Between allegations that they manipulated benchmark interest rates or wrote faulty mortgages, banks have racked up more than $170 billion in litigation costs since 2008, according to an estimate by the Macquarie Group. So some financial institutions are investing in technology that can sift through millions of e-mails, instant messages, and transcripts of telephone calls to spot suspicious behavior before it explodes into a mess of lawsuits and fines.
“What the banks want is a way to surveil and read all these things as they happen,” says Tim Estes, chief executive officer of Digital Reasoning, a data analytics firm that on Oct. 8 announced a $24 million investment from a group of banks led by Goldman Sachs and Credit Suisse. “If you’re working on a mergers-and-acquisitions team at a bank and giving information to a trader, that ought to be flagged when it happens, not in an investigation three years later.” (Investment banks are supposed to have so-called Chinese walls between staff making investment decisions and those working on deals.)
