NICE Actimize, a provider of financial crime, risk and compliance software platform for the financial services industry, released the findings of a new survey focused on behavioral analytics technology and its role in reducing operational risk, uncovering hidden threats, and enriching existing surveillance programs in place at financial services firms. The survey showed that 82 percent of respondents believe that behavioral analytics detects conduct related threats that usually cannot be discovered by traditional analytics. Moreover, this same percentage of respondents agree or strongly agree that detecting hidden threats also reduces operational risks and financial losses.
The NICE Actimize survey, titled The Emergence of Behavioral Analytics in Financial Markets Compliance, stated that 65 percent of respondents also recognized the value of behavioral analytics in generating new, valuable insights solely from trade data (such as orders and executions), with 42 percent of firms confirming that they would be deploying behavioral analytics-based solutions and strategies in the next 12 months.
The survey respondents stated that individuals – especially traders, investment advisors and brokers – would be the focus of their analysis. The most common behavioral factors that they would like to measure are abnormal changes in an individuals communication method, trading hours and positions. Additionally, 91 percent agreed that viewing alerts generated by traditional analytics and behavioral data together will accelerate their investigations processes.
Operational risk is often heightened because of an inability to detect suspicious behaviors or improper market conduct. Mitigating these risks requires analysis of behavior patterns which often uncovers hidden violations and the individual parties who may be intent on doing harm, such as insider trading or market abuse activities, said Joe Friscia, President, NICE Actimize. Behavioral analytics helps firms detect such threats, and can provide a positive impact on risk teams, compliance and front office operations.”
About 70 percent of respondents indicated that they want to purchase their behavioral analytics solutions from a vendor or from a mix of homegrown and vendor-supplied analytics. Only 15 percent stated that they wanted to build their solutions themselves.
Approximately 60 respondents from global financial institutions, including broker/dealers and investment banks, participated in the survey. By region, approximately 36 percent were from Europe, 22 percent from APAC, and 14 percent from North America. By functional area, 31 percent were compliance; 19 percent technology; and 14 percent risk-related personnel. By asset class, 24 percent worked in equities, 15 percent in fixed income, 14 percent in FX, 11 percent in swaps, and 10 percent in options.
NICE Actimize recently introduced its Holistic Behavioral Analytics solution designed to help financial institutions uncover conduct-related threats that traditional analytics are not designed to detect. The new solution transforms existing compliance processes by discovering risks that lie in enterprise silos, a critical step in mitigating losses, thereby protecting a firms reputation and meeting regulatory obligations.
