Why Debt Collectors Should Take Notice of IBM’s Acquisition of Promontory

It is becoming increasingly clear that whatever the
specifics of the CFPB’s final debt collection rules, technology is going to be
critical to the ability to provide compliant services and remain profitable.

So I was fascinated by the announcement by IBM late last
week that the company plans to acquire Promontory Financial Group, a global risk
management and regulatory compliance consulting firm headquartered in
Washington, D.C.

On the face of it this may not seem to relate to the ARM
industry. But take another look; this is a very interesting example of
out-of-the-box innovation from other industries being applied to financial
services. Read the following all the way through. What unfolds, to me, should
be a “wow” to collectors, who depend so heavily on manual review and human
intervention.

According to the announcement,

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.

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 2020, 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 year.

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…”

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).

Eugene Ludwig, Promontory’s founder and CEO said, “We
believe the future of business and regulation will be driven by the need for
advanced technology alongside deep subject-matter expertise.”

I agree. And to this end, we at The iA Institute are
in the process of forming an Innovation Council to leverage the collective imagination
of big thinkers from across – and outside – the ARM industry. The Innovation Council will work closely the Consumer Relations Consortium, also managed by The iA Institute. If you think you
can contribute, please get in touch.

Why Debt Collectors Should Take Notice of IBM’s Acquisition of Promontory
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