HNC Software Inc. is introducing a new version of Falcon, the credit card fraud detection system used by a majority of the top 50 U.S. credit card issuers and 16 of the world’s top 25 issuers.
Falcon is a predictive software solution that uses neural networks, expert rules bases, and HNC’s proprietary cardholder behavior profiling technology to analyze card transactions in real time to predict fraud. The new release, Falcon 4.0, is year 2000 compliant, provides greater flexibility in its fraud operations interface, and creates and maintains more detailed cardholder profiles. Most significantly, Falcon 4.0 introduces a new-generation scoring model that yields substantial performance improvement.
Called Model 2000, the new Falcon Consortium model makes use of an innovative advance in HNC’s proprietary profiling technology. Model 2000 employs a variety of scoring methods in conjunction with a more intelligent set of profiles. Using the transaction information and behavioral profiles, Model 2000 selects the best scoring method for a given transaction. This technique provides a dramatic improvement in fraud detection, especially at low false-positive rates, where a real-time referral strategy is most effective.
“We expect Falcon issuers see at least a 30 percent improvement in the Model 2000 performance,” said Krishna Gopinathan, originator of Falcon and vice president of Advanced Projects at HNC Software. “Our fraud models have always been outstanding performers, so there really has to be a big performance increase for us to be this enthusiastic. Under some circumstances, the average U.S. client might see as much as an 80 percent increase in dollars saved.”
Gopinathan added that fraud model performance must be measured within the context of actual operations. “The 80 percent savings could be achieved by someone using a strategy of referring real-time transactions at a 3-to-1 false-positive rate and working cases at 40-to-1 false-positive rate.”
HNC has localized Falcon to a variety of different countries and optimized its performance with regional or country-specific models. Many of the techniques used in Model 2000 are already employed in the latest international models.
A workshop on Falcon 4.0 enhancements and the best strategies to use to maximize the benefits of Model 2000 will be presented at HNC’s Financial Technology Conference, March 1-4, in San Diego. Installation of Falcon 4.0 is currently being scheduled by HNC Software Client Services.
With headquarters in San Diego, HNC Software Inc. (NASDAQHNCS) is a world leader in the development and delivery of predictive software solutions in client/server environments. HNC provides innovative predictive software systems in the financial services, retail, insurance information, and electronic commerce markets. For more information, see [www.hnc.com] or contact Patsy Campbell, director of Marketing, HNC Software Inc., 5930 Cornerstone Court West, San Diego, CA 92121, (619) 546-8877. For investor relations hotline, call (800) 396-8052.