Can AI detect misconduct by rogue traders?

investmentnews.com:

Deutsche Bank AG is testing out artificial intelligence tools that aim to detect possible signs of misconduct from the tone of traders’ phone conversations.

Germany’s largest bank is examining Google Cloud’s machine learning as part of a wider exploration of uses for AI, Bernd Leukert, chief technology, data and innovation officer, said in an interview. The firm declined to say how soon the system could be rolled out.

It’s part of a wider drive into AI at the bank, which is also exploring how large language models, or generative AI, can help support client and employees and assist with coding.

Lenders globally are looking to make monitoring more effective, as stakes are getting high following government crackdowns on impropriety. Total fines paid by financial institutions for the use of unofficial communication channels like WhatsApp have exceeded $2.5 billion since December 2021.

For now, Deutsche Bank’s surveillance tools can analyze words but not changes of tone or hints of cynicism. The new system should be able to differentiate between, for example, traders saying “keep it between us” when discussing a surprise party and when their aim is more nefarious. 

“If you have a tool that can understand and direct you to tonality, not just to words that are suspect, it can give much better oversight,” Leukert said. “It has the potential to put governance onto a completely different level.”

Deutsche is training the AI using recordings of existing calls between traders, so it becomes familiar with the language they use and the norms of conversation. The software will direct analysts to areas of interest, and humans will make the ultimate judgments about how to proceed.

Staff on Deutsche Bank’s innovation team are working to