International Business Machines Corp. (NYSE:IBM) has announced plans to acquire Promontory Financial Group as part of its plan to make a new subsidiary known as Watson Financial Services.
Promontory is one of the most influential Wall Street firms with a global consultancy that helps financial institutions including banks to meet risk management requirements. It also helps banks to keep up with the increasing regulation in the financial sector. The acquisition is part of a strategic move by IBM to venture deeper into financial services. The company is working on a new subsidiary that will be known as Watson Financial Services.
IBM is planning to use Promontory’s experience in the financial sector to develop its subsidiary. The aim is to use Promontory’s workforce to educate Watson about compliance, risk and regulation. Watson Financial Services will feature cognitive tools for things such as keeping track of regulatory obligations, surveillance, anti-money laundering detection systems and financial risk modelling.
“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,” stated IBM.
Roughly 600 people from Promontory, most of them from Wall Street as well as ex-regulators will teach Watson how to give advice on regulatory compliance to Watson. IBM pointed out that complex financial regulations have been put in place since the financial crisis. The company also stated that Watson will continue to process more information as new regulations are created. This will be possible through interactions with other applications.
“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,” highlighted the firm.
IBM stock closed the recent trading session at $158.11, down by $0.18 or 0.11% compared to the previous close. The trading volume of the stock was 3.37 million shares.