The national rollout of a popular neural network-based product has signaled an expanding role for artificial intelligence technology within the financial industry.

HNC Software Inc. has started a greater market push for its Automated Real Estate Analysis System, also known as AREAS, which gauges the current market value of residential property using neural network modeling and advanced statistics.

Neural networks are computer systems programmed to "think" like the human brain, discerning complex patterns and relationships among hundreds or thousands of examples that are fed into their memory.

Neural networks have received a fair amount of use .in the credit card arena. For example, the nation's four fastest-growing credit card issuers. all employ HNC's Falcon product to help detect fraud.

But the expansion of this technology into the more staid banking business segment of lending gives neural networks substantial credibility in the industry, identifying them more as workable tools than as flashy, high-tech contraptions.

"For whatever reason, artificial intelligence has been knocking at their [real estate bankers'] doors for five to 10 years now," said Michael Jackman, vice president for lender systems at HNC. "Now, they're finally beginning to welcome it with open arms."

Indeed, AREAS has already been around for several months, although not in its current form.

The national rollout also marks the release of the 3.0 version of the software, which has evolved largely from testing at Household International during the past year.

STM Mortgage, Advanta Mortgage, Norwest Mortgage, and other companies have also adopted AREAS.

The software is expected to reach many more customers through distribution channels provided by Foster Ousley Conley, Walnut Creek, Calif., and Computer Power Inc., a Vendor that specializes in mortgage systems.

AREAS also ties neatly into another neural network-based lending product, HNC's Colleague automated loan analysis and risk management system, which has started to achieve some popularity among larger lenders (like Mellon Bank Corp.) recently.

A major selling point of AREAS, the offshoot of an HNC executive's doctoral thesis, is that it makes a judgment based purely on statistical rather than subjective data, with the hope of eliminating any gray area of lending discrimination.

This could prove an important advantage given federal regulators' recently stepped up efforts to toughen fair-lending enforcement.

But it seems the real motivators for lenders to use this technology will be reliability and an improvement of current procedures.

"Collateral assessment has long been a time-consuming and expensive part of the loan origination process, and AREAS is a vital tool for re-engineering that process," said Mr. Jackman, the HNC executive.

"Our customers have been impressed with AREAS' capabilities," he said, "and our national rollout, beginning with adding Florida and Washington to our existing California coverage, answers a real customer need."

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