IBM announced on Wednesday that it has launched a suite of regtech products powered by Watson, IBM’s artificial intelligence platform, to help financial services firms manage their growing compliance responsibilities.
IBM developed the software to help advisors and financial professionals better understand their regulatory requirements, identify potential financial crimes and manage financial risk with an “architectural approach” to data.
IBM worked with one of its subsidiaries, Promontory Financial Group, to train Watson Financial Services to identify 60,000 potential regulatory citations, and will continue to add data sets to the software.
"Robo-advisors may not take over the world, but 'robo regulators' could be an entirely different question," Aaron Klein, CEO of Riskalyze, said in an email. "The era of digital accountability is here, and AI-driven data analysis is a fascinating and exciting layer that has the potential to add a ton of value to compliance departments."
John Cunningham, chief information security officer of Docupace, noted IBM's use of artificial intelligence in the financial services regulatory environment "holds great promise to the industry. At Docupace, we have long understood the importance of staying ahead of cybercrime activity and having at-a-glance intelligence readily accessible to safeguard the financial services professionals we serve."
Cunningham added, "With all the emphasis on new regulations at both at the federal and state level, compliance officers are increasingly struggling to keep up with all of the rules and requirements expected of them, and the Watson-powered software appears to offer that forward-looking insight these professional so desperately need. Artificial intelligence platforms like IBM Watson can provide the needed analytical speed to data-mine the vast regulatory rules and quickly identify specific obligations on distinct matters. This technology should greatly reduce time spent by compliance and risk teams and improve their ability to ensure adherence in an ever increasing regulation-driven world."
All of the Watson Financial Services solutions are available on the IBM Cloud. Specific solutions include:
- Watson Regulatory Compliance, which uses natural language processing to understand regulatory language. IBM noted it has started inputting regulations from 200 different sources to identify firms’ obligations. Users will have access to a searchable, customized library of regulations that can be filtered by geographical area, business line, type of product and compliance area.
- IBM Financial Crimes Insight with Watson, which uses advanced analytics tools like cognitive computing, identity resolution and network analysis to address firms’ anti-money laundering and know-your-customer requirements. The tool will help identify behaviors associated with misconduct as well as client suitability.
- IBM Algo One Big Data Foundation, which offers an intuitive interface to help analyze structured and unstructured data.
“To strengthen trust today, financial institutions must analyze an industry’s worth of information to help monitor risk and compliance," Bridget van Kralingen, senior vice president of IBM Industry Platforms, said in a statement. "No individual, or team of them, can adequately do this alone.”
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This article has been updated to include comments from Aaron Klein of Riskalyze and John Cunningam of Docupace.