Briefs

Jun 10, 2004.

Computing: Analysis of customer information, better known as �data mining�, is finally delivering on its promises�and expanding into some promising new areas

IN THE old days, knowing your customers was part and parcel of running a business, a natural consequence of living and working in a community. But for today's big firms, it is much more difficult: a big retailer such as Wal-Mart has no chance of knowing every single one of its customers. So the idea of gathering huge amounts of information and analysing it to pick out trends indicative of customers' wants and needs�data mining�has long been trumpeted as a way to return to the intimacy of a small-town general store.

But for many years, data mining's claims were greatly exaggerated. Customer-loyalty cards, which allow retailers to gather information not just about what is selling, but who is buying it, sound like a great idea. Yet Safeway, a British retailer, eliminated its customer-loyalty card when it realised it was gathering mountains of data without being able to use it. ...

In recent years, however, improvements in both hardware and software, and the rise of the world wide web, have enabled data mining to start delivering on its promises.

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Robert Littas, vice-president for fraud management at the European arm of Visa, says that a new system called VISOR, implemented in January across all European banks that issue Visa credit cards, has reduced fraud from 1,576 cases per month across seven test banks to 458 cases. Better still, it has a far lower �false alarm� rate, generating an average of ten false alarms for each fraudulent transaction, compared with 97 for its predecessor.

Here is the rest of the story.