International Business Machines Corp (IBM) took another step towards positioning its artificial intelligence platform Watson as the centerpiece of a future strategy by acquiring consulting group Promontory Financial Group. According to the Armonk-based company, the acquisition will be used
to bolster capabilities of the newly created Watson Financial Services group. Up until now, Watson has been mainly used in creating visualizations and churning through financial data to recognize patterns and trends. (For more, see also: Uncle Sam Gives IBM Another Watson Health Win.)
With Promontory’s expertise in financial regulation and compliance, the acquisition puts a different spin to the service’s offerings. In an interview with the Wall Street Journal, IBM senior vice president Bridget van Kralingen said the data-driven world of financial regulation was a logical expansion of Watson’s cognitive computing technology. The idea is to have Promontory feed its expertise into the AI platform.
“Watson is going to learn by continuously ingesting this regulatory information as it is created,” said van Kralingen. The article mentions that the goal is to build a “smarter system” to help financial institutions deal with an ever-expanding web of financial regulations across multiple geographies, post the 2008 financial crisis, and track transactions to spot errors and terrorism financing. (For more, see also: AI: These Companies Are Leading the Way.)
That increased regulation has translated into a windfall for the Global Risk & Compliance (GRC) software industry. It has had double-digit growth since 2010. For example, it had a growth rate of 18% in 2010. According to some estimates, the market is expected to grow from $19.42 billion in 2016 to $38 billion in 2021. Not surprisingly, the Asia Pacific region, which is home to China and India, two of the fastest-growing economies in the world today, are expected to witness highest growth figures in the industry.
According to its website, Promontory excels at helping companies resolve critical issues related to regulation and compliance. In their coverage of the acquisition, the Journal and the New York Times have both pointed to the company’s close ties with Washington D.C.’s elite and the financial organizations with which it consults. For example, the company picked up a plum $900 million plus contract after the financial crisis to review mortgage foreclosures. It also paid a fine of $15 million to New York’s Department of Financial Services for going easy on its report about potential violations by British bank Standard Chartered.
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