Chapter 21: Banking-Specific AI

"A bank's balance sheet is not an accounting artefact. It is a regulatory instrument — shaped simultaneously by IFRS 9 provisioning, Basel III capital floors, and AML surveillance obligations. The banking practitioner who can operate across all three pillars commands a career advantage that no single-domain specialist can match. The AI agent that can do the same becomes a Digital FTE worth deploying."

Chapter 20 built jurisdiction-aware agents for Islamic finance — routing the same transaction through different accounting frameworks by country. This chapter confronts a different kind of complexity: pillar complexity. In banking, a single loan portfolio is governed simultaneously by three regulatory pillars — solvency (Basel III/IV), accounting (IFRS 9), and financial crime (AML/KYC) — each with its own models, thresholds, reporting cycles, and regulatory bodies. A credit risk agent that ignores capital adequacy produces incomplete output. An AML agent that ignores IFRS 9 staging misses the provisioning impact of suspicious transactions. This chapter builds the agents that work across all three pillars.

The architectural contribution extends Chapter 20's router-product-overlay pattern into a pillar-aware routing architecture where the banking plugin's 17 skills span solvency, accounting, and financial crime — and the router determines which pillar (or combination of pillars) a query requires before loading the correct skill chain.

What You'll Learn

By the end of this chapter, you will be able to:

• Explain the three regulatory pillars of modern banking (Solvency/Basel, Accounting/IFRS 9, Financial Crime/AML) and why they must be addressed simultaneously rather than in isolation
• Deploy the banking plugin's 17-skill architecture and trace queries through the pillar-aware routing system
• Build IFRS 9 expected credit loss models — staging criteria, PD/LGD/EAD estimation, macroeconomic scenario overlays, and post-model adjustments
• Calculate Basel III/IV capital adequacy ratios — CET1, Tier 1, Total Capital, risk-weighted assets, output floors, leverage ratio, and liquidity ratios (LCR/NSFR)
• Design AML/KYC surveillance systems — the three lines of defence, transaction monitoring rule evolution to ML, SAR filing, and tipping-off prohibitions
• Execute bank reconciliation across nostro, suspense, GL-to-risk-system, and four-way provision reconciliation using AI automation
• Complete 14 exercises (22+ hours of practice) spanning all three pillars and reconciliation

Lesson Flow

Lesson	Title	Duration	What You'll Walk Away With
L01	The Three Regulatory Pillars of Modern Banking	20 min	The three-pillar framework, why they interact, and why single-pillar agents fail
L02	The Banking Plugin Architecture — 17 Skills, Three Pillars	25 min	Plugin installation, skill routing anatomy, pillar-aware architecture
L03	IFRS 9 Expected Credit Loss — Staging and the ECL Formula	40 min	Stage 1/2/3 criteria, the ECL = PD x LGD x EAD formula, lifetime vs 12-month ECL
L04	PD, LGD, and EAD — Building the ECL Components	45 min	Point-in-time PD, downturn LGD, EAD with CCFs, Exercise 1: Retail mortgage ECL
L05	Macroeconomic Scenarios and Post-Model Adjustments	40 min	Probability-weighted scenarios, management overlays, Exercise 2: Commercial portfolio overlay
L06	Basel III/IV Capital Adequacy — CET1, Tier 1, Total Capital	45 min	Capital stack, deductions, CET1 ratio calculation, Exercise 3: Bank capital ratio
L07	Risk-Weighted Assets — SA and IRB Approaches	50 min	Standardised risk weights, IRB formula, output floor, Exercise 4: RWA comparison
L08	Leverage Ratio, LCR, and NSFR	35 min	Leverage ratio, HQLA, LCR calculation, NSFR, Exercise 5: Liquidity stress test
L09	AML/KYC — The Three Lines of Defence	35 min	CDD/EDD, three lines model, PEP screening, Exercise 6: Customer onboarding risk
L10	Transaction Monitoring, ML Evolution, and SAR Filing	40 min	Rule-based to ML TM, SAR workflow, tipping-off, Exercise 7: TM alert investigation
L11	Cross-Pillar Integration — When IFRS 9, Basel, and AML Collide	45 min	Exercise 8: Fraud-triggered stage migration, Exercise 9: Capital impact of ECL spike
L12	Exercises: IFRS 9 Deep Practice	60 min	Exercise 10: Full portfolio ECL, Exercise 11: Stage migration cascade
L13	Exercises: Basel and AML Deep Practice	55 min	Exercise 12: ICAAP stress scenario, Exercise 13: Cross-border AML investigation
L14	Bank Reconciliation — Nostro, Suspense, and GL-to-Risk	45 min	Nostro recon, suspense clearing, GL-risk system recon, Exercise 14: Four-way provision recon
L15	Full Banking Agent — Skill Library Build and Capstone	90 min	Full 17-skill library deployment, cross-pillar capstone scenario, documentation

Chapter Contract

By the end of this chapter, you should be able to answer these five questions:

1. What are the three regulatory pillars of modern banking, and why does a single loan portfolio require simultaneous treatment under all three?
2. How does the pillar-aware routing architecture determine which skills to load when a query spans IFRS 9 and Basel simultaneously?
3. How does IFRS 9 ECL staging interact with Basel III capital adequacy — specifically, how does a Stage 2 migration affect both the provision charge and the CET1 ratio?
4. What are the three lines of defence in AML/KYC, and where does the boundary lie between AI-automatable transaction monitoring and human-required SAR filing decisions?
5. How does four-way provision reconciliation (GL provision, risk system provision, regulatory return, IFRS 9 model output) ensure data integrity across a bank's systems?

Plugin & Companion Materials

Install the Banking Domain Agents plugin once — it activates automatically on all banking regulatory queries:

Claude Code CLI:

claude plugin install banking@agentfactory-business

Cowork: Sidebar > Customize > Browse plugins > + > Add marketplace from GitHub > panaversity/agentfactory-business-plugins > Install "banking"

Downloads (from the latest release):

• banking-exercise-data.zip — Scenario data for Exercises 1-14 + regulatory reference tables
• banking-workflow-recipes.zip — Scheduled task configurations (daily recon, monthly ECL, quarterly ICAAP, annual SREP)
• banking-full.zip — Everything in one package (Lesson 15 capstone)

Repository contents (inside banking/):

• skills/ — 17 skills: 1 router + 16 product skills (auto-loaded by agent)
• skills/banking-global-router/references/ — Regulatory reference tables (Basel schedules, IFRS 9 staging criteria, AML typologies)
• commands/ — Domain commands: /bank-ecl, /bank-capital, /bank-recon, /bank-aml
• hooks/ — SessionStart (pillar detection) + PostToolUse (regulatory label validation)
• exercises/ — Scenario data per exercise
• workflow-recipes/ — Operational playbooks (daily, monthly, quarterly, annual)
• references/ — Basel framework summaries, IFRS 9 application guidance, FATF recommendations

After Chapter 21

When you finish this chapter, your perspective shifts:

1. You see banking regulation as three interlocking systems, not separate silos. The three-pillar mental model — solvency, accounting, financial crime — changes how you approach any banking question. You ask "which pillars does this touch?" before answering.
2. You have a working 17-skill plugin. The IFRS 9, Basel, AML, and reconciliation skills are installed, tested, and deployable. The router handles pillar detection and skill chaining automatically.
3. You understand the boundaries. The agent calculates ECL, computes capital ratios, flags suspicious transactions, and automates reconciliation. It does not make credit approval decisions, determine regulatory capital buffers, or file SARs. These boundaries are encoded in every skill file.
4. You can extend. The pillar-aware routing pattern transfers to any domain with multiple simultaneous regulatory frameworks — insurance (Solvency II + IFRS 17 + conduct), asset management (UCITS + MiFID + AML), healthcare (clinical + billing + compliance).

Start with Lesson 1: The Three Regulatory Pillars of Modern Banking.