various governing bodies. To streamline this process, we implemented the Screening Agent:

Custom regulatory libraries

We began by identifying the key regulatory bodies governing Ratepay’s operations and expanded our existing scope by integrating additional relevant regulatory portals. This ensured that the compliance team had access to a comprehensive and up-to-date stream of regulatory updates, connecting alerts directly to the source documents.

To make horizon scanning even more seamless, all updates are conveniently located in one place -  the  Inventory. Instead of navigating multiple regulatory websites, the team can access everything from a single, organized Inventory page. It allows users to search the publications by title, sort by institution that issued them, and differentiate by the type of the regulation, e.g. report, guideline, recommendation, or opinion. This structured approach enables the compliance team to quickly locate and assess relevant content, significantly improving efficiency and decision-making.

Automated Horizon Scanning and alert system.

The Screening Agent continuously monitors regulatory portals and notifies the compliance team of any relevant changes. With this feature, Ratepay saves up to 10 hours per week previously spent manually identifying, reading, and analyzing updates.

Our user-friendly interface notifies Ratepay’s team of new publications, providing key details such as publication dates, topics, and status, i.e., which updates have already been reviewed or analyzed. For each new update, our AI agent generates a concise, easy-to-read summary and provides reasoning why this is relevant to the company.

Within a few clicks, the user can create a detailed overview report, highlighting all the key information in an easy-to-read format, that can be shared internally or externally for seamless communication. 

In combination with other features outlined here, this automation not only mitigated the risks of missing regulatory updates, but also significantly reduced the manual workload, allowing the compliance team to shift focus on higher-priority tasks, such as refining internal processes and engaging with key regulatory stakeholders. 

Highly accurate relevance filter.

To further refine the regulatory update screening process, we worked closely with Ratepay to set up a custom relevance filter, training the model to distinguish between the regulatory updates that were truly important and those that were not directly applicable to their particular business. This tailored approach enabled the model to achieve an impressive 97% accuracy in filtering out irrelevant updates that would have otherwise required time-consuming manual sorting.

To put this in perspective, out of 68 weekly regulatory publications, only 18 were relevant for Ratepay, on average. This implies significant time inefficiency in case of manual processing. With the filter in place, we ensured that the team had their eyes only on the relevant updates, that require close attention of Ratepay’s compliance team, minimizing ‘noise’ and allowing quick and easy access to them through the organized library. Despite the high accuracy of the relevance detection, filtered-out updates remain accessible. With the human-in-the-loop review, the combination of automation and human oversight results in full control and even higher accuracy.

Step 2: Analyze Updates with the Insights Agent 

To assist in interpreting complex legal texts, we integrated another powerful feature from Kodex AI’s toolbox: An Insight Agent. This chat assistant enables the team to seamlessly retrieve, summarize, analyze, and even translate complex regulatory content on demand. This tool allows the compliance team to quickly find answers to specific questions, search through documents, and clarify legal texts without spending hours manually parsing through regulatory updates.

The chat assistant provides concise, actionable insights and always includes sources in its responses. For absolute transparency, all answers can be tracked back to highlighted paragraphs in the original documents, allowing the team to quickly find real, pinpointed quotes for proper reporting without relying solely on the chatbot’s output. 

Step 3: Implement Regulations with the Governance Agent

The Governance Agent analyzes regulatory updates and instantly generates a list of suggested obligations - a task that would otherwise take the compliance team 2-3 hours to derive and document manually. However, the most time-intensive phase is defining concrete measures to fulfill these obligations, which can take up to 12 hours of manual expert work. The Governance Agent simplifies this process by pre-analyzing requirements and delivering structured, actionable insights - saving hours of manual effort.

With the AI’s output as a starting point, users can refine, save, and manage the recommended obligations directly within the platform, ensuring that the team has an organized, up-to-date record of all compliance requirements, enabling them to act quickly and with confidence to meet deadlines and avoid potential penalties. 

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Conclusion 

With an ever-growing regulatory landscape, staying compliant is both time-consuming and complex. By partnering with Kodex AI, Ratepay has significantly improved efficiency in managing regulatory updates, freeing up valuable time for strategic decision-making. With all updates consolidated into a single dashboard, the compliance team can now seamlessly track and assess new regulations without sifting through multiple sources. The Screening Agent has eliminated countless hours of manual monitoring, saving the team 10 hours per week while ensuring that no critical updates are overlooked. The implementation of Kodex AI’s 97% accurate relevance filter has further streamlined the process by minimizing the ‘noise’, allowing the team to focus only on what truly matters. Instead of manually sorting through an overwhelming number of regulatory publications, the compliance team now receives a curated selection of applicable updates, ensuring precision and efficiency.

With Insights and Governance Agents, that analyze new regulations and generate clear, actionable insights, Ratepay's compliance framework is future-proof. By proactively identifying necessary changes and mapping them to specific obligations, the system minimizes the risk of gaps in implementation. As a result, Ratepay significantly reduces its exposure to regulatory fines, safeguarding both compliance integrity and operational stability in the long run, lementing important changes and thus significantly reducing the risk of regulatory fines.

By automating key compliance tasks and providing AI-powered insights, Kodex AI has helped Ratepay reduce manual effort by 80%, allowing the team to stay ahead of regulatory changes with confidence. With improved accuracy, faster decision-making, and a structured compliance workflow, Ratepay is better equipped to navigate the complexities of financial regulations while minimizing risk.

Kodex AI has a positive impact on Ratepay with significant time savings in the short term and a transparent and future proof compliance governance to reduce regulatory risk in the long run. 

Want to know how your compliance team can benefit from it? 

Let’s talk - contact us today to see how Kodex AI can revolutionize your regulatory processes.