Entrepreneurs are selling banks on the same big data analysis they are applying to the hunt for terrorists.
The technology relies on the still-evolving science of natural language processing, in which algorithms can scan huge amounts of data to flag fraudulent credit card charges the same way they zero in on potential plans to set off a bomb.
Disparate as that sounds, Robert P. Gach, Accenture's industry managing director of global capital markets, sees a strong connection.
"There are problems and opportunities that two different industries are trying to solve," related to trying to make sense of voluminous data, he says. "The opportunity here is not just to solve problems but to generate better financial products, better financial advice, that all of these banks and other financial institutions aren't equipped to deal with today."
A half-dozen technology companies chosen to be part of the New York-based FinTech Innovation Lab — including a few that are already established in the defense industry but hope to cross over into financial services — gave product demonstrations Wednesday at Credit Suisse's headquarters in Manhattan.
The incubator program, which is in its second year, was created by Accenture and the New York City Investment Fund to match up entrepreneurial technology companies with executives at large financial players, such as Bank of America and credit card company American Express — for their mutual benefit. The financial companies chose which of the startups they wanted to mentor during the 12-week program.
But as Gach pointed out, many will continue to work with each other long after the program ends. "I think especially where the banks picked who they wanted to chaperone, it was clear they were passionate about those companies," says Gach. "The program doesn't stop today for them."
The tech firms pitching their solutions for the financial industry at demo day included: BillGuard, an online bill monitoring and resolution management provider; Centrifuge, which creates data visualizations that show relationships found within big data; Digital Reasoning, which detects relationships between words in unstructured text, allowing, for example, smart analysis of company emails; EidoSearch, a search tool that allows advanced analysis of stock information, enabling banks to generate new trading strategies, among other things; True Office, which creates customized games to facilitate employee training; and Visible Markets, which sells an iPhone and iPad app that presents markets data for consumers, but now wants to do more customized data visualization for wealth mangers and other financial providers.
At least three of those companies — BillGuard, Centrifuge and Digital Reasoning — have employees that have worked on national security problems either abroad or in the United States.
Some financial technology executives have crossed over from the government securities agencies, says Justin Bonar, BillGuard's vice president of sales. "I see a lot of that. There is a lot of cross-over in the spook world."" He added: "We are all trying to protect the good guys, and we are all trying to catch the bad guys."
That mission has become even more important as banks are contending with increasing regulatory scrutiny that promises to crowdsource complaints from consumers and deeply review a bank's internal processes.
Tim Estes says banks — which are often skeptical of tech startups — are finding it easier to get comfortable with some of them, because of who some of these entrepreneurs have worked with in the past, particularly those with a background in the defense industry.
"There is a big affinity between banks and the intelligence community," says Estes, Digital Reasoning's chief executive, referring to the terrorist attack in Manhattan on Sept. 11. "It's New York. It's a little personal, and if you can prove you really have this stuff and it helped protect people here, and it helped find bad guys that did some bad things here, there is a willingness."
