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Digital Reasoning Enables Financial Institutions to Proactively Address Regulatory and Reputational Risks
Report by GigaOM validates advantages of using Big Data Analytics to identify critical risks hidden in human-generated data

NEW YORK, July 15, 2013 – Digital Reasoning, the company that enables automated understanding of human communications, is using advanced machine learning technology to help financial institutions analyze human-generated data to identify risks and anticipate suspicious activity that can have a damaging effect on their business. As a result, financial services firms become more proactive about managing their compliance risks; moving beyond transactional monitoring systems and responding to discovery requests in the context of ongoing investigations.

In support of this new approach, GigaOM Pro today released a report underwritten by Digital Reasoning titled, “Proactive Compliance: Using Big Data Analytics To Manage Human Risks.” The report, authored by Steve Hunt, highlights the ways that banks and other financial services companies can leverage their unstructured data to intelligently analyze millions of documents, electronic communications and financial records to reveal hidden relationships and activities that put financial institutions at regulatory and reputational risk.

“The techniques that banks commonly use for fraud detection, such as analyzing structured transactional data insufficiently addresses the far more complicated business of detecting money laundering, insider trading, and other types of malfeasance,” said Hunt. “Banks know intuitively that they must change, and quickly. So, banks are changing their thinking about information technology risk, shifting as quickly as practicable from a reactive to a proactive approach, and seeking ways to harvest intelligence from unstructured data and other non-traditional data sources.”

Having worked closely with the U.S. Intelligence Community for over a decade, Digital Reasoning has become highly adept at helping clients understand human communications at an enormous scale. The patented technology quickly consumes unstructured data, such as email, instant messaging and business documents and transforms this data into knowledge that helps decision-makers answer important and complicated questions.

“We are pleased to see Digital Reasoning has been able to gain momentum in the financial services sector following their graduation from the 2012 FinTech Innovation Lab,” said Maria Gotsch, President and CEO of the Partnership Fund for New York City. “Thanks to the mentorship and talent offered by some of New York City’s leading financial services firms, Digital Reasoning has been able to identify requirements and productize their compliance solution in a relatively short period of time.”

Being able to sift through millions of emails, messages and documents, while quickly identifying valuable information is critical to any enterprise. Digital Reasoning’s solution is designed to impact global compliance efforts in the following areas:

  • Anti Money Laundering: Analyze information within wire instructions and other unstructured transactional fields in order to identify hidden relationships, previously unknown household associations, high-risk geographies & locations.
  • Conduct Risk: Reveal employees who have become ethically exposed, involved in bribery and fraudulent activities by analyzing communications traffic for related behaviors and assertions.
  • Control Room Violations: Uncover relationships between employees that are on a restricted trading list, and their communications with external counterparties trading in the restricted securities based on insider information.
  • Know Your Customer (KYC): Automate the process of building a public profile of new customers and corporate entities by scrubbing publically available sources of information for risk related information.
  • Trading Abuse: Discover hidden relationships and trade related activities that have been intentionally obfuscated within email, instant messaging and dealer chat.
  • Trade Finance – Collateral Classification: Reveal information within collateral documentation, agreements and manifests that identify collateral risk, based on hidden relationships, assertions and associations.

“While banks have made significant investments in their compliance strategies, they are still highly exposed in areas centered around human communication,” said Tim Estes, CEO of Digital Reasoning.  Estes added, “You need something other than a keyword trigger or static rule that fires an alert over LIBOR. It has to understand context the way a human does through learning. In order to be proactive, you need something that can intelligently extrapolate from past examples to catch new issues before they occur – especially in enterprise email, chat, and conversations – which is where intentions and bad behavior often first surface.”

Additional information:

– For a free copy of the GigaOM report titled, “Proactive Compliance: Using Big Data Analytics To Manage Human Risks” go to