Transaction monitoring specialist adds Actimize

Responding to the need among businesses to monitor employee activity for signs of potential cybercrime and fraud, behavior analysis specialist Actimize is being acquired by Nice Systems for roughly $280 million.

Announced on July 2, the deal aims to blend Actimize’s insider threat prevention software with Nice’s transaction monitoring technology to create a more comprehensive package of employee-screening applications for use by enterprise businesses.

Nice’s existing software offers the ability for companies to track and monitor phone calls, e-mails, and other customer-oriented interactions to gauge their overall quality and look for potential issues as well as to respond to complaints and weed out troublesome employees.

By adding the ability to monitor business interactions for potential crime carried out by insiders, such as customer service workers who attempt to communicate sensitive information to outsiders for the purpose of committing fraud, Nice contends it can offer its users a more complete transaction-monitoring system that includes security capabilities.

Both of the Israel-based companies already claim lists of well-known customers of their products among leading financial services firms in the United States and worldwide.

“Our combined solution constitutes a technology breakthrough in processing, analyzing, and cross-referencing information from customer transactions and interactions,” said Haim Shani, chief executive of Nice. “Actimize’s transaction analytics and risk management solution along with Nice’s interaction analytics changes the competitive landscape in the financial services industry as well as in the enterprise and security markets in which we operate.”

Under the terms of the deal, Nice will acquire Actimize for a total consideration of $280 million with approximately 80 percent of the price paid in cash and the remaining 20 percent to be paid in shares of Nice’s stock. The companies said they expect the deal to close by the end of the third quarter of calendar 2007.

Nice reported that once the deal is completed, Actimize will operate as a wholly-owned subsidiary and retain its current management team.

Actimize has earned a name for itself as a provider of powerful security analytics tools that businesses can use to watch for irregularities in the manner that employees handle data. Among the financial services customers the company lists on its Web site are Bank of America, Citigroup, and Wells Fargo.

Actimize claims that its customers can use applications like its Employee Fraud Prevention software to scan through large volumes of database file-access logs and other transaction-related data to determine if workers are trying to steal information from sensitive records or pass it along to others.

In addition to watching out for clear policy violations, such as employees who open sensitive files that they do not have permission to view, Actimize’s applications also look for more subtle behavior patterns which could indicate inappropriate activity, such as workers who spend inordinate amounts of time viewing particular records or use Webmail sites simultaneous to their use of protected systems.

Amir Orad, executive vice president for marketing at Actimize, said that insider fraud continues to prove a major headache for many financial services firms.

In addition to a growing number of employees who have discovered, there is such a market for stolen data — in particular sensitive personal financial records that can be used to carry out identity fraud — that some organized crime groups have begin planting workers inside large companies for the specific purpose of collecting valuable information, he said.

“We have evidence that organized crime groups are recruiting people to go into these companies and commit fraud, as either existing or new employees,” Orad said. “It’s key to look for irregularities in behavior that might indicate misuse including efforts by people to cover their tracks after doing something with the data they’re not supposed to.”

If approved, Nice estimates that Actimize will add roughly $60 million in revenue to its earnings during 2007.