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[liberationtech] <nettime> Richard Waters: Counter-terrorism (tech)tools used to spot fraud at JPMorgan (FT)

Eugen Leitl eugen at
Sat Dec 15 10:22:45 PST 2012

----- Forwarded message from Patrice Riemens <patrice at> -----

From: Patrice Riemens <patrice at>
Date: Sat, 15 Dec 2012 08:23:58 +0100
To: nettime-l at
Subject: <nettime> Richard Waters: Counter-terrorism (tech)tools used to
	spot fraud at JPMorgan (FT)
User-Agent: SquirrelMail/1.4.18

Convergence, anyone?

Original to:

Counter-terrorism tools used to spot fraud
By Richard Waters in London (Dec 13, 2012)

JPMorgan Chase has turned to technology used for countering terrorism to
spot fraud risk among its own employees and to tackle problems such as
deciding how much to charge when selling property behind troubled

The technology involves crunching vast amounts of data to identify
hard-to-detect patterns in markets or individual behaviour that could
reveal risks or openings to make money. Other banks are also turning to
“big data”, the name given to using large bodies of information, to
identify potential rogue traders who might land them with massive losses,
according to experts in the field.

“They’re trying to mine not just trading data, but also emails [and] phone
calls,” said David Wallace, an executive at SAS, a US data analysis
company. “They’re trying to find the needle in the haystack.”

Guy Chiarello, JPMorgan’s chief information officer, said the bank was
mining massive bodies of data in “a couple of dozen projects” that
promised to have a significant effect on its business, although he refused
to give further details.

According to three people familiar with its activities, JPMorgan has used
Palantir Technologies, a Silicon Valley company whose technology was honed
while working for the US intelligence services, for part of its effort. It
first used the technology to spot fraudsters trying to hack into client
accounts or ATMs, but has recently started to turn it on its own
250,000-strong staff.

In another aspect of its big data work, the bank is drawing on large
amounts of highly diverse information about local economies where it has
troubled real estate loans, two of these people said. The information is
being used to set prices for property sold before a loan goes into
default, in an attempt to reduce the social disruption caused by the
troubled loans.

Other technology companies are also finding new purposes for
number-crunching techniques used in intelligence to bring new
data-intensive approaches to risk management, credit assessment and
marketing activities. Quantifind, a tech start-up that has worked with the
CIA to identify aliases used by terrorists, was called in by JPMorgan to
explain how its technology could be applied to its credit card business,
said Ari Tuchman, chief executive.

Some of the same technologies revolutionising risk-management in banks,
meanwhile, are being used to break down barriers in the financial services
business and let start-ups compete head-on with large institutions.

Larry Summers, former US Treasury secretary, predicted that this would
lead to a wave of new technology-based companies in the consumer lending
and investment fields.

“We’ve had a generation where financial innovation was found in large
institutions for the benefit of large pools of capital,” he told the FT.
“I think the next generation of innovation will be more for consumers.”

Mr Summers on Thursday joined the board of Lending Club, a Silicon Valley
start-up that lets individuals invest directly in pools of consumer loans
it generates over the internet. The company has been able to take a large
slice out of the funding and operating costs of a traditional bank and
offer better terms to borrowers and lenders, said RenaudLaPlanche, Lending
Club’s chief executive.

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Eugen* Leitl <a href="">leitl</a>
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