Question
The main difference between 'supervised' and
'unsupervised' learning is that:Solution
Supervised learning uses labelled training data (features + target) for Classification (predict category — fraud/not fraud, default/no default) and Regression (predict continuous value — loan amount, house price). Algorithms of Supervised Learning are Linear/Logistic Regression, Decision Trees, SVM, Random Forest, Neural Networks. Unsupervised learning uses data with no labels for Clustering (K-Means, DBSCAN — customer segmentation), Dimensionality Reduction (PCA — compressing features) and Association Rules (Apriori — product bundling). In Banking, Supervised learning is used for credit scoring and Unsupervised learning is used for detecting unusual transaction clusters (potential fraud rings).
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