Towards a Comprehensible and Accurate Credit Management Model: Application of four Computational Intelligence Methodologies

The paper presents methods for classification of applicants into different categories of credit risk using four different computational intelligence techniques. The selected methodologies involved in the rule-based categorization task are (1) feedforward neural networks trained with second order methods (2) inductive machine learning, (3) hierarchical decision trees produced by grammar-guided genetic programming and (4) fuzzy rule based systems produced by grammar-guided genetic programming. The data used are both numerical and linguistic in nature and they represent a real-world problem, that of deciding whether a loan should be granted or not, in respect to financial details of customers applying for that loan, to a specific private EU bank. We examine the proposed classification models with a sample of enterprises that applied for a loan, each of which is described by financial decision variables (ratios), and classified to one of the four predetermined classes. Attention is given to the comprehensibility and the ease of use for the acquired decision models. Results show that the application of the proposed methods can make the classification task easier and - in some cases - may minimize significantly the amount of required credit data. We consider that these methodologies may also give the chance for the extraction of a comprehensible credit management model or even the incorporation of a related decision support system in bankin

A Multi-Gene Genetic Programming Application for Predicting Students Failure at School

Several efforts to predict student failure rate (SFR) at school accurately still remains a core problem area faced by many in the educational sector. The procedure for forecasting SFR are rigid and most often times require data scaling or conversion into binary form such as is the case of the logistic model which may lead to lose of information and effect size attenuation. Also, the high number of factors, incomplete and unbalanced dataset, and black boxing issues as in Artificial Neural Networks and Fuzzy logic systems exposes the need for more efficient tools. Currently the application of Genetic Programming (GP) holds great promises and has produced tremendous positive results in different sectors. In this regard, this study developed GPSFARPS, a software application to provide a robust solution to the prediction of SFR using an evolutionary algorithm known as multi-gene genetic programming. The approach is validated by feeding a testing data set to the evolved GP models. Result obtained from GPSFARPS simulations show its unique ability to evolve a suitable failure rate expression with a fast convergence at 30 generations from a maximum specified generation of 500. The multi-gene system was also able to minimize the evolved model expression and accurately predict student failure rate using a subset of the original expressionComment: 14 pages, 9 figures, Journal paper. arXiv admin note: text overlap with arXiv:1403.0623 by other author

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

Artificial intelligence makes computers lazy

This paper looks at the age-old problem of trying to instil some degree of intelligence in computers. Genetic Algorithms (GA) and Genetic Programming (GP) are techniques that are used to evolve a solution to a problem using processes that mimic natural evolution. This paper reflects on the experience gained while conducting research applying GA and GP to two quite different problems: Medical Diagnosis and Robot Path Planning. An observation is made that when these algorithms are not applied correctly the computer seemingly exhibits lazy behaviour, arriving at a suboptimal solutions. Using examples, this paper shows how this 'lazy' behaviour can be overcome

Application of multiobjective genetic programming to the design of robot failure recognition systems

We present an evolutionary approach using multiobjective genetic programming (MOGP) to derive optimal feature extraction preprocessing stages for robot failure detection. This data-driven machine learning method is compared both with conventional (nonevolutionary) classifiers and a set of domain-dependent feature extraction methods. We conclude MOGP is an effective and practical design method for failure recognition systems with enhanced recognition accuracy over conventional classifiers, independent of domain knowledge