At Experian DataLabs in Carmel Valley, a team of scientists is thwarting bad guys with math.
A top-five U.S. credit card issuer recently dumped about 6 billion transaction records on Experian DataLabs to see if its fancy machine learning mathematical formulas could do a better job of rooting out credit card fraud than the bank’s existing system.
Experian scientists used neuro-embedding/natural language processing techniques to understand the “syntax” of the credit card data, said Honghao Shan, a Ph.D. computer scientist.
Transactions with odd syntax – words out of place if you will – popped up as potential fraud.
“We thought we had figured it out and went back to them,” said Eric Haller, head of Experian DataLabs. “They said, how did you do that? You identified fraud that we can’t identify ourselves. And it turns out we reduced their false positives by half.”
Making sense of the tsunami of data from connected devices and other sources is a fast-growing technology field. Predictive analytics – the mathematical formulas that find patterns and draws conclusions from the data – are being applied to applications ranging from smart cities to medicine to cybersecurity.
“We are going now from the monitoring era to really anticipating what is about to happen at that moment, or what will happen in the next hour or two hours so we can plan for it,” said Ilkay Altintas, the Ph.D. chief data science officer at the San Diego Supercomputer Center.
San Diego has a small cluster of data analytics firms — particularly in the sub-specialty of searching for credit card fraud.
ID Analytics, FICO, Opera Solutions, Global Analytics and Experian DataLabs are among the local companies applying math to big databases to uncover useful information.
Many of these San Diego analytics firms have their roots in HNC Software, which was purchased by FICO in 2002 for $810 million. Several HNC executives and scientists left after the FICO acquisition to start their own firms.
“There is this network from HNC that is still pervasive,” said Haller, who formerly worked as chief marketing officer at HNC. “It is a very tight community. Almost everybody keeps in contact with each other.”
Experian, a 17,000 employee global business services firm, is best known as one of the big three consumer credit bureaus. Haller was managing products for its credit services group in Costa Mesa about six years ago when he pitched the idea of creating an internal research lab focused on analytics.
“We needed to invest in R & D,” said Haller. “It’s all about the people. I knew the people. I worked with them all down in San Diego.”
Experian gave Haller’s DataLabs experiment three years. Though it started with a small team, it got off to a hot start. A major credit card firm hired the lab to build an analytics-based cross-sell marketing platform.
That led to other projects. The company built Extended View, which ranked the risk of lending to people with little or no credit history by looking at data ranging from gym memberships to rental history to magazine subscriptions.