5 step recipe for Network Analytics – a real world approach, delivering tangible results using AI

Whether you like it or not, artificial intelligence (AI) is here to stay, and with almost every technology company saying “we use AI” and “we can make you 1million % more effective”, businesses are not only interested in how to use AI, but are under pressure to make it work!

So why are businesses so often underwhelmed by the results of AI?

I’ll tell you, it’s because of three things – firstly, adoption – getting people to move away from traditional methodologies is hard. Secondly, the methodology is ‘blackbox’, so users can’t identify how the outcomes are delivered and consequently don’t understand, or more often, trust the results. And thirdly, false positives; poor tuning and application of AI can actually decrease efficiency rather than improve it.

The concurrent issue is that people often don’t realise that even AI needs a helping hand, simply throwing compute capacity at the problem is akin to the monkeys and typewriters theorem.

So, what’s the answer? And what’s the helping hand that can make AI, actually, 100% more effective? Well, there’s no magical silver bullet, but the place to get the best results, its to start at the foundation – the data. If you want real world results, your starting point has to be underlying data that represents the real world – this is something called network analytics.

It sounds obvious, but as anyone who’s worked with data or AI will know, it’s not simple. However, this 5 point recipe can start you on the journey to getting real world results from your AI and moving to be data driven organisation:

1)    Resolve your entities: Match entities, create a single customer view

Data pertaining to individuals, organisations or real world concepts should be joined together – this is a process called Entity Resolution, an example of this is creating statistical single view of customer. However, match rates are often as poor as 50% (on a good day!) due to data quality issues, or are confused by trying to match complex entities such as businesses. Fortunately, there are techniques that can raise resolution rates to 85%+ by using multiple data points to overcome data quality challenges.

2)    Create networks: Link the networks together, uncover the relationships

Entities interact in the real world and form networks: businesses have directors, customers, suppliers and employees, people have networks too – those they live with, places they visit together or others they interact with. However, to consume these networks using AI you need to generate statistics about the networks, implying that networks do not go on forever. This in turn means they have to be “bounded” – the question being where to make the edges of a network. Furthermore, you have to deal with over-connectivity (e.g. many people pay utility bills – should they all be connected – answer probably not). But once you have good quality networks in your data you’ll never look back.

3)   Apply network analytics: Understand your network, analyse the relationships

Now you are ready to develop your AI models, whether detecting financial crime, assessing risk or identifying contagious churners, you’ll find that network analytics not only predicts 100% more of what you are looking for, but false positive rates plummet. The outcome can be up to a 3 fold increase in effectiveness by only focusing on those alerts of interest.

4)    Operationalise analytics: Bring AI into the process to produce compelling outcomes

Often crucially missed, is the impact that can be achieved by using network analytics to operationalise AI to produce compelling outcomes. Imagine the traditional AI model detecting insurance claims fraud: “this claim has 67% risk of fraud” (based purely on the claim data alone) – where does the investigator start? How long will it take them to investigate? Will they remember; when the system was right or each time it was wrong? False positives can be the scourge of AI solution adoption. Now imagine the network analytics equivalent: “this claim may be fraudulent because:

a.     The claimant’s partner was previously insured and made a similar claim;

b.     The credit card that bought this policy, bought two other policies both having made similar claims in the last 3 months;

c.     The ratio of whiplashes to vehicle damage claims across this network is 3:1;

d.     The network has a 150% growth in claims over the previous month;

e.     The vehicle was involved with another vehicle with claims that were rejected for fraud.”

Clearly, an investigator can make a much faster decision when presented with an alert that has been elaborated using network analytics. This dramatically improves the throughput of the investigation team – often cutting effort by 70%. A similar approach can be used for AML investigations or tax compliance issues as well as assessing the next product to cross sell to a business.

5)    Corporate memory: Blend humans with AI, enhance effectiveness

Blending human decision making with AI is often under looked and is a missed opportunity as it can significantly enhance future effectiveness. Every time a human makes a decision that outcome can be stored against the appropriate entity within the network. As all these nuggets of insight are on a network, their impact is amplified as they influence the scoring of other surrounding entities on the network. For example, the average over indebtedness or payments in arrears on a network could be a useful variable to use in your models.

If you are really wanting to up your game on data driven decisions, the next generation approach is to use network analytics. The benefits are significant, and once you have entities and networks in your data lake, your data scientists will wonder how they ever managed to deliver outcomes without them. You should aim to make this a fundamental utility within the data lake that can operate both in batch and real time. Technology is now available to accelerate your journey towards network analytics without having to re-invent the wheel. Your data scientists can deliver game changing results across your organisation using AI, by combining it with network analytics.

 

Imam Hoque COO and Global Head of Products at Quantexa, pioneer of network analytics and its application in fighting crime and generating actionable insight across global banks, insurers, governments and telcos. He has lead the development of 3 market leading entity resolution and network analytics software platforms and currently leads a team with over 200 collective years of experience in network analytics at Quantexa.

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