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While IBM Buys Netezza, UK Rival Detica Launches into America Print E-mail
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IBM's $1.7 billion bid for Netezza has focused attention on companies which can conduct fast analysis on huge quantities of data. The purchase announcement coincides with a marketing push by Detica, an often secrecy-obsessed English company with a background in defense and intelligence work. Now it is polishing up its public face and pushing into the US with NetReveal. 

After a Citi risk manager in London briefly described a successful Detica pilot to search for rogue traders,  but neither the bank nor Detica would talk about it. Now, however, Detica is marketing NetReveal with the aim of increasing sales for the product from $40 million to $200 million.

 

NetReveal is used by insurance companies and banks to detect fraud and by tax authorities to find unreported income. HSBC has licensed it for global use and one of the largest banks in America linked 140 of its systems to Detica -- in just four months -- and uses the tool to work through 50 billion records. The software runs on a 4-CPU box with attached storage. A global bank using Detica is shutting down 1,000 fraudulent accounts a month, using just four or five investigators during its initial phase; the bank expects the number of account closings to decline as it works through its client base.

 

NetReveal  uses proprietary analysis tools to identify relationships that otherwise go unnoticed. In fraud, that can mean several individuals sharing the same address or phone number. The analytical tool sifts through every account and every transaction looking for links.

 

You can learn a lot about individuals by tracing their networks, explained Imam Hoque, managing director of Detica NetReveal.  Its high speed tools can run through billions of records to see individuals who are conducting transactions with each other, spot earnings which haven't been reported to tax authorities, and identify insurance claims among people who have hidden relationships.

 

In England, Detica powers the UK Insurance Fraud Bureau, running 100,000 updates per day on a 2-CPU Windows computer with three terabytes of attached storage, Hoque said. The network analysis has found fraud such as induced accidents where a "victim" was caught on video tape checking the person who hit him. He then returned to his car, called the Fire Brigade to cut him out of the car and filed a claim for both the car and for whiplash.  By analyzing claims from across the country it can show where insurance claimants have a history of crashing into each other, even if the accidents have occurred far apart. Hoque said that insurance companies have become increasingly concerned about fraud because:

 

1. They are no longer making a lot of money by investing premiums in the stock market.

 

2. Internet comparison shopping sites now clearly show what companies are charging. The companies with the best fraud control can charge the lowest rates and avoid the worst fraudsters.  Insurers using Detica can save three to four percent on their annual claims.

 

3. Banks are improving their anti-money laundering controls, so money laundering  is shifting into insurance.  Hoque said one Australian insurance company wanted to buy all the licenses for the country. The company was  cutting its claims spending by four percent, so it could reduce its premiums, avoid most fraudulent business and leaving the higher risks customers and fraudsters to its competitors.

 

Detica's largest client is the UK tax authority which has more than 40 data sources to draw on in its search for tax evasion.  The company is also running pilots with tax authorities in the US and Spain, said Hoque.  Detica's  proprietary data server uses a scripted language to deal with dirty data which it can extract from multiple data sources in multiple lines of business. A team of 45 can link to 100 different data sources in a firm and extract the data in usable form within a few months.

 

Analyzing networks can also be used for marketing. A large European mobile phone operator used Detica to track 10 million customers' phone calls and SMS messages to understand their personal networks and see who the technology influencers were. Then it offered upgraded handsets to the key influencers, which helped reduce churn among their personal networks.

 

Hoque sees great potential in Medicare and Medicaid fraud, in anti-money laundering, and eventually in marketing. After all, if you can understand individuals through their networks well enough to find sophisticated criminal organizations, you should be able to understand what customers want. . With just a few more rules, the analytics could also be used to profile customers for sophisticated marketing -- CRM on steroids.  Hoque admitted as much, but the idea of marketing the software for CRM seems an affront to a firm which is proud of a heritage in the shadows of national security operations.

 




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1. 10-06-2010 06:12
 
The main question raised by this article then is who will buy Detica while it is still a relative steal...
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