driving centralized decisions with advanced analytics

© 2017 Fair Isaac Corporation. All rights reserved. 1

WHITE PAPER

Leveraging the FICO® Decision Management Suite for Centralized Analytics and Decisions Across Domains

Sri JayasundarSenior Solutions Consultant, FICOSri Jayasundar is a senior technology manager with more than 20 years of experience in IBM and now FICO. He has held diverse positions in software sales and service organizations and is an expert in integrating middleware technologies to solve business problems. More recently, he leverages analytics and decision management to craft intelligent, agile solutions for FICO customers, helping them harness the power of analytics to bring data-driven business applications to life. Sri holds a bachelor’s degree in computer science and math from the University of Madras, and an MBA from the University of Texas.

September 2017

The FICO® Decision Management Suite provides an easy way for customers to evaluate, customize, deploy and scale state-of-the-art analytics and decision management solutions. It allows them to quickly integrate FICO and FICO partner decision management tools and components with their own components, helping organizations of all sizes realize the promise of advanced analytics and decision management via cost-effective, scalable cloud and on-premises solutions. Decision management solutions are software services that expose predictive models, optimization models and decision rules to business processes for the purpose of automating business decisions. This white paper will explore three capabilities in Decision Management Suite and look at an insurance solution based on a real FICO customer.

“Only a handful of suppliers are equipped to offer an enterprise decision management platform, and FICO happens to be one of them. Only a handful of suppliers approach the level of sophistication offered by FICO.”Butler Analytics, 2015 Review of FICO Decision Management Suite

WHITE PAPERDriving Centralized Decisions with Advanced Analytics


Retail use case: A new solution for smarter offers in just weeksFICO built a real-time “sense and respond’ solution for one of its retail clients in Europe. This solution was responsible for upselling customers at the point of sale (PoS). In the few seconds that the customer is waiting at the PoS, this solution calculated and presented the most relevant offers to the customer based on their loyalty level informed by their previous purchases. This is possible through the use of contextual profiling. FICO built this solution in six weeks. Another customer who decided to build a similar solution in-house has still not gone live despite more than six months of programming effort with upwards of 10 developers. This should serve as a cautionary tale for customers underestimating the effort it takes to build a similar but custom solution.

Customer problem

A FICO insurance customer was spending way too much time responding to quotes. There was also a perception that their claims handling process was slow and error-prone. Customer satisfaction was at a low and they were finding that their insurance renewal rates were falling. In reality, the insurance company was battling millions of dollars in fraud losses and had to track fraudsters using archaic processes, which included painstakingly poring through thousands of rows of spreadsheet data to identify fraud markers and networks. They decided to tackle all these problems using analytics and a data-driven approach because they believed they would significantly improve their bottom line and have a major advantage over their competitors by modernizing their IT infrastructure. FICO stepped in and proposed an architecture that just a few years earlier would have been a multi-phase, multi-year project. The solution included three FICO® Decision Management Suite capabilities: FICO® Decision Management Platform Streaming, FICO® Identity Resolution Engine and FICO® Blaze Advisor® decision rules management system.

What is FICO® Decision Management Platform Streaming?

In the world of big data, oftentimes there is too much data. It is critical to extract and distill what is important and quickly identify analytical insights. To do this, businesses need a solution that can continuously ingest, clean, analyze and transform large and growing amounts of data from disparate sources into something that aligns to the discrete purposes of their unique analytic inquiry. The ability to make data-driven decisions is key to organizations achieving their goals. Past tools meant to achieve this have been complex, adding significant costs to the delivery of these decisions. This is where FICO Decision Management Platform Streaming can help.

This tool removes the complexity of cleaning and distilling the data along with providing analytic insights. The key differentiator here is FICO’s approach, which focuses on dedicated solutions for running analytics in real-time data streams for the fastest time to insight and action. In the case of the FICO insurance customer, the solution “senses and responds” to real-time events from internal and external systems. By running fraud models and rules in-stream and in real time, this solution effectively becomes the ultimate analytic solution for responding to fraud, customer quotes and insurance claims events.



Figure 1

A sample of a FICO® Decision Management Platform Streaming Job template with palette showing transformation job steps.

Decision Management Platform Streaming is a high-performance platform that serves both batch and stream sources of data. It has extremely low latency and a small footprint, relative to other software products with similar functionality. Customers can rapidly build real-time streaming analytic solutions that integrate with other applications in a fraction of the time it usually takes.

FICO® Decision Management Platform Streaming provides for contextually guided decisions that allow organizations to implement stateful processing that performs “in the moment” analytics informed by previous history and actions. Decision Management Platform Streaming has a very user-friendly and visually pleasing interface that allows users to drag and drop job steps for data ingestion, analytics, transformation and outbound processing. These job steps are included in a web-based UI that provides templates for rapid creation of jobs as well as an SDK for customers

to be able to create their own job steps to add to the palette of job steps. Jobs can be created from templates with the simplicity of snapping together Lego blocks. Decision Management Platform Streaming is “always on” but can also be run in batch mode or scheduled to poll for files via SFTP, etc. Out of the box, organizations can execute rules and models in-stream to gain analytic insight as the streams of data are being processed. Users can deploy Predictive Model Markup Language (PMML), Python or Java-based models.

In the insurance use case, the customer deployed a predictive PMML model that predicted insurance claims fraud. Performance instrumentation and visualization in DMP Streaming is first class, allowing users to monitor performance and throughput of a running job. Metrics can be stored in visualization stores, letting stakeholders see metrics of interest in dynamically updating dashboards. For the insurance company, Decision Management Platform Streaming can process streams of request events, while taking action in near real time to respond to insurance fraud, create quote requests or process claims.

Figure 1 shows a sample of a Decision Management Platform Streaming Job template with the palete in the left pane showing transformation job steps.



What is FICO® Identity Resolution Engine?

FICO® Identity Resolution Engine seamlessly glides across disparate data — whether internal or external to the organization — to resolve unique identities and relationships between these identities. By systematically analyzing claims, claimants and service providers in the context of their connections, Identity Resolution Engine bolsters an organization’s ability to identify and investigate fraud rings. Identity Resolution Engine Graphs are a powerful tool to help investigators (in real time or batch) identify fraud and conduct their investigation. However, analyzing graphs can be a complex and time-consuming process. In a transaction-oriented solution where the business needs a near-instant response (for example, scoring a claim for fraud) there is no time for an investigator to evaluate a network and provide a go/no-go decision. This situation is best addressed using Identity Resolution Engine Social Network Analytics (SNA). Identity Resolution Engine SNA can be used to automatically score a graph for a particular analysis. Identity Resolution Engine extracts variables from the graph and feeds them into a predictive analytic that produces a score for a given network. The score can then be used to make a determination of the disposition of the network.

FICO Identity Resolution Engine helps insurers around the globe efficiently detect fraud and is also the solution used by TSA to screen millions of airline passengers across terrorism watch lists and hotlists at high speed. It offers federated data search capabilities, link analysis and social network analysis technology — all housed within a modern and intuitive visualization layer. (Figure 1a – Showing SNA with risk scores for each applicant).

Figure 1a

FICO® Identity Resolution Engine SNA showing analytics for highest risk score applicant.



Figure 2

Simplified Identity Resolution Engine investigator link chart showing that “Chloe Casey” is linked to two applications, one of which resulted in account opening.

With Identity Resolution Engine, organizations can systematically examine how entities link to other entities, and how these connections are predictive of fraud and fraud rings. Identity Resolution Engine expedites reactive or targeted user-driven investigations by letting the application take care of the busywork. FICO® Identity Resolution Engine gives investigators the fastest and most comprehensive technology to determine who’s who and who knows whom across disparate and potentially remote data sources. FICO Identity Resolution Engine leverages 50+ similarity matching algorithms that are user-configurable, allowing for adjustable weighting and tuning to reduce false negatives and false positives. FICO’s patented matching technology is designed to identify, address and display connections between both accurate and inaccurate data. It can detect slight variations in names, addresses, telephone numbers, SSNs, etc. In our insurance example, Identity Resolution Engine is used to screen claims from customers and identify fraudulent claims within a fraction of a second.

Figure 2 shows a simplified link chart in Identity Resolution Engine, which shows how the different entities are connected.

What is FICO® Blaze Advisor® decision rules management system?

Blaze Advisor is a best-in-class decision rules management system that offers a complete solution for designing, deploying and maintaining decision rules as a service. Decision rules define the policies, practices and procedures of an organization that might be embedded in business processes or policy documents, or simply as tribal knowledge of employees. A Blaze Advisor decision service is a software component that executes a decision-making flow of steps when called either by an application or a batch process. When the rules need to be applied, the decision service is invoked in order to determine the action or set of actions to take. A decision service can be invoked by any kind of application, batch process or another decision service and can be deployed in Java, .NET and COBOL environments. Blaze Advisor provides a rule-authoring environment in which the rules can be written, organized, tested, debugged and deployed by IT staff and then read, edited, maintained and deployed by business stakeholders themselves via an easy-to-use web-based rule maintenance application (RMA).

This entire business user environment is now available in the cloud as FICO® Decision Modeler and it allows the business user to completely take charge of rule creation, maintenance and deployment. This allows businesses to move at market speed because we have now eliminated the traditional IT develop, test, QA and deploy cycle, as hundreds of FICO customers can attest. Decision services are enterprise resources that are executed and managed by the Blaze Advisor Rule Server, which handles the



complexity of processing several thousands of decision service invocations with superb scalability and reliability. Blaze Advisor is a mature product that has been licensed to numerous large corporations and tested under fire with rigorous “run the business” conditions. For individual clients in financial services, Blaze Advisor processes up to 100 million transactions daily, executing over 1,000 rules on 65 million transaction records per day.

Figure 3 shows a sample Decision Flow in Decision Modeler (Blaze Advisor in the cloud) where customers are offered incentive plans to lower energy consumption.

An integrated solution

FICO’s leadership in scores and its analytic heritage of identifying creditworthy borrowers has enabled us to bring to market the Decision Management Platform Streaming for real-time stream processing, Identity Resolution Engine for minimizing insurance fraud, and Blaze Advisor decision rules engine for executing rules for insurance quotes and claims in one easy-to-use solution.

The FICO insurance customer wanted to rapidly extract value from data, making it decision-ready for a variety of downstream applications, and this integrated solution was exactly the kind of game changer they wanted for their business.

Figure 4 shows the logical architecture proposed for the FICO insurance customer.

Figure 3

Decision flow that runs rules for customer eligibility, segments customers and offers energy savings plans.



As shown in the logical customer architecture in Figure 4, the customer receives multiple real-time request events. For purposes of simplification, only quote and claim events are shown in the figure. These events originate from multiple channels, and some require a synchronous response and some asynchronous. For example, a new web request for a quote from an external system might require a synchronous response while a claim originating from an internal system requires approval and sign-off, hence asynchronous. Decision Management Platform Streaming processes these events in milliseconds and takes the appropriate action based on the type of event. Quotes are passed straight through to the rule-processing job step, which returns the response to a customer’s quote request. Claims on the other hand require multi-step processing. They are first sent to the Zementis job step, which processes the claim data against a PMML fraud model. If indicative of fraud, the data is used to search Identity Resolution Engine for any existing, known fraud actors. If the claim is valid, then it is sent to another rule-processing job step, which runs through the rules in Blaze Advisor to decide if the claim can be paid, and at what level, depending on the customer’s segmentation and policy type.

Figure 5 shows the Identity Resolution Engine Search Job template available out-of-the-box in Decision Management Platform streaming, which makes for easy integration with Identity Resolution Engine.

1 © 2014 Fair Isaac Corporation. Confidential.

Insurance Customer Architecture

Quotes

Claims

DMP Streaming

API

Events and requests are sent from internal and external systems.Some messages require synchronous and some asynchronous responses

STORE EVENT

Rules/Models can result in sync response

DMP Streaming stores events in contextual profile topicby customer

FRAUD MODELS

DMP Streaming forwards quote eventsto Blaze Advisor Rules engine

DMP Streaming

DMS Authoring and Execution Layer

FRAUD MODELS

NETWORK SCORE

Enterprise Event Datastore

FORWARD EVENTSCALL IRE

BUSINESS RULES

CALL RULES

Claims events go through fraud modelsand IRE for claims fraud

Figure 4

Insurance customer architecture showing Decision Management Platform Streaming handling real-time events and invoking Identity Resolution Engine for real-time fraud detection and Blaze Advisor decision rules for quotes and claims processing.



Results

To implement this kind of high-performance real-time stream processing with integration to fraud models and decision rules in message-oriented middleware (MOM) is not a simple task. FICO has first-class integration within the Decision Management Suite. And the combination of FICO® Decision Management Platform Streaming, Identity Resolution Engine and Blaze Advisor® has been proven to be the best solution for this customer looking to connect to multiple data sources simultaneously, extract the most relevant data, transform different formats into a consistent and usable source, and quickly load that source into an analytic model and run them through business rules. This enabled the customer to quickly acquire market and competitive advantage.

By utilizing FICO Decision Management Platform Streaming as a mainstay platform, this customer was able to address data ingestion, data normalization and real-time streaming analytics with minimal latencies, which greatly improved the consistency of their decisions while dramatically improving compliance, revenue, retention, customer loyalty and engagement. The combined solution helped this customer become more agile through data-driven decisions. They were able to meet all their goals of minimizing insurance fraud, improving customer engagement and retention rates, and responding rapidly to customer quotes and claims. In their very first year alone, the customer detected nearly $10 million in fraudulent claims. Their customer retention rates improved by nearly 80%. They were able to cut the time taken for claims processing in half and respond to quotes the same business day. This entire solution was built using an agile methodology and took the customer less than 15 weeks using only three dedicated developers — impressive ROI by any standard.

Figure 5

Identity Resolution Engine Search Job template in Decision Management Platform Streaming showing analytic job steps in the left pane.

FICO and Blaze Advisor are trademarks or registered trademarks of Fair Isaac Corporation in the United States and in other countries. Other product and company names herein may be trademarks of their respective owners. © 2017 Fair Isaac Corporation. All rights reserved. 4457WP_EN 09/17 PDF

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FICO was named a Leader in the Forrester Wave™: Predictive

Analytics and Machine Learning Solutions, Q1 2017 Report.

Contact your FICO representative to learn more about

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Conclusion

FICO® Decision Management Suite solutions are industry agnostic and agile. They enable rapid deployment and reduced complexity for customers aiming to develop highly intelligent analytic solutions. The example above was based on insurance. However, this type of decision management solution can be just as easily replicated in any domain. For example, in retail it can be applied to cross-selling and upselling. Think of the online shopping experience where customers are offered the right products based on preferences and previous buying history. In the Internet of Things (IoT) space, for example, it can be used in the real-time monitoring of meters and sensors for smart buildings. Proactive maintenance can be undertaken for failing components by opening automated service requests in a case manager. Figure 3 depicts an energy and utilities example where customers are offered energy saving incentives and plans based on their daily energy consumption. FICO Decision Management Suite solutions provide a cost-effective and easy way for customers to develop, deploy and scale state-of-the-art decision management solutions anywhere analytics are needed for efficient decisioning to transform and improve business processes.

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