Smarsh, enabling organizations to manage risk and uncover value within their electronic communications, announced the acquisition of Digital Reasoning, a global leader in natural language processing (NLP), artificial intelligence (AI), and machine learning (ML), at the 2020 FINRA Artificial Intelligence Virtual Conference.
The transaction brings together the leadership of Smarsh in digital communications content capture, archiving, supervision and e-discovery, with Digital Reasoning’s leadership in advanced AI/ML powered analytics. The combined company will enable customers to spot risks before they happen, maximize the scalability of supervision teams, and uncover strategic insights from large volumes of data in real-time.
Smarsh manages over 3 billion messages daily across email, social media, mobile/text messaging, instant messaging and collaboration, web, and voice channels. The company has unparalleled expertise in serving global financial institutions and US-based wealth management firms across both the broker-dealer and registered investment adviser (RIA) segments. Smarsh has been named a Leader in the Gartner Magic Quadrant for Enterprise Information Archiving (EIA) since 2015. The report evaluates vendors on their completeness of vision and ability to execute, and in the 2020 edition, Smarsh was placed highest in ability to execute and positioned furthest in completeness of vision.1
Brian Cramer, CEO of Smarsh, said, “Smarsh and Digital Reasoning’s combined capabilities equip customers with an entirely new expertise that we are calling ‘Communications Intelligence.’ Using artificial intelligence and machine learning helps firms more efficiently supervise and mitigate risk at scale, and will now enable them to analyze their electronic communications to uncover business intelligence that can fuel sales and other revenue drivers.
Mr. Cramer continued, “The ongoing pandemic and its impact on how and where people work has accelerated long-term trends that were already well underway. The exploding volume, velocity, and variety of electronic communications are creating greater risks for firms, while also presenting opportunities to leverage communications data to spot risks before they happen, and identify new insights to drive fresh growth initiatives. These conditions are creating a large divide between firms investing to harvest data-driven insights and leverage data to manage risk, and those who are falling behind. This will bear out in earnings and share prices in the years to come."
Tim Estes, Founder and CEO of Digital Reasoning, said, “In this new world of remote work, a company’s digital communications infrastructure is now the most essential one for it to function and thrive. Smarsh and Digital Reasoning provide the only validated and complete solution for companies to understand what is being said in any digital channel and in any language. This enables them to quickly identify things like fraud, racism, discrimination, sexual harassment, and other misconduct that can create substantial compliance risk.”
The combined capabilities of Smarsh and Digital Reasoning enable customers to:
• Strengthen lexicon-driven supervision with AI-powered surveillance across the widest breadth of digital communications channels
• Automate surveillance across the emerging collaboration tools (such as Microsoft Teams, Zoom, Slack, and Workplace by Facebook) that are critical for productivity in the COVID-era remote workforce reality
• Reduce costs of human capital, by minimizing the amount of communications people must review
• Accelerate the ability to leverage massive amounts of data for insights that can drive business growth
• Identify troublesome patterns or trends of employee behavior before they cause irreparable harm
According to the 2020 Gartner Magic Quadrant for Enterprise Information Archiving, “Enterprises are increasingly tapping into business intelligence (BI) by applying analytics, semantics analysis and classification to many data types and sources. Enterprises are looking for improved offerings that will integrate the archiving of such platforms for compliance-based or business-analytics-based initiatives.”1
Smarsh customers include 9 of the top 10 banks in the world. Digital Reasoning’s world-class AI and high-quality NLP models are powering conduct surveillance at many of the largest Tier 1 investment banks worldwide. Its investors, including leading global financial institutions Barclays, BNP Paribas, Goldman Sachs, Nasdaq, Macquarie Group, and Standard Chartered, will continue to support the business following this combination.
Together, Smarsh and Digital Reasoning can enable global customers to get ahead of unwanted or illegal activities such as fraud, insider trading, money laundering, customer complaints, and other top priorities. The enhanced platform will be especially adept at satisfying requirements from financial services regulators in the United States and overseas, including the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and the U.K.’s Financial Conduct Authority (FCA).
Digital Reasoning was recognized among Fast Company's Most Innovative Companies for AI and recently received the Frost & Sullivan Product Leadership Award in the AI Risk Surveillance Market. Smarsh and Digital Reasoning will be presenting on Communications Intelligence as the new imperative for the risk and compliance industry at the upcoming 1LoD XLoD global conference.
The addition of Digital Reasoning to the Smarsh organization follows the acquisition by Smarsh of Entreda, the leading cybersecurity compliance solutions provider for the wealth management space, in May of this year.
Financial details of the transaction, which is expected to close in the next 60 days, were not disclosed. Barclays acted as exclusive financial advisor to Digital Reasoning.