Complying with regulations is becoming more expensive for financial institutions. According to a recent survey, a significant majority of financial services firms increased their compliance expenditure from 2022 to 2023, primarily due to the implementation of new laws.
As compliance costs continue to rise, businesses are actively seeking cost-saving measures that still ensure regulatory compliance. Entrepreneurs Nir Laznik and Eyal Peleg claim to have developed a solution that harnesses the power of generative AI, which is currently a popular trend.
Masterminds behind Sedric.
Laznik and Peleg are the brilliant minds behind Sedric, a cutting-edge platform that utilises artificial intelligence to assist financial institutions in effortlessly implementing compliance rules and promptly identifying any potential issues that may arise. Before Sedric, Laznik led multiple startups, including a company specialising in photo kiosk software, while Peleg gained nearly eight years of experience at Intel’s AI and machine learning organisation.
“There was an uneven distribution of pressure on mid-size organisations, along with a fresh set of challenges for banks,” Laznik explained. It was clear that the rapid advancements in AI had the potential to tackle these problems in a completely innovative manner. These various factors prompted us to develop Sedric.
Sedric’s AI functions as a supervisor, keeping track of a team’s outgoing and incoming calls, chats, emails, social media DMs, and instant messages. It strives to identify compliance issues in real-time, such as missing disclosures, overlooked steps, and misconduct. Sedric has the ability to automatically address these problems and offer guidance to the staff involved, according to Laznik.
“With this technology, compliance officers gain a comprehensive understanding of their customer touchpoints across various channels. This enables them to promptly and effectively identify any deviations from established compliance policies and guidelines,” Laznik explained. Our platform provides comprehensive coverage of the compliance lifecycle, including policy setting, enforcement, correction, and audit.
Such extensive surveillance may seem intrusive, especially since Sedric evaluates employee interactions based on their adherence to company policies. However, U.S. state and federal guidelines provide businesses with significant leeway when it comes to monitoring their employees, as long as they maintain a reasonable level of transparency.
In addition, there are federal-level regulations that require financial institutions to closely monitor their employees’ interactions with customers and the overall market. These regulations specifically address issues such as insider trading, collusion, and the sharing of certain earnings documents. These override state laws that impose extra obligations on employers who engage in workforce monitoring, such as those in New York and Connecticut.
I asked Laznik about the possibility of bias in Sedric’s AI, given that it monitors communications from staff with diverse backgrounds. Unfair AI can result in discrimination, depending on its deployment and intentions.
According to research, some AI systems that are able to detect offensive language view expressions in African-American vernacular English, a colloquial grammar style that some Black Americans use, as being disproportionately negative. Several studies have shown the disparity in accuracy between speech recognition systems when transcribing audio from black speakers compared to their white counterparts.
Laznik states that Sedric employs highly refined models trained on exclusive datasets, carefully selected and verified in collaboration with industry professionals, with the aim of minimising bias. The company diligently keeps track of any decrease in performance of deployed models and takes prompt action to retrain them if needed. 
“Our platform allows customers to give feedback directly using different annotation inputs. Compliance teams then review this feedback, which they can use for re-training or incorporate into the prediction process, he explained. By implementing this approach, our models can be more tailored to meet the unique needs of each customer.
With a focus on safeguarding customer and employee privacy and security, Sedric offers companies the flexibility to determine the location of their data storage and establish measures to redact personally identifiable information, ensuring the utmost protection.
Lazink emphasised that Sedric has meticulously crafted its platform to prioritise compliance and security. Enterprises have the flexibility to establish their own retention policies and compliance guidelines based on their internal protocols and specific regulations.
Sedric has a significant number of paying compliance officers and enterprise customers in the United States and Europe, according to Laznik. Additionally, Sedric provides tools to assist call centre agents during phone conversations with clients.
The revenue has seen a significant increase over the past year, although Laznik chose not to disclose specific figures.
“We have a solution ready for small and medium-sized businesses, and we also offer a hybrid model with customisations specifically designed for enterprises and banks,” Lazink explained. We differentiate ourselves in the market with our deep understanding of financial institution requirements and our extensive collection of pre-trained models, inspired by regulations and tailored to suit the individual needs of each organisation.
Targeting finance customers and focussing on specific use cases has proven to be advantageous for Sedric, distinguishing the company from its competitors in workplace monitoring like Fairwords, Shield, Erudit, and Aware. Investors continue to see potential in this crowded and sometimes contentious market, especially as AI becomes increasingly integrated into these types of tools.
According to Sedric’s impressive progress, Foundation Capital took the lead in a $18.5 million Series A investment in the company, which is four years old. Amex Ventures also joined in on the investment, showing their satisfaction with Sedric’s performance. According to Lazink, the company will use the additional funding to expand its go-to-market and R&D teams in both NYC and Tel Aviv. This latest investment brings Sedric’s total raised to $22 million.
Sedric is looking to significantly increase its workforce over the next year.
