Insights & Analyses

IBM launches cognitive regtech tools powered by Watson AI

June 14, 2017

IBM on Wednesday announced the launch of a suite of cognitive solutions, based on Watson Financial Services, intended to help financial professionals manage regulatory and fiduciary responsibilities.

Capable of being deployed in the IBM Cloud, the Watson-powered software aims to simplify understanding regulatory requirements, to deliver insight into potential financial crimes, and to manage financial risk.

In a press release, IBM heralded that its suite, trained by promontory experts, heralds the launch of the “cognitive era of regtech.” Specific products include Watson Regulatory Compliance, IBM Financial Crimes Insight with Watson, and IBM Algo One Big Data Foundation.

Starting with Thursday’s launch, the new trio of services are all available on the IBM Cloud to financial services industry clients. The business stems from IBM’s acquisition of Promontory Financial Group last year.

At IBM’s T.J. Watson Research Center in Yorktown Heights, N.Y., Promontory Financial Group Managing Director Susan Krause Bell and IBM Vice President Marc Andrews are part of the team training Watson with an initial 60,000 U.S. regulatory citations. Credit: IBM

“Two generations ago, IBM brought the first computers to the financial services sector, allowing banks and other institutions to foster greater trust in the market by operating more efficiently and accurately,” said Bridget van Kralingen, senior vice president of IBM Industry Platforms. “To strengthen trust today, financial institutions must analyze an industry’s worth of information to help monitor risk and compliance. No individual, or team of them, can adequately do this alone, and so once again, IBM is bringing a new type of computing – cognitive computing – to help these professionals operate more effectively.”

Big Blue noted that managing risk and compliance is currently estimated to take up some 10 to 15 percent of operational spending budgets among major banks. Annual spending is pegged at $270 billion for financial services organizations, according to the latest data from consulting firm McKinsey & Company.

Financial regulations are only getting more complex, as estimates suggest the total number of pages of regulations faced by the global financial services industry will balloon to 300 million by the year 2020.

Enter IBM’s Watson, which has now been trained in the nuances of financial regulations. The artificial intelligence and cognitive computing platform was trained on 60,000 regulatory citations by the now-IBM-owned Promontory Financial Group, and additional data sets will be added over time.

Watson Regulatory Compliance aims to help financial institutions understand and address changing regulatory requirements, leveraging Watson’s natural language processing capabilities to understand regulations from 200 different sources.

IBM Financial Crimes Insight with Watson will apply identity resolution, cognitive computing, machine learning, and other advanced analytics capabilities to accelerate due diligence activities and understand anti-money laundering alerts that stem from modern transaction monitoring systems.

Finally, IBM Algo One Big Data Foundation takes a new architectural approach, seeking to help clients tackle regulatory compliance regarding liquidity, application lifecycle management, and market risk. IBM says its solution will encourage decision makers to ask more complex questions and get better answers faster when developing new business strategies.