Building Credit-Risk Evaluation Expert Systems Using Neural Network Rule Extraction and Decision Tables.

In this paper, we evaluate and contrast four neural network rule extraction approaches for credit scoring. Experiments are carried out on three real life credit scoring data sets. Both the continuous and the discretised versions of all data sets are analysed. The rule extraction algorithms, Neurolinear, Neurorule, Trepan and Nefclass, have different characteristics with respect to their perception of the neural network and their way of representing the generated rules or knowledge. It is shown that Neurolinear, Neurorule and Trepan are able to extract very concise rule sets or trees with a high predictive accuracy when compared to classical decision tree (rule) induction algorithms like C4.5(rules). Especially Neurorule extracted easy to understand and powerful propositional ifthen rules for all discretised data sets. Hence, the Neurorule algorithm may offer a viable alternative for rule generation and knowledge discovery in the domain of credit scoring.Credit; Information systems; International; Systems;

An enhanced intelligent database engine by neural network and data mining

An Intelligent Database Engine (IDE) is developed to solve any classification problem by providing two integrated features: decision-making by a backpropagation (BP) neural network (NN) and decision support by Apriori, a data mining (DM) algorithm. Previous experimental results show the accuracy of NN (90%) and DM (60%) to be drastically distinct. Thus, efforts to improve DM accuracy is crucial to ensure a well-balanced hybrid architecture. The poor DM performance is caused by either too few rules or too many poor rules which are generated in the classifier. Thus, the first problem is curbed by generating multiple level rules, by incorporating multiple attribute support and level confidence to the initial Apriori. The second problem is tackled by implementing two strengthening procedures, confidence and Bayes verification to filter out the unpredictive rules. Experiments with more datasets are carried out to compare the performance of initial and improved Apriori. Great improvement is obtained for the latte

Neuroinspired unsupervised learning and pruning with subquantum CBRAM arrays.

Resistive RAM crossbar arrays offer an attractive solution to minimize off-chip data transfer and parallelize on-chip computations for neural networks. Here, we report a hardware/software co-design approach based on low energy subquantum conductive bridging RAM (CBRAM®) devices and a network pruning technique to reduce network level energy consumption. First, we demonstrate low energy subquantum CBRAM devices exhibiting gradual switching characteristics important for implementing weight updates in hardware during unsupervised learning. Then we develop a network pruning algorithm that can be employed during training, different from previous network pruning approaches applied for inference only. Using a 512 kbit subquantum CBRAM array, we experimentally demonstrate high recognition accuracy on the MNIST dataset for digital implementation of unsupervised learning. Our hardware/software co-design approach can pave the way towards resistive memory based neuro-inspired systems that can autonomously learn and process information in power-limited settings

Credit-Scoring Methods (in English)

The paper reviews the best-developed and most frequently applied methods of credit scoring employed by commercial banks when evaluating loan applications. The authors concentrate on retail loans – applied research in this segment is limited, though there has been a sharp increase in the volume of loans to retail clients in recent years. Logit analysis is identified as the most frequent credit-scoring method used by banks. However, other nonparametric methods are widespread in terms of pattern recognition. The methods reviewed have potential for application in post-transition countries.banking sector, credit scoring, discrimination analysis, pattern recognition, retail loans

A survey of outlier detection methodologies

Outlier detection has been used for centuries to detect and, where appropriate, remove anomalous observations from data. Outliers arise due to mechanical faults, changes in system behaviour, fraudulent behaviour, human error, instrument error or simply through natural deviations in populations. Their detection can identify system faults and fraud before they escalate with potentially catastrophic consequences. It can identify errors and remove their contaminating effect on the data set and as such to purify the data for processing. The original outlier detection methods were arbitrary but now, principled and systematic techniques are used, drawn from the full gamut of Computer Science and Statistics. In this paper, we introduce a survey of contemporary techniques for outlier detection. We identify their respective motivations and distinguish their advantages and disadvantages in a comparative review

Intelligent Financial Fraud Detection Practices: An Investigation

Financial fraud is an issue with far reaching consequences in the finance industry, government, corporate sectors, and for ordinary consumers. Increasing dependence on new technologies such as cloud and mobile computing in recent years has compounded the problem. Traditional methods of detection involve extensive use of auditing, where a trained individual manually observes reports or transactions in an attempt to discover fraudulent behaviour. This method is not only time consuming, expensive and inaccurate, but in the age of big data it is also impractical. Not surprisingly, financial institutions have turned to automated processes using statistical and computational methods. This paper presents a comprehensive investigation on financial fraud detection practices using such data mining methods, with a particular focus on computational intelligence-based techniques. Classification of the practices based on key aspects such as detection algorithm used, fraud type investigated, and success rate have been covered. Issues and challenges associated with the current practices and potential future direction of research have also been identified.Comment: Proceedings of the 10th International Conference on Security and Privacy in Communication Networks (SecureComm 2014