Canadian Underwriter

Deep learning to help drive fraud predictions by 2019: Gartner

September 20, 2017   by Canadian Underwriter

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Deep learning – a variation of machine learning (ML) – will be a “critical driver for best-in-class performance for demand, fraud and failure predictions” by 2019, research and advisory company Gartner, Inc. suggested on Wednesday.

Deep learning represents the major driver toward artificial intelligence. As deep learning delivers “superior data fusion capabilities” over other ML approaches, the Stamford, Conn.-based company expects it be a critical driver in predictions in two years.

“Deep learning is here to stay and expands ML by allowing intermediate representations of the data,” said Alexander Linden, research vice president at Gartner, in a press release. “It ultimately solves complex, data-rich business problems. Deep learning can, for example, give promising results when interpreting medical images in order to diagnose cancer early. It can also help improve the sight of visually impaired people, control self-driving vehicles, or recognize and understand a specific person’s speech.”

The release noted that deep learning inherits all the benefits of ML. “Several breakthroughs in cognitive domains demonstrate this,” Gartner reported, using the examples of Chinese web services company Baidu’s speech-to-text services that are “outperforming humans in similar tasks”; PayPal using deep learning as an approach to block fraudulent payments “and has cut its false-alarm rate in half”; and Amazon applying deep learning for product recommendations.

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Gartner reported that today, most common use cases of ML through deep learning are in image, text and audio processing, but increasingly also in “predicting demand, determining deficiencies around service and product quality, detecting new types of fraud, streaming analytics on data in motion and providing predictive or even prescriptive maintenance.”

But ML and AI initiatives require more than just data and algorithms to be successful, Gartner said; they need a blend of skills, infrastructure and business buy-in.

Gartner noted in the release that organizations lack the necessary data science skills for simple ML solutions, let alone deep learning. If ML projects cannot be addressed with easy-to-use applications, IT leaders will require ML expertise. “In this situation, IT leaders will be seeking specialists called data scientists,” Linden said. “Data scientists can extract a wide range of knowledge from data, can see an overview of the end-to-end process, and can solve data science problems.”

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By 2018, Gartner predicted, 80% of data scientists will have deep learning in their toolkits. “If one of your teams possesses a good understanding of data, has business domain expertise and can interpret outputs, it is ready to start ML experiments,” Linden said. “Even if your team lacks experience with algorithms, it can start with packaged applications or [application programming interfaces].”

Using ML and AI to add value to a business is complicated. “Don’t deliberately meet all ML prerequisites exactly – instead find the right problem to solve,” Linden suggested. “It is a good idea to start ML by using the same data you use in your popular reports, such as orders by a region. Then you can apply ML to make forward-looking predictions, for example a forecast for the same orders by a region for the next month. This way it extends on the after-the-fact reports to show business stakeholders the art of the possible with ML.”

Nevertheless, ML has limitations. “An ML system can make the best possible decision if it has enough data to learn from – such as millions of priced items and their availability – but it cannot judge whether any of the resulting decisions are OK ethically,” Linden said. A combination of data scientists’ current experience and skills with new ML capabilities will be required for successful ML and AI adoption.

“What’s hard for people is easy for ML, and what’s hard for ML is easy for people,” Linden concluded.

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