IBM is buying Regulatory Compliance specialist Promontory. Financial services in Europe are expected to be offered new tools by IBM's AI division Watson after the giant bought the expert, whose 600 professionals and offerings will form the foundation of new Watson Financial Services portfolio from IBM's Industry Platforms business
Promontory Financial Group is a global risk management and regulatory compliance consulting firm. Upon close, the capabilities of Promontory combined with IBM's expertise and Watson's cognitive capabilities will directly address the operational effort and manual cost of escalating regulation and risk management requirements.
Promontory's 600 professionals are based in North America, Europe, the Middle East and Asia Pacific - many of them have expertise amassed over decades as senior leaders of regulatory bodies, financial institutions and Fortune 100 corporations. The firm's expertise and offerings directly address the standards for compliance implemented to ensure the integrity of the financial system, protect consumers and build trust through transparency.
More than 20,000 new regulatory requirements were created last year alone, and the complete catalogue of regulations is projected to exceed 300 million pages by 2020, rapidly outstripping the capacity of humans to keep up. Today, the cost of managing the regulatory environment represents more than 10% of all operational spending of major banks, for a total of $270bn per year.
This is a workload ideally suited for Watson's cognitive capabilities intended to allow financial institutions to absorb the regulatory changes, understand their obligations, and close gaps in systems and practices to address compliance requirements more quickly and efficiently, says IBM.
"What Watson is doing to transform oncology by working with the world's leading oncologists, we will now do for regulation, risk and compliance," said Bridget van Kralingen, senior vice president, IBM Industry Platforms. "Promontory's experts are unsurpassed in this field. They will teach Watson and Watson, in turn, will extend and enhance their expertise. This initial offering of Watson Financial Services is emblematic of the transformative cloud-based solutions that IBM Industry Platforms will bring to clients."
Promontory will begin to accelerate IBM's development and machine training of cognitive solutions for risk and compliance. This includes solutions for tracking constantly changing regulatory obligations, expectations and control requirements, as well as solutions that address specific compliance needs, such as financial risk modeling, surveillance, anti-money laundering (AML) and Know Your Customer. In addition, Promontory professionals will extend IBM's consulting and services offerings to help clients reduce the cost of regulatory compliance.