FI Tech: SearchSpace > Fortent > NICE

Back in the mid 1990s, a group of eggheads got together in London and planned a system for identifying financial crime in financial institutions - and quite a lot of other types of analysis, too.

The back office boys were geeks to the power of n. The sales people were lost when it came to understanding anything that happened in the black box that processed data. For the sales people, their challenge was that there was nothing like Searchspace. It took in massive amounts of data, in real time, and processed it to provide an indication as to whether the company should consider suspicion.

But, unlike all the other products announced, but not yet on the market, Searchspace had another trick up its sleeve: it used so-called artificial intelligence, said the salespeople.

The problem with AI, as Prof Ian Angel once said, is that the processes are neither intelligent or artificial.

What he means to say is this: no matter how many routines the computer processes, it only does so because at some level a human has told it what to do. Computers cannot actively learn and, in effect, reprogram themselves.

And so SearchSpace's product - like the later programs that claim AI - depend upon the fundamental law of computing: GiGo: garbage in, garbage out. If the underlying programs don't work, or don't work as expected, then the system generates false reports.

To be fair to SearchSpace, they have come closer to the grail of a learning program than most. But their biggest challenge was not the technology, it was that they were British. It soon became apparent that, if they were to succeed globally, they would have to be American.

And so, with a change of name to Fortent, the company moved its official headquarters to New York. There it started to pick up US and global clients. It bought Money Laundering Alert to give it immediate access to the US money laundering market, and pole position at the Money Laundering Alert annual conference, and ported that event, almost lock, stock and speakers over to Europe.

The company's biggest coup came after Bank of New York found itself victim of a USD7,000 million scheme run by one of its senior officers, Lucy Edwards. The bank put in SearchSpace and, according to sources at the regulator, reduced its potential fine by roughly the cost of the software. That, however, has never been formally confirmed.

The company has built up a small but impressive client list: The Bank of New York Mellon, Bank of Tokyo Mitsubishi-UFJ, Barclays, JPMorgan Chase, Justice Federal Credit Union (U.S. Department of Justice), The Lloyds Banking Group, Mizuho, The Royal Bank of Scotland, Scotiabank, and UBS.

Actimize has a larger and no less prestigious customer base: HSBC, Citi, Bank of America, Lloyds Banking Group (yes, the same one as Fortent) and more.

The announcement of the deal says "Under the terms of the agreement, NICE will be acquiring Fortent's Compliance and Risk Management business. Fortent will become part of Actimize which continues to operate as a wholly owned subsidiary of NICE, with the Fortent team becoming an integral part of Actimize. NICE will acquire Fortent in an all cash transaction for a total consideration of USD73.5 million."

The terms of the deal for Fortent to buy Money Laundering Alert's business have never been fully publicly disclosed. And the announcement from NICE makes no mention of the publications business.