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An article on neural networks for an operating unit of Sears

COMPUTERS THAT LEARN: NEW NEURAL NETWORK TECHNOLOGY ENTERS THE REALM OF FINANCIAL DECISION MAKING

by J. Clarke Smith Executive Vice President and Chief Financial Officer

The power of the computer is about to take another quantum leap but this time the change won't be measured in more bytes for the buck or processing speed. It will be something entirely new: highly sophisticated computer systems with the ability to learn, and to utilize accumulated experience to make specific, sound business decisions that rival, and perhaps surpass, those of a living, breathing human being.

Called neural networks, such Artificial Intelligence systems are built around concepts similar to the way the human brain's web of millions of neural connections (synapses) are believed to work together to identify patterns, learn and reach conclusions.The ability to recognize patterns is key to automated processing of business data as well as solving complex problems.

Neural technology has been under development for decades.. Nobel Laureate Dr. Leon Cooper and Dr. Charles Elbaum, both of Brown University, began work then to create a computer model that would store information and change it over time as the model learned from experience.

Considered by some to be one of the most important technological advances of the last 10 years, neural network systems already are at work in the world of finance and elsewhere. They are particularly applicable to risk management and forecasting, where the ability to identify intricate patterns is key to making predictions. Nearly 100 companies reportedly are experimenting with neural network development.

Wide application

In theory, a neural network can be put to work in any application where substantial amounts of data are used to predict outcome. Neural networks are being used today in applications ranging from analyzing engines to finding submarines. One credit card company is using a neural network to identify fraudulent use of plastic by spotting unusual purchasing activity.

Neural networks are also being employed with profitable result in security and options trading. One insurance company is experimenting with a neural network to compare individual agent's handwriting stored in a...

(Complete article available on request)