IBM Watson now being used to catch rogue traders

25 Apr 2017

Traders at work. Image:

The power of IBM Watson’s analytical tools is now going to be harnessed within the financial sector to catch rogue traders in action.

Despite happening six years ago, the analytical artificial intelligence (AI) system IBM Watson is still best known for taking on humans in the American game show, Jeopardy!

Since then, however, IBM has utilised Watson in various sectors, most notably within healthcare, where it makes tracking of patients and data much more efficient.

Also, in recent months, IBM Security revealed to that AI and IBM Watson are also being used fight cybercrime as part of a “game of wits” with hackers.

Now, according to the The Wall Street Journal, it is trying its hand at being a detective in the financial sector in order to spot any potential rogue traders.

Referred to as Watson Financial Services, the new product will become a monitoring tool within companies to search through every trader’s emails and chats, combining it with the trading data on the floor.

The objective? To see if there are any correlations between suspicious conversations online and activity that could be construed as rogue trading.

IBM Watson: Trading detective

To take one example of potential damage, Bloomberg revealed in June of last year that one of China’s largest food companies lost nearly $200m due to a single rogue trader.

Currently, much of this work has to be done manually by compliance officers that can’t analyse each and every piece of information, while existing technologies that search for keywords might not pick up on subtle attempts at rogue trading.

“I think about it like a detective that can do problem solving, rather than just a search. And that is the difference that many risk and compliance officers are desperate for,” said Bridget van Kralingen, senior vice-president of IBM industry platforms.

Van Kralingen co-founded the financial consultancy Promontory Financial Group, which was bought by IBM to help train Watson for the financial world.

So far, IBM said the new service is being piloted with just a few players in the trading sector, but eventually the company wants to move Watson into the increasingly lucrative regulation technology (regtech) sector.

Colm Gorey was a senior journalist with Silicon Republic