The big data opportunity for Africa came into sharp focus this week when IBM CEO Ginni Rometty and key members of her executive team visited Africa to meet with clients and government leaders. “Going forward, data is going to be THE source of competitive advantage,” Rometty told a South African audience.
Already, African companies are harnessing big data to transform their businesses. Take Santam Ltd., the leading short-term insurance company in South Africa. The company is using predictive analysts to streamline the processing of claims and to spot potentially fraudulent claims. When Anesh Govender reported for duty as Santam’s head of operations for finance, his boss told him that he wanted to do more with less. Govender quickly spotted data as his leverage point. “I was amazed how much data was available but how little of it was being used” he said. Govender was one of the presenters at IBM’s South African gathering.
He decided to completely overhaul the claims processing system. In the past, every claim went through the same steps of being reviewed manually by staff members. Today, they’re all fed into a predictive analytics software program that channels routine claims into a queue for quick action. The others go through deeper analysis that takes into account not just the current claim but a lot more information about the customer and their past claim activities. Computer algorithms search for patterns that suggests the claims might be fraudulent. One example: Fraudsters typically start with small false claims and, if they’re successful, submit larger ones. Govender’s staff has tuned the algorithms so they identify the maximum amount of false claims without producing too many false positives—which require extra work by the claims processing staff. Today, they kick out only 1% of claims for deep fraud analysis, and about 30% of them are fraudulent.