Promontory's
600 professionals and offerings will form the foundation of new Watson
Financial Services portfolio from IBM's Industry Platforms business
IBM (NYSE: IBM)
today announced plans to acquire Promontory Financial Group, a global
market-leading risk management and regulatory compliance consulting
firm. Upon close, the capabilities of Promontory combined with IBM's
deep industry expertise and Watson's
cognitive capabilities will directly address the massive 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 deep and varied expertise amassed over decades as
senior leaders of regulatory bodies, financial institutions and Fortune
100 corporations. Promontory is widely regarded as the firm financial
institutions turned to for guidance coming out of the 2008 financial
crisis. 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 catalog of regulations is projected to exceed
300 million pages by 20201, rapidly outstripping the capacity
of humans to keep up. Today, the cost of managing the regulatory
environment represents more than 10 percent of all operational spending
of major banks, for a total of $270 billion per year2.
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.
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.
"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 (KYC).
In addition, Promontory professionals will extend IBM's consulting and
services offerings to help clients dramatically reduce the cost of
regulatory compliance.
"We believe the future of business and regulation will be driven by
the need for advanced technology alongside deep subject-matter
expertise," said Eugene Ludwig, Promontory's founder and CEO. "Combining Promontory's expertise with IBM's extraordinary technological capabilities such as Watson
will permit us to directly address our clients' greatest challenges in
innovative and powerful ways. It will enhance our mutual commitment to
risk management and regulatory compliance excellence, and our results
will benefit customers and the overall financial system."
Promontory will operate as a wholly owned subsidiary of IBM. The
planned acquisition represents the first example of new capability from
IBM's Industry Platforms business, launched in August. The new business
was formed to build open vertical platforms – the first comprehensive
"as a service" offerings designed from the ground up for individual
industries. These platforms will integrate IBM Cloud, Watson
and capabilities from across digital ecosystems of specialized
providers, and serve multiple clients in an industry – delivering
dramatically reduced costs for outcomes spanning speed, quality,
audit-ability, security and transparency.
Promontory is headquartered in Washington, D.C. and has 19 offices in North America, Europe, Asia, Australia, and the Middle East.
The planned acquisition is expected to close in late 2016 and is
subject to applicable regulatory review and customary closing
conditions. Financial details were not disclosed.
For more information visit ibm.com/