08 June 2018

Tech collaboration aims to boost risk detection for global financial institutions

By leveraging regulatory intelligence data, tech partnership offers enhanced risk-weighted surveillance controls and broadens risk coverage.

Technology firms Corlytics and Digital Reasoning are to collaborate on an integrated regulatory intelligence and surveillance offering to help financial institutions achieve better control of their risks. Corlytics is combining its regulated financial market experience with Digital Reasoning’s intelligence technology for conduct surveillance to enable financial institutions to develop new detection strategies and address blind-spots in risk coverage. The combined solution will be offered to clients globally. The offer helps financial firms seeking to enhance process, programme and technology solutions to meet changing regulatory expectations, and improve surveillance efficiency and effectiveness. According to analysis by Tricumen and PwC, firms have seen headcount in the front office dedicated to a control function grow by about 21% over the past six years. However, limitations of time, budget and technology mean firms often lack formal processes to optimise alerts and identify new risk areas.

Evolution of misconduct

Brett Jackson, CEO of Digital Reasoning, says ‘Monitored employees learn how surveillance works and can learn evasion tactics. Hence, misconduct typologies can be expected to evolve, sometimes quite rapidly.’ Corlytics scans a diverse set of authoritative data sources to inform compliance teams how surveillance strategies are evolving, and the impact of failing to detect certain types of misconduct. John Byrne, CEO of Corlytics explained ‘every time a regulator communicates to the market or publishes a document, we break that information down, classifying its industry impact and adding it to our intelligence. Speeches, industry guidance, thematic reviews and business plans all yield insight into regulatory intent. Combined with our global enforcements analysis, we can offer a single end-to-end source of regulatory assessment risk of regulatory change information.’ Mr Byrne says the AI-enabled conduct surveillance technology is set to be a ‘game changer for regulated firms.’