Fraud Detection in Financial Services Reloaded


 
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Old 09-20-2008
Fraud Detection in Financial Services Reloaded

Tim Bass
09-20-2008 03:36 PM
I read an interesting *post by*the ex-CTO of the now defunct Kaskad Technologies, where event processing colleague Colin Clark respectfully disagrees with my assesement of the (lack of) capabilites*in current-generation “CEP engines” for detecting complex fraud in financial services.* I’ll respond with a quote from*my September 2007 post,* End Users Should Define the CEP Market.
“Experienced end users are very intelligent.*

These end users*know the complex event processing problems they need to solve; and they know the limitations of the current COTS approaches marketed by the CEP community.* Even in Thailand, a country many of you might mistakenly think is not very advanced technologically, there are experts in telecommunications (who run large networks) who are working on very difficult fraud detection applications, and they use neural networks and say the results are very good.** However, there is not one CEP vendor, that I know of, who offers true CEP capability in*the form of neural nets.**

Almost every major bank, telco, etc. has the same opinion, and the same problem. They need much more capability than streaming joins, selects*and rules to solve their complex event processing problems that Dr. Luckham outlined in his book.** The software vendors are attempting to define the CEP market to match their capability; unfortunately, their capabilities do not meet the*requirements of the vast majority of end users who have CEP problems to solve.

If the current CEP platforms were truely solving complex event processing problems, annual sales would be orders of magnitudes higher.* Hence, the users have already voted.** The problem is that the CEP community is not listening.”

Not to be overly repetitive,* but the last part of this quote from a year ago*is worth highlighting:
“If the current CEP platforms were truely solving complex event processing problems, annual sales would be orders of magnitudes higher.* Hence, the users have already voted.** The problem is that the CEP community is not listening.”

Frankly speaking, nothing in the “CEP*world”*has changed, technologically speaking,*since this September 2007 post was written.* From a sales perspective, we have seen less CEP-related sales in 2008 than in prior years.** If these so called CEP products were actually capability of detecting “real” complex network-centric situations (threats)*in real-time, they would be selling faster than a cup of ice water*in the blazing hot Sahara desert.

Don’t shoot the messenger.* Build better detection engines!*

On the other hand,*maybe complex detection is too hard for most of these companies and that is why they*focus on routing, mediation and relatively simple rule-based scenarios,*versus complex event processing?



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