IBM has announced that it plans to acquire Promontory Financial Group, a risk management and regulatory consulting firm that is staffed by 600 employees, many of whom have worked at various regulatory bodies and financial institutions around the globe.
The interesting thing about this deal is how the tie-up will look to pair Promontory's human expertise with IBM's artificial intelligence unit, Watson.
"Upon close, Promontory's professionals will train Watson, which will learn by continuously ingesting regulatory information as it is created and through interaction in real-world applications," noted IBM, in a statement.
Promontory will operate as a wholly-owned subsidiary of IBM, and will form the foundation for Watson Financial Services, which will offer cloud-based solutions to solve regulatory hurdles.
Promontory will work with Watson to help firms to "absorb regulatory changes, understand their obligations, and close gaps in systems and practices to address compliance requirements more quickly and efficiently." Some of these challenges include financial risk modeling, surveillance, and anti-money laundering (AML) and Know Your Customer (KYC) requirements.
"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 of IBM Industry Platforms, in a statement. "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 was founded by Eugene Ludwig, who serves as the firm's CEO. The firm has offices North America, Europe, Asia and the Middle East. Ludwig said that the pairing will help Promontory to better address clients' risk management and regulatory compliance needs.
"We believe the future of business and regulation will be driven by the need for advanced technology alongside deep subject-matter expertise," Ludwig said.
While terms of this deal were not disclosed, IBM has spent more than $5 billion on M&A this year as its seen revenues fall over the last few years.
Bill Murphy, CTO of Blackstone, once again joins the podcast to discuss the private equity firm's new offices, designed to house its innovations team.Subscribe to Weekly Wrap emails