expert systems in banking and insurance

Expert Systems Banking & Insurance

Expert Systems Banking & Insurance Mahesh Karane, Sunil ChauhanBalaji Iyer, Sanoop Nair

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IndexWhat is Knowledge Management?What are Expert Systems?What is Artificial Intelligence?Human Expert v/s Expert SystemFeatures of Expert SystemAdvantages & Disadvantages of Expert SystemsCase Study of HDFC BankATM & UESA Expert SystemsPutting Expert System to WorkThe CreatorReferences

Click to edit Master text stylesWhat is Knowledge Management?Knowledge Management (KM) is the process of creating value from intellectual capital and sharing that knowledge with employees, managers, suppliers, customers and other who need capital.KM is a process, not a piece of technology.

Knowledge Management SystemsContent Management Systems e.g. WikipediaCollaborative Systems e.g. Web Portals, Blogs, Social NetworkingExpert Systems e.g. Caduceus & Mycin for medical diagnosis, Prospector for prediction of mineral deposits.

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What are Expert Systems?The expert systems (ES) are the computer applications developed to solve complex problems in a particular domain, at the level of extra-ordinary human intelligence and expertise.

Capabilities of Expert SystemsAdvisingInstructing and assisting human in decision makingDeriving a solutionExplaining & Interpreting inputPredicting resultsSuggesting alternative options to a problem

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What is Artificial Intelligence?Artificial Intelligence (AI) is practical mechanisms that enable computers to simulate the human reasoning process.

The study of how to make computers do things which human can do better The Turing test Can computers think?Commercial applications of AI you may not have expectedDriverless Cars (Artificial Pilots)

Forms of AINeural NetworksArtificial Life

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What are Expert Systems?Knowledge BaseIt contains domain-specific and high-quality knowledge.Interface EngineIt acquires and manipulates the knowledge from the knowledge base to arrive at a particular solution. User InterfaceIt provides interaction between user of the ES and the ES itself.

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Human v/s Expert System?

Comparison between an Expert System and Human ExpertFactorHuman ExpertExpert SystemTimeWorking Days OnlyAnytimeGeographyLocalAnywhereSafetyCannot be replacedCan be replacedDamagesYesNoSpeed and EfficiencyChangesConsistentCostHighIntermediate

Expert system is built on two factors either to replace or help an expert


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Features of an Expert SystemGoal Driven Reasoning or Backward chainingShould have simple reasoning mechanism i.e. If and then rules, frames basedShould be domain specific Quality of advice offered should be on the amount of knowledge storedEncoding and storage of domain specific knowledge is economic process due to small sizeCapable of assigning confidence values i.e. Confidence and Certainty factors


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Advantages of Expert SystemIncreased timeliness in decision making (24 Hours availability of ES)Increased productivity of expertsImproved consistency in decisionsImproved understanding and explanationImproved management of Uncertainty e.g. How tall is tall?

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Click to edit Master text stylesDisadvantages of Expert SystemHow do you code common senseExpertise is difficult to extract and encodeExpert errors transferred to modelHuman Expert adapt naturally but an ES must be recodedHuman Expert can better recognize when a problem is outside domain knowledge, ES would not be.

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Click to edit Master text stylesCRM In Banking Sector HDFC Bank

Products:Retail banking, Wholesale Banking, TreasuryCustomers:25 million+Workforce:55,000+ | Cities/ towns:2,200+ | Branches:3,400+ | CRMnext Users: 25,000+ChallengesSingle 360 customer viewCumbersome process for monitoring of TATNo banking CRM software implemented, leading to fragmented customer information in various lines of business and multiple systemsHighly demanding and sensitive managed customer segment

Click to edit Master text stylesCRM In Banking Sector HDFC Bank

SolutionsSingle 360 customer viewOnline accessibility to customer data for more than 15000 users through an effective banking CRM software CRMnextBenefits 93% Improvement in sales turn-around-time92% Increase in customer loyalty index30% Reduction in average customer complaints99% Uptime Schedule.Today, 85 per cent of the transactions by customers takes place though non-branch channels. The mobile and Internet banking channel contributes almost 55 per cent.

Click to edit Master text stylesAutomated Teller Machines (ATMs)A common banking example of an Expert System is an ATM machine.It performs the actions of an expert in particular domain (i.e. a bank teller) who would perform when faced with a client requesting a cash withdrawal. The inputs required by an ATM system are quite simple likeClient identification and Service RequestsIn this example, the definition of an Expert System becomes the same as that of an Expert Model.(Client identified + funds in account available + account within limits + funds in the ATM available + denominations available = Perform transaction).

Click to edit Master text stylesUnderwriting Expert System Advisor (UESA)UESA covers three insurance policies i) Motor Vehicle Insurance, ii) Personal Accident Insurance, and iii) Travel Insurance. The knowledge-base collected for the UESA proposed consists of a collection of knowledge from insurance underwriting experts and a website and constitutes a 16 Rule-Based procedure/strategies.Expert Systems Artificial Intelligence (AI) helps the Insurance Industry to use computers as Underwriting Expert System Advisors to help customers/clients calculate risks involved in taking on a particular insurance. Other expert systems developed in the field of insurance helps customers to fill forms of an insurance policy properly and accurately so that the form will not be rendered useless and the insurance policy can go on and work out accordingly. An Underwriting Expert System Advisor for Insurance Policies

Click to edit Master text stylesKnowledge-Base for UESAThe knowledge of the system was collected from underwriting experts and from an insurance website, www.metinsurance.comThe main knowledge bases involved in the proposed system design for UESA were Personal Accident, Motor/Vehicles and Travel Insurance Policies.

User Requirements Users who will use the proposed UESA are most likely to be customers/clients who are seeking insurance policies from an insurer (insurance company) ORExperienced underwriters can use UESA to help them make better and faster decisions about a policy, when a recommendation is sought from themDesigning of the Required Knowledge-Base for UESA

Click to edit Master text stylesPutting Expert System to WorkN L Baroid, a drilling services company, created MUDMAN to analyze the drilling fluids, or muds,Coopers & Lybrand has an ES called ExperTAX that helps accountants in reviewing the way their clients accrue taxes and in offering tax planning advice.(3000 rules defined)American Express Company uses an expert system to help its credit authorization staff sort through data from as many as 13 data bases. The American Express credit card has no set spending limit.The Expert System for Management of Malformation Disease of Mango (ESMMDM) has been developed to predict the disease occurrence and suggest an appropriate crop protection and pest management strategyA Hybrid Legal Knowledge Based System named TPA-EXPERT for Indian Legal domain

Harvard Business Review

Click to edit Master text stylesThe CreatorDr. Edward Albert Feigenbaumis acomputer scientistworking in the field ofartificial intelligence, and joint winner of the 1994ACMTuring Award.

He is often called the Father ofExpert Systems.

He founded theKnowledge Systems LaboratoryatStanford University which focuses on expert systemsfor science and engineering.

Click to edit Master text stylesReferenceshttp://www.ijarcsms.com/ - Definitionshttps://en.wikipedia.org/ - Definitions & The Creatorhttp://www.tutorialspoint.com/ - Comparison of Human Expert and Expert System.http://www.myreaders.info/Expert_Systems - Advantages and Disadvantageshttps://hbr.org/1988/03/putting-expert-systems-to-work - Putting Expert System to workhttp://www.businesstoday.in/hdfc-bank-digital-transformation- Case Studyhttp://www.ijcst.org/Volume3/Issue12/p4_3_12.pdf (International Journal of Computer Science and Telecommunications Case Study)

Click to edit Master text stylesArtificial Intelligence BBC NewsWhat is artificial intelligence?

The objective of Artificial Intelligence is to replace human intelligence in robots and systems.Human Brain is the most complex object on this planet.Nothing can replace Human Brain.Tip: Press Shift+F5 to make this link clickable.


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expert systems in banking and insurance

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