In a world that deals with a lot of data analysis that cannot be efficiently handled by human ability alone, it is only wise to call in the help of technology. It is no surprise therefore that numerous companies in the world of finance are working with companies that develop software to analyse data.
Wall Street companies are contracting spy software companies to go through large caches of data like emails so that they can figure out employee misconduct before it develops into something worse. This is akin to the way the software finds terrorists.
Financial firms are looking for good customers, attempts at fraud and collusion among employees and all this can be done using software just like the intelligence agencies would do to root out terrorists.
According to The Wall Street Journal, many of these software companies owe their success to the CIA whose private equity firm In-Q-Tel seeded them in their fledgling years so that they could develop and be able to comb through vast amounts of data so as to quickly point out threats. A review by the Wall Street Journal revealed that of the 101 companies that were seeded, 33 of them have taken on clients on Wall Street.
Some of the standout companies in this field include; Digital Reasoning Systems Inc., Palantir Technologies Inc. and Recorded Future Inc. all which in some way or the other analyze data as needed by the Wall Street companies. Palantir alone has scored more than $215 million in federal agency contracts but 60 per cent of its clientele originates from Wall Street.
Digital Reasoning Systems, headquartered in Franklin, Tennessee has provided software that combs through mounds of data to companies like Swiss Bank UBS Group AG and Point72 Asset Management LLP. This kind of software is used by the United States government to find enemies of the state.
The latter uses systems from Digital Reasoning alongside those from Palantir so that it can monitor in excess of a million emails and direct messages as well as other electronic communications weekly in a bid to flag and risk score them. The resultant data is reviewed by a compliance group of former employees of the FBI, CIA, Department of Homeland Security and the Securities and Exchange Commission.
The company was founded by current CEO Tim Estes in his final year at college. It was conceived as a company that specializes in a branch of computer science known as machine learning whereby the programs learn from the data they are analyzing so that they can do better predictions. The Synthesys program reads all the text files in a database, capturing metadata and creating links between people and institutions. Words are given sentiment scores to help detect emotion. The end result is an application that can be used to look at the data from many perspectives.
Many Wall Street companies are actively seeding these companies when they are in their early stages. The venture capitalists identify a company or group of companies that have something really special on their hands that can be beneficial to them if its potential is realized. They then proceed to infuse capital into the start-ups.
An example of a company reeling in the big bucks from Wall Street is Symphony. The company was founded to create a secure communications tool that can be used by Wall Street financial services to send secure messages.
According to TechCrunch, Symphony received over $66 million in the fall of last year from Wall Street bigwigs like Bank of America Merrill Lynch, BNY Mellon, BlackRock, Citadel, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, Jefferies, JPMorgan, Maverick, Morgan Stanley, Nomura and Wells Fargo.