3,092 research outputs found
Fuzzy Logic and Its Uses in Finance: A Systematic Review Exploring Its Potential to Deal with Banking Crises
The major success of fuzzy logic in the field of remote control opened the door to its application in many other fields, including finance. However, there has not been an updated and comprehensive literature review on the uses of fuzzy logic in the financial field. For that reason, this study attempts to critically examine fuzzy logic as an effective, useful method to be applied to financial research and, particularly, to the management of banking crises. The data sources were Web of Science and Scopus, followed by an assessment of the records according to pre-established criteria and an arrangement of the information in two main axes: financial markets and corporate finance. A major finding of this analysis is that fuzzy logic has not yet been used to address banking crises or as an alternative to ensure the resolvability of banks while minimizing the impact on the real economy. Therefore, we consider this article relevant for supervisory and regulatory bodies, as well as for banks and academic researchers, since it opens the door to several new research axes on banking crisis analyses using artificial intelligence techniques
Large-Scale Detection of Non-Technical Losses in Imbalanced Data Sets
Non-technical losses (NTL) such as electricity theft cause significant harm
to our economies, as in some countries they may range up to 40% of the total
electricity distributed. Detecting NTLs requires costly on-site inspections.
Accurate prediction of NTLs for customers using machine learning is therefore
crucial. To date, related research largely ignore that the two classes of
regular and non-regular customers are highly imbalanced, that NTL proportions
may change and mostly consider small data sets, often not allowing to deploy
the results in production. In this paper, we present a comprehensive approach
to assess three NTL detection models for different NTL proportions in large
real world data sets of 100Ks of customers: Boolean rules, fuzzy logic and
Support Vector Machine. This work has resulted in appreciable results that are
about to be deployed in a leading industry solution. We believe that the
considerations and observations made in this contribution are necessary for
future smart meter research in order to report their effectiveness on
imbalanced and large real world data sets.Comment: Proceedings of the Seventh IEEE Conference on Innovative Smart Grid
Technologies (ISGT 2016
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
A Comprehensive Survey of Data Mining-based Fraud Detection Research
This survey paper categorises, compares, and summarises from almost all
published technical and review articles in automated fraud detection within the
last 10 years. It defines the professional fraudster, formalises the main types
and subtypes of known fraud, and presents the nature of data evidence collected
within affected industries. Within the business context of mining the data to
achieve higher cost savings, this research presents methods and techniques
together with their problems. Compared to all related reviews on fraud
detection, this survey covers much more technical articles and is the only one,
to the best of our knowledge, which proposes alternative data and solutions
from related domains.Comment: 14 page
The role of IT/IS in combating fraud in the payment card industry
The vast growth of the payment card industry (PCI) in the last 50 years has placed the industry in the centre of attention, not only because of this growth, but also because of the increase of fraudulent transactions. The conducted research in this domain has produced statistical reports on detection of fraud, and ways of protection. On the other hand, the relevant body of research is quite partial and covers only specific topics. For instance, the provided reports related to losses due to fraudulent usage of cards usually do not present the measures taken to combat fraud nor do they explain the way fraud happens. This can turn out to be confusing and makes one believe that card usage can be more negative than positive.
This paper is intended to provide accumulative and organized information of the efforts made to protect businesses from fraud. We try to reveal the effectiveness and efficiency of the current fraud combating techniques and show that organized worldwide efforts are needed to take care of the larger part of the problem. The research questions that will be addressed in the paper are: 1) how can IT/IS help in combating fraud in the PCI?, and 2) is the implemented IT/IS effective and efficient enough to bring progress in combating fraud?
Our research methodology is based on a case study conducted in a Macedonian bank. The research is explorative and will be mostly qualitative in nature; however some quantitative aspects will be included.
The findings indicate that fraud can take up many forms. A classification of the different forms of data theft into different fraudulent appearances was made. We showed that the benefits from implementing the fraud reduction efforts are multiple. Results show that a bank has to be very small to experience losses from fixed expenditures coming from the implementation of the fraud reduction IT/IS. Medium-sized and large banks should not even see any problems arising from those expenditures. Based on the empirical data and the presented facts we can conclude that the fraud reduction IT/IS do have a positive effect on all sides of the payment process and fulfills the expectations of all stakeholders
Parameter optimization for intelligent phishing detection using Adaptive Neuro-Fuzzy
Phishing attacks has been growing rapidly in the past few years. As a result, a number of approaches have been proposed to address the problem. Despite various approaches proposed such as feature-based and blacklist-based via machine learning techniques, there is still a lack of accuracy and real-time solution. Most approaches applying machine learning techniques requires that parameters are tuned to solve a problem, but parameters are difficult to tune to a desirable output. This study presents a parameter tuning framework, using adaptive Neuron-fuzzy inference system with comprehensive data to maximize systems performance. Extensive experiment was conducted. During ten-fold cross-validation, the data is split into training and testing pairs and parameters are set according to desirable output and have achieved 98.74% accuracy. Our results demonstrated higher performance compared to other results in the field. This paper contributes new comprehensive data, novel parameter tuning method and applied a new algorithm in a new field. The implication is that adaptive neuron-fuzzy system with effective data and proper parameter tuning can enhance system performance. The outcome will provide a new knowledge in the field
AI Solutions for MDS: Artificial Intelligence Techniques for Misuse Detection and Localisation in Telecommunication Environments
This report considers the application of Articial Intelligence (AI) techniques to
the problem of misuse detection and misuse localisation within telecommunications
environments. A broad survey of techniques is provided, that covers inter alia
rule based systems, model-based systems, case based reasoning, pattern matching,
clustering and feature extraction, articial neural networks, genetic algorithms, arti
cial immune systems, agent based systems, data mining and a variety of hybrid
approaches. The report then considers the central issue of event correlation, that
is at the heart of many misuse detection and localisation systems. The notion of
being able to infer misuse by the correlation of individual temporally distributed
events within a multiple data stream environment is explored, and a range of techniques,
covering model based approaches, `programmed' AI and machine learning
paradigms. It is found that, in general, correlation is best achieved via rule based approaches,
but that these suffer from a number of drawbacks, such as the difculty of
developing and maintaining an appropriate knowledge base, and the lack of ability
to generalise from known misuses to new unseen misuses. Two distinct approaches
are evident. One attempts to encode knowledge of known misuses, typically within
rules, and use this to screen events. This approach cannot generally detect misuses
for which it has not been programmed, i.e. it is prone to issuing false negatives.
The other attempts to `learn' the features of event patterns that constitute normal
behaviour, and, by observing patterns that do not match expected behaviour, detect
when a misuse has occurred. This approach is prone to issuing false positives,
i.e. inferring misuse from innocent patterns of behaviour that the system was not
trained to recognise. Contemporary approaches are seen to favour hybridisation,
often combining detection or localisation mechanisms for both abnormal and normal
behaviour, the former to capture known cases of misuse, the latter to capture
unknown cases. In some systems, these mechanisms even work together to update
each other to increase detection rates and lower false positive rates. It is concluded
that hybridisation offers the most promising future direction, but that a rule or state
based component is likely to remain, being the most natural approach to the correlation
of complex events. The challenge, then, is to mitigate the weaknesses of
canonical programmed systems such that learning, generalisation and adaptation
are more readily facilitated
A Novel Method of Fraud Detection of Credit Cards by Fuzzy, LSTM, and PSO Optimization
Since online shopping has become so popular, credit card theft has skyrocketed. This makes it hard to spot fake charges on accounts. In this research, credit card fraud detection is performed using a fuzzy database. It has been considered a data mining challenge to reliably identify whether or not a transaction is legitimate. This paper discusses the LSTM method and fuzzy logic. The learning process was sped up and made more precise by using a technique called particle swarm optimization (PSO). Performance values have been compared with those of the LSTM and fuzzy logic techniques, and a PSO-based neural network has been intensively trained by increasing the number of iterations and the population, or number of swarms. It has been shown that the PSO-based algorithm yields the best result for detecting fraudulent transactions. The goal of this method is to lower the mean square error (MSE) rate of the system. PSO is a popular optimization technique that can be used to locate the optimal set of features for the credit card fraud detection system. The proposed method PSO shows less mean squared error compared with Fuzzy and LSTM techniques
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