Select your localized edition:

Close ×

More Ways to Connect

Discover one of our 28 local entrepreneurial communities »

Be the first to know as we launch in new countries and markets around the globe.

Interested in bringing MIT Technology Review to your local market?

MIT Technology ReviewMIT Technology Review - logo


Unsupported browser: Your browser does not meet modern web standards. See how it scores »

{ action.text }

Jeff Hawkins has a track record at predicting the future. The founder of Palm and inventor of the PalmPilot, he spent the 1990s talking of a coming world in which we would all carry powerful computers in our pockets. “No one believed in it back then—people thought I was crazy,” he says. “Of course, I’m thrilled about how successful mobile computing is today.”

At his current firm, Numenta, Hawkins is working on another idea that seems to come out of left field: copying the workings of our own brains to build software that makes accurate snap decisions for today’s data-deluged businesses. He and his team have been working on their algorithms since 2005 and are finally preparing to release a version that is ready to be used in products. Numenta’s technology is aimed at a variety of applications, such as judging whether a credit card transaction is fraudulent, anticipating what a Web user will click next, or predicting the likelihood that a particular hospital patient will suffer a relapse.

“What those examples have in common is that they contain complex patterns that evolve over time,” says Hawkins. The algorithms can analyze and extrapolate from those patterns because they borrow techniques from parts of the human brain that have evolved to interpret complex data streaming in from our senses and use it to predict what might be coming.

Some companies are already putting Numenta’s latest approach to the test. Sm4rt Security Services, a computer security firm based in Mexico City, is one of them. “We were hired by one of the world’s top banks to prove this new technology was able to prevent card fraud,” says CEO Victor Chapela. “In just three months we’ve managed to match the accuracy of the existing systems, which have been developed over 25 years.”

The bank will deploy a Numenta-based fraud checker alongside its existing measures sometime next year, he says. The bank suffers more than $100 million of fraud every year, he says, “so anything that can cut even a fraction of that has a very quick payback.”

Numenta’s technology is attractive to banks because its ability to learn from previous data sidesteps a crucial limit on fraud prevention technology. A bank’s computer system has just 10 milliseconds to decide whether to authorize a transaction, says Chapela: “There’s simply no time to search a person’s past transactions.” As a result, transactions are typically divided into narrowly defined categories and judged according to rules specific to each one—rules that have to do with characteristics like the type of card, the amount charged, and the type of merchant.

But Numenta’s technology makes these separate sets of rules unnecessary. Instead, a raw feed of each person’s spending patterns is used to train a set of algorithms so they can learn that customer’s habits. At any moment the system has an internalized representation of past events that it uses to predict what kinds of transactions are likely to come next. If a new transaction doesn’t fit those expectations, it can be flagged as potential fraud. In this approach, the fraud detectors are always up to date, says Chapela. A traditional analytic system, on the other hand, must have its rules updated in a laborious process that’s usually undertaken only once every six months.

4 comments. Share your thoughts »

Credit: Numenta

Tagged: Business, Business Impact, Predictive Modeling

Reprints and Permissions | Send feedback to the editor

From the Archives


Introducing MIT Technology Review Insider.

Already a Magazine subscriber?

You're automatically an Insider. It's easy to activate or upgrade your account.

Activate Your Account

Become an Insider

It's the new way to subscribe. Get even more of the tech news, research, and discoveries you crave.

Sign Up

Learn More

Find out why MIT Technology Review Insider is for you and explore your options.

Show Me