Few technologies this century have captured the imagination of so many technologists within the capital markets as artificial intelligence (AI). Thanks to a fertile combination of data, storage, and computing power, AI has emerged from its long winter and spread into nearly all areas of the capital markets, across the front, middle and back offices.
While many vendors can claim AI capability—some of them dubiously—few have the bona fides of firms like Digital Reasoning. The Franklin, Tenn.-headquartered firm had its start in 2000, quickly winning defense contracts with the US Army, and in 2010, funding from the Central Intelligence Agency.
It wasn’t until around 2012, however, that Digital Reasoning entered into finance with a bang, signing up names such as Point72 and UBS. AI has, for the most part, found much of its early success within surveillance functions, owing to the vast volume of data that needs to be processed and analyzed, and in this regard, Digital Reasoning is no different—it wins this year’s Sell-Side Technology Award primarily for its Conduct Surveillance platform.
At the heart of Conduct Surveillance are two means by which it accomplishes its task—language-process automation and human behavioral insights. It allows the primary task of data ingestion and analysis to be combined with an individual focus on specific employees, ensuring that personal details that are often so important to monitoring and policing potential fraud don’t disappear in noisy information flows. The types of conduct monitored by self-managed AI modules also stretch across a range of behaviors, from typical anti-money laundering and bribery alerts through to outside business activities and offers of employment.
The proof is also in the numbers—an independent estimate by Forrester reckons that false positive alerts are at least halved in examined firms, resulting in what the company claims is a four-times increase in analyst efficiency at one client, where a workload of alerts that would typically take a month to process was managed in a week. Also, according to Digital Reasoning, a recent benchmarking test in which Conduct Surveillance handled 90,000 emails found 14 emails that could potentially generate suspicious activity reports and precede a case. Other vendors in the same test found four.
The acuity of the product is perhaps best demonstrated by the names of those that have invested in Digital Reasoning, including (but not limited to) BNP Paribas, Macquarie, Barclays, UBS, Credit Suisse, Goldman Sachs and Nasdaq, another pioneer in AI-based surveillance and winner of the best market surveillance category on page 56, which has long worked with the firm. Digital Reasoning has now won this award three times in a row, every year since it has been on offer.
The founder and CEO of Imperative Execution looks at how trade execution is changing and what that means for the buy side.Subscribe to Weekly Wrap emails