CREDIT CARD FRAUD DETECTION:

Fraud detection is a continuously evolving discipline and requires a tool that is intelligent enough to adapt to criminals strategies and ever changing tactics to commit fraud. With the relatively recent growth of the Internet into a global economic force, credit card fraud has become more prevalent. It is in a company and card issuers interest to prevent fraud or, failing this, to detect fraud as soon as possible. Otherwise consumer trust in both the card and the company decreases and revenue is lost, in addition to the direct losses made through fraudulent sales The inherit nature of neural networks is the ability to learn is being able to capture and represent complex input/output relationships. The motivation for the development of neural network technology stemmed from the desire to develop an artificial system that could perform "intelligent" tasks similar to those performed by the human brain. Neural networks resemble the human brain in the following two ways: 1. A neural network acquires knowledge through learning. 2. A neural network's knowledge is stored within inter-neuron connection strengths known as synaptic weights. The true power and advantage of neural networks lies in their ability to represent both linear and non-linear relationships and in their ability to learn these relationships directly from the data being modeled. Traditional linear models are simply inadequate when it comes to modeling data that contains non-linear characteristics

Sentinel Sentinel is a complete solution designed to prevent, detect, analyze and follow up banking fraud in any entity or corporation in the financial business. Specific fraud detection solutions may include:
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Credit Debit ATM

Sentinel allows you to:

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Process data from any origin, whether it comes from transactions, merchants or cardholders. Monitor issuer, acquirer or banking activities. Examine information by strategic business units such as countries, regions, banks, etc. Analyze data from a managerial perspective, through a technology known as Business Intelligence. Evaluate the performance of the rules created in the system and the profit generated by them. Minimize risk and loss due to banking fraud.

What is Neural Fraud Management Systems (NFMS)? The Neural Fraud Management System is a completely automated and state-ofthe-art integrated system of neural networks, Fraud Detection Engine, Automatic Modeling System (AMS), supervised clustering, and system retune. Combined with Sentinel the Neural Fraud Management System (NFMS) can automatically scale the relative importance of fraud to non-fraud, group symbols to reduce dimensionality, and evolve over time to detect new patterns and trend types in frauds. How does NFMS work?
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The Neural Networks are completely adaptive able to learn from patterns of legitimate behavior and adapting to the evolving of behavior of normal transactions and patterns of fraud transactions and adapting to the evolving of the behavior of fraud transactions. The recall process of the Neural Networks is extremely fast and can make decisions in real time.

Supervised Clustering uses a mix of traditional clustering and multi-dimensional histogram analysis with a discrete metric. The process is very fast and can make decisions in real time.

Statistical Analysis ranks the most important features based on the joint distribution per transaction patterns. In addition, it finds the optimal subset of features and symbols with maximum information and minimum redundancy.

The Fraud Detection Engine can apply the generated model by AMS on input data stream and output the detection results by specified model: Neural Networks, Clustering, and Combined. The Fraud Detection Engine supports both Windows and UNIX platforms.

Retuning the basic model created by AMS to adapt to the recent trend of both the legitimate behavior and fraud behavior and update the model for Fraud Detection Engine.

The Automatic Modeling System (AMS) chooses the important inputs and symbols, train and create clustering and neural network models.

Advantages
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Significantly reduces losses due to fraud. Identify new fraud methods to reduce fraud losses and minimize false positives. It can work in real time, online or batch modes. Reinforce customer trust. Improve operational efficiencies.

SPATIAL DATA MINING

The main difference between data mining in relational DBS and in spatial DBS is that attributes of the neighbors of some object of interest may have an influence on the object and therefore have to be considered as well. The explicit location and extension of spatial objects define implicit relations of spatial which are used by spatial data mining algorithms. Therefore, new techniques are required for effective and efficient data mining.

DATABASE PRIMITIVES FOR SPATIAL DATA MINING

We have developed a set of database primitives for mining in spatial databases which are sufficient to express most of the algorithms for spatial data mining and which can be efficiently supported by a DBMS. We believe that the use of these database primitives will enable the integration of spatial data mining with existing DBMSs and will speed-up the development of new spatial data mining algorithms. The database primitives are based on the concepts of neighborhood graphs and neighborhood paths.

EFFICIENT DBMS SUPPORT

Effective filters allow restricting the search to such neighborhood paths leading away from a starting object. Neighborhood indices materialize certain neighborhood graphs to support efficient processing of the database primitives by a DBMS. The database primitives have been implemented on top of the DBMS Illustrate and are being ported to Informix Universal Server.

ALGORITHMS FOR SPATIAL DATA MINING

New algorithms for spatial characterization and spatial trend analysis were developed. For spatial characterization it is important that class membership of a database object is not only determined by its non-spatial attributes but also by the attributes of

objects in its neighborhood. In spatial trend analysis, patterns of change of some nonspatial attributes in the neighborhood of a database object are determined.

SPATIAL TREND DETECTION IN GIS

Spatial trends describe a regular change of non-spatial attributes when moving away from certain start objects. Global and local trends can be distinguished. To detect and explain such spatial trends, e.g. with respect to the economic power, is an important issue in economic geography.

SPATIAL CHARACTERIZATION OF INTERESTING REGIONS

Another important task of economic geography is to characterize certain target regions such as areas with a high percentage of retirees. Spatial characterization does not only consider the attributes of the target regions but also neighboring regions and their properties.

TEMPORAL DATA MINING

Time is one of the essential natures of data. Many real-life data describes the property or status of some object at a particular time instant. For example, a supermarket transaction database records the items purchased by customers at some time point. In this database, every transaction has a time stamp in which the transaction is conducted. In a telecommunication database, every signal is also associated with a time. As a third example, the price of a stock is not a constant, but changes with time as well. Temporal data mining refers to data mining performed on the temporal data. The primary objective is to discover interesting patterns hidden in the data. For example, an interesting pattern in a stock database may be that when the price of stock A increases, the price of stock B will increase in the next two days.

TIME SERIES
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Time series = sequence of values usually recorded at regular increasing intervals (yearly, monthly, weekly, ... secondly). Regularity is critical: without regularity, moving averages, autocorrelations, and volatility would not make sense (e.g. if I have a sequence of daily price closings and then 1,000 values within one day, the moving average covering the entire sequence doesn't make much sense). Non-regular time series are also of interest (e.g. the history of stock splits), but we can say less about them.

Time series also exhibit historicity: the past is an indicator of the future. That is why auto regression can be used to predict the future of sales and why the past volatility may predict future volatility.

SYSTEM SUPPORT FOR TIME SERIES

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We want to be able to create time series, manipulate them, keep them in persistent storage, and display them in reports.

Time series have frequencies, but may not have values for every time instance at the stated frequency, e.g. business day has the frequency of a day but has no values on holidays or weekends. On the other hand, time frequencies with gaps can present problems in international markets. For example, some Asian stock markets are open on Saturdays. Different markets don't have the same holidays in general. One solution is to store values without gaps everywhere (i.e. every day).

Then the question becomes: How to fill the gaps? The answer has to do with the kind of value stored.

The values associated with each time are of two general types (we borrow this distinction from the FAME system):
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Level values stay the same from one period to the next in the absence of activity. For example, inventory is a level value, because inventory stays the same if you neither buy nor sell.

Flow values are zero in the absence of activity. For example, expenses go to zero if you buy nothing.

This distinction turns out to be important when interpolating missing values and for time scale conversion.

OPERATIONS ON TIME SERIES DATA

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A typical framework is that of the FAME system, since it embodies an excellent understanding of the special properties of time series. FAME stands for forecasting, analysis and modeling environment FAME information systems, Ann Arbor Michigan. www.fame.com

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Data Preparation (i.e. interpolating and time scale conversion) -- curve-fitting Queries (e.g. moving averages and sums) -- aggregates over time. Forecasting (e.g. statistical or data mining-based extrapolation) -- regression, correlation, Fourier analysis, and pattern-finding.

TEXT DATA MINING

Text mining, sometimes alternately referred to as text data mining, roughly equivalent to text analytics, refers to the process of deriving high-quality information from text. High-quality information is typically derived through the divining of patterns and trends through means such as statistical pattern learning. Text mining usually involves the process of structuring the input text 'High quality' in text mining usually refers to some combination of relevance, novelty, and interestingness. Typical text mining tasks include text categorization, text clustering, concept/entity extraction, production of granular taxonomies, sentiment analysis, document summarization, and entity relation modeling.

APPLICATION Recently, text mining has received attention in many areas. SECURITY APPLICATIONS Many text mining software packages are marketed for security applications, especially analysis of plain text sources such as Internet news. It also involves in the study of text encryption. BIOMEDICAL APPLICATIONS range of text mining applications in the biomedical literature has been described. One example is Pub Gene that combines biomedical text mining with network visualization as an Internet service. Another text mining example is GoPubMed. Semantic similarity has also been used by text-mining systems, namely, GOAnnotator. Text mining is being used by large media companies, such as the Tribune Company, to disambiguate information and to provide readers with greater search experiences, which in turn increases site "stickiness" and revenue. Additionally, on the back end, editors are benefiting by being able to share, associate and package news across properties, significantly increasing opportunities to monetize content. Text mining is starting to be used in marketing as well, more specifically in analytical customer relationship management. Coussement and Van den Poel (2008) apply it to improve predictive analytics models for customer churn (customer attrition). Sentiment analysis may involve analysis of movie reviews for estimating how favorable a review is for a movie. Such an analysis may need a labeled data set or labeling of the affectivity of words. A resource for affectivity of words has been made for WordNet. The issue of text mining is of importance to publishers who hold large databases of information needing indexing for retrieval. This is especially true in scientific disciplines, in which highly specific information is often contained within written text. Therefore, initiatives have been taken such as Nature's proposal for an Open