AI-driven risk management and regulatory compliance in banking with SAP ERP

Polu, Venkata Satish (2025) AI-driven risk management and regulatory compliance in banking with SAP ERP. World Journal of Advanced Research and Reviews, 26 (1). pp. 2491-2515. ISSN 2581-9615

This comprehensive article explores the integration of Artificial Intelligence (AI) and Machine Learning (ML) with SAP Enterprise Resource Planning (ERP) solutions in banking risk management and regulatory compliance. The article analyzes how financial institutions leverage AI-enhanced SAP ERP systems to strengthen risk management frameworks, improve fraud detection mechanisms, and streamline regulatory compliance processes. It investigates the evolution of risk management in banking, detailing SAP's comprehensive risk management framework, including SAP Risk Management, SAP S/4HANA Finance, and SAP Financial Compliance Management. The article evaluates AI-enhanced fraud detection capabilities through SAP Fraud Management, automated KYC/AML processes, and risk scoring with SAP BTP. Additionally, it examines regulatory compliance automation through SAP GRC, Central Finance, and Analytics Cloud. The article addresses implementation challenges, including data quality issues, model training complexities, regulatory acceptance hurdles, and talent shortages, while providing best practices for successful deployment. Finally, it explores future trends in AI-driven risk management with SAP, including quantum computing integration, advanced natural language processing, expanded predictive capabilities, and RegTech innovation.