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William McKnight

Hello and welcome to my blog!

I will periodically be sharing my thoughts and observations on information management here in the blog. I am passionate about the effective creation, management and distribution of information for the benefit of company goals, and I'm thrilled to be a part of my clients' growth plans and connect what the industry provides to those goals. I have played many roles, but the perspective I come from is benefit to the end client. I hope the entries can be of some modest benefit to that goal. Please share your thoughts and input to the topics.

About the author >

William is the president of McKnight Consulting Group, a firm focused on delivering business value and solving business challenges utilizing proven, streamlined approaches in data warehousing, master data management and business intelligence, all with a focus on data quality and scalable architectures. William functions as strategist, information architect and program manager for complex, high-volume, full life-cycle implementations worldwide. William is a Southwest Entrepreneur of the Year finalist, a frequent best-practices judge, has authored hundreds of articles and white papers, and given hundreds of international keynotes and public seminars. His team's implementations from both IT and consultant positions have won Best Practices awards. He is a former IT Vice President of a Fortune company, a former software engineer, and holds an MBA. William is author of the book 90 Days to Success in Consulting. Contact William at wmcknight@mcknightcg.com.

Editor's Note: More articles and resources are available in William's BeyeNETWORK Expert Channel. Be sure to visit today!

In a prior post, I talked about having my credit card cancelled over a small purchase I made that the bank unexplainably could not tightly quantify. I spoke with Claudia Imhoff over the weekend and we decided this was really a failure of operational business intelligence.

It highlights the need for master data in the operational environment, where intra-day information is accessible along with profile summaries that are fed from the data warehouse. If a summarized profile from transaction data, such as length of service, average balance, late payment totals, credit limit, etc. were available to the operational intelligence in the approval process for the transaction, it may have made a different, and better, business decision.

Instead, it's likely that the bank made the decision in absence of this analytical information, looking at the transaction only on the face of it.

Operational business intelligence is becoming more and more important. Taking optimal advantage of the moment requires analytics, likely from a downstream data warehouse and fed back into master data management systems.


Posted August 8, 2006 9:21 AM
Permalink | 5 Comments |

5 Comments

Well you're right that a profile of account transactions is an essential in effective card fraud detection systems. In fact, the 80% or so of US bank card accounts monitored by Fair Isaac?s Falcon Fraud Manager all have such a profile maintained over the entire life of the account and updated within milliseconds of every transaction received. In fact, these profiles reflect all transactions ever processed on the account with the most recent and most extreme transactions having the greatest weight.

The profiles are not retained in a data warehouse as you suggest though. Such technology is far too slow to meet the demands of credit card operations where near simultaneous transactions from opposite corners of the world can be arranged by well-organized fraudsters - nearly all successful fraud is by well-organized groups. Instead, the profiles are retained in a special file much more rapidly updated and accessed than possible with the relational database management systems used for data warehouses. This specialized structure makes possible transaction processing rates of up to one billion transactions per day through a single computer.

Also, the profile is only the beginning. In fact, it is the input to a neural network system trained on millions of historical transactions to recognize profile changes indicative of fraud. It recognizes complex and subtle changes associated with fraud and finishes its work while you wait for approval at the merchant. Most bank card frauds are detected after only one or two transactions and usually the detection relies upon many weak indicators combined rather than any one or two clues.

I don't know the details or cause of the misfire on your card that triggered your concerns, but it could be from many sources not visible to you and not usually revealed by bank operators. Perhaps the merchant involved had just suffered a binge of fraud. Perhaps you had used your credit card at an ATM two weeks prior at about the same time as several other cards that subsequently experienced frauds. Perhaps your account record had been recently accessed by an employee under suspicion. Perhaps the transaction was "out of character" as recognized from your profile because of time of day, rate of movement from his last transaction or because the amount was smaller than usual for you at merchants of that kind (some of the most suspicious transactions are for $1.00 or similar amounts when a fraudster is testing the card's status). It might have been for many reasons. In the end, fraud detection is a matter of beating the odds. It's not by any means certain, but it's much better than guessing and has driven fraud to a rate one-third what it was before such systems were employed.

I hope this clarifies the issues a bit. In fact, the Falcon system is by far the most successful and widespread artificial intelligence system ever developed by man. But it's still not perfect!

I work for a data warehousing company in china, and i found that you are the author of the article "Choosing a DBMS for data warehousing " . but i can not find it on the net. can you be pleased to send me a copy of that ? thanks in advance.

Hi Dennis,

I am the author of that paper and I have sent it to you. Enjoy.

Hello William,

We are in the process of chosing a DBMS for our company for DataWarehouse purpose. Your whitepaper "Choosing a DBMS for data warehousing" I guess would help me understand the differences better.

Would it be possible for you to email me a copy of your whitepaper. I searched on the internet but was unable to find it.

Kindly email it to grajee@yahoo.com

Thanks,
Gopi

Hi William,

I am an ETL guy and in process of learning indepth warehousing concepts and choosing DBMS for warehousing. I saw lots of experts directing to see your whitepaper. Would you please email it to me? It would be of great help for me.

Thanks much,
Udhaya

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