HNC Software Unveils Check Fraud Detection Solution; Falcon Cheque to Attack $1 Billion Problem

Business Wire, August 5, 1998

SAN DIEGO--(BUSINESS WIRE)--Aug. 5, 1998--Tackling the growing problem of checking account fraud in the United States, HNC Software Inc. today announced the general availability of Falcon Cheque(TM), a check fraud detection solution that builds upon HNC's proven predictive software technologies currently used by top bank card issuers worldwide to prevent fraud.

Falcon Cheque runs in the bank's check processing center and uses neural networks and HNC's proprietary behavior profiling technology to uncover fraud on all types of check transactions, including savings account, ATM, ACH, and on-line banking. Using a powerful, neural network-based fraud model, the product evaluates each item and compares the prediction with an accurate model of the accountholder's normal check usage, which Falcon Cheque builds and updates automatically.

The software can address in-stream, off-line batch and real-time processing paths. When suspect-check data is uncovered, it is routed to the bank's existing remedy systems. Falcon Cheque is delivered with an algorithm for bottom-line return optimization, ranking out-sorted fraud cases in the order of potential dollars saved.

"Check fraud is costing U.S. banks at least $1 billion a year," said Michael Thiemann, president of HNC's Financial Solutions division. "Given the proven effectiveness of HNC's intelligent fraud detection technology, we almost felt as though we had a moral imperative to develop a product to address checking account fraud."

Currently monitoring over 240 million credit card accounts at banks worldwide, HNC's Falcon(TM) credit card fraud detection solution is generally credited with helping to curtail the meteoric rise in credit card fraud losses of a few years ago. In 1992, MasterCard and Visa reported a fraud rate of 18 and 19 cents per $100, respectively. By 1997, the rate had dropped to approximately 8 cents per $100.

"HNC customers see use of Falcon as a major factor in these savings," Thiemann added. "Our goal with Falcon Cheque is to have the same kind of effect on check fraud as we have on credit card fraud."

As a result of a pilot project with a major US bank, HNC has demonstrated that Falcon Cheque provides strong, quantifiable fraud detection. Because of the intuitive and automated data mining provided by the neural network technology, Falcon Cheque is easier to use than rules-based parametric systems, as well as providing better performance with lower false-positive rates.

With headquarters in San Diego, HNC Software Inc. (NASDAQ:HNCS) is a world leader in the development and delivery of predictive software solutions in client/server environments. HNC provides innovative predictive software systems in the financial services, retail, insurance information, and electronic commerce markets. For more information, see www.hnc.com or contact Patsy Campbell, Director of Marketing, HNC Financial Solutions, 5930 Cornerstone Court West, San Diego, CA 92121, 619/546-8877. For investor relations hotline, call 800/396-8052.

Trademarks are property of HNC Software Inc.

    CONTACT:  HNC Software Inc.
               Patricia Campbell, 619/799-8206