What makes today’s giant companies efficient is their ability to mine data and apply insights to their strategies
COMMENT | Emmanuel Osanga | How can we not pay attention to data, considering the value it provides? Ultimately, it will position organisations to either win or lose in their industries.
At the core of any future ready or platform transformation agenda lies data or data science. For organisations to truly transform digitally, it is critical to get these foundations right. Data and data science has become the vector for competition and companies who position themselves well in this space are most likely going to win in their respective industries.
Already, we are seeing this globally with the big tech companies purely using data to drive their platform businesses. What makes these companies efficient is their ability to mine data and apply insights to their strategies. Yes, they are obsessed with their clients but what lies beneath is their deep understanding of those client needs.
A study conducted by several global research institutions like MIT and McKinsey have found that across all industries, firms that take a data-driven approach to decisions garner results that are on average 5-6% higher than industry peers without a data-driven approach.
Some sectors have truly achieved incredible results from this approach and increased profits, for example, in the retail sector by more than 60%, by just mining the data set that they have. This is an area that is showing and proving dividends or results for many organisations.
Big data to impact lives
Generally, there are some innovations big enough to cause implications for everyone’s lives, whether we like it or not, and data or big data is one of those megatrends that will impact our lives in one way or another – both negatively and positively.
The rate at which data or new data is being generated is frightening. This has only been heightened in the pandemic environment, which has initiated or even forced major shifts to do almost everything digitally. At the same time, our ability to analyse large and complex forms of data has transformed tenfold in recent years. And the tools that are available to analyse complex data sets are only advancing.
For instance, marketers are using data tools and techniques like natural language processing to evaluate huge volumes of content from social media or text messaging platforms like WhatsApp to provide a closer read on what consumers really think of brands.
The practical application of some disruptive tools like natural language processing makes it possible to take large volumes of publicly available data to deduce what our consumers think of our brands.
In the financial services sector, where most of the services delivered are highly client centric, it is critical to understand where your client is in their life journey and what their needs are at a specific time. It is therefore pivotal for financial services organisations to explore their clients digital or data footprints to be able to have deeper understanding and fulfil their personalised needs.
This means digging deep through publicly available information to transform services delivered to clients. Those who can pre-empt the needs of their clients, as opposed to waiting for them to come through, will be the ones who can win and retain clients now and in the future.
With the explosion of mobile penetration or access to mobile phones across the continent, we are afforded the opportunity to innovate with data to expand our services to new frontiers instead of simply providing services to what we call the traditional, bankable client.
Like using the telecommunication services data to understand how much airtime a person may procure in a month. Such information via data aggregators can be used to profile individuals for loans as opposed to the tradition processes of building transaction history and providing security or collateral to qualify for such services.
Such extra data now provides alternative ways of risk profiling, which wouldn’t have been possible a few years back and this enables the provision of services to the unbanked populations who would have been automatically excluded in the past, simply because the data set wasn’t available.
We are seeing widening access to alternative financial services in areas that have traditionally remained outside of the formal financial system. This presents an immense opportunity to drive economic growth in the continent.
Ultimately, the use of data will enable businesses to service their clients in a more personalised and tailored manner than ever before, and this kind of opportunity cannot be ignored.
However, I must say we have entered an era in which the abuse or misuse of data has fuelled distrust and scepticism. Perhaps this remains the greatest challenge, so organisations need to make sure they play by the rules, engage openly with regulators and industry peers to ensure that data is well protected and used appropriately.
Osanga is the Head Data Management, Africa Regions at Standard Bank Group Africa