The Middle East and Africa form a massive grouping of 70 countries across seven time zones with 22 commonly spoken languages. The region features a mixture of highly developed countries fueled by natural resources and others that struggle to deliver even basic utilities to their residents. Apparently, there is nothing homogenous about this region…or is there?
As urbanization accelerates rapidly through the region, and countries across this vast expanse use wireless connectivity and mobile to leapfrog legacy technology, there is a common ingredient unifying the region: data, and lots of it – big data! As predicted by IBM CEO Ginni Rometty at the Council of Foreign Relations Corporate Conference in 2013, data is the world’s new natural resource, since cutting-edge analytics can now refine the raw masses of structured and unstructured data.
It is an analogy that plays well in a region blessed with natural resources, from the oil- and gas-rich fields in the Middle East, Nigeria and Angola, to the swathes of gold, diamonds and other valuable minerals across Africa. But are enterprises in the region using analytics to turn big data into valuable insights and fuel their competitive growth? Is it all talk, or are there real investments, uptake and use cases?
To understand if big data & analytics was going mainstream in the region, the IBM Center for Applied Insights interviewed organizations from across the banking and telco sectors in the Middle East and Africa during the fourth quarter of 2014. These two industries in particular are fit to pioneer the adoption of analytics capabilities, since both are technologically sophisticated, highly competitive and flooded with data thanks to large customer bases.
A surplus of insights for the banking sector
Different levels of maturity and development across the region creates a range of drivers and challenges affecting the Middle East and Africa banking market, which in turn leads to contrasting investments in analytics.
In some of the less developed locales, banks highlighted that they were challenged by a lack of skilled resources, limited vendor training and infrastructure constraints. These banks were gradually shifting from basic business intelligence tools to analytics solutions in an effort to better understand their customers and generate new opportunity.
At a more mature banking organization in the Middle East, the use of analytics was driven by the challenge of fraud across multiple credit channels, requiring the bank to use state-of-the-art, real-time predictive analytics to mitigate that risk.
In addition, a better understanding of customers was often cited as an analytics driving force, an imperative that was voiced even by non-traditional technology buyers like the Chief Marketing Officer. In a time of low customer trust, intense competition, increasing risks and ever-expanding regulatory scrutiny, banks are under great pressure to adapt and evolve.
“The prime reason for deploying a big data solution is to gain a deeper understanding of changing customer behaviors. To expand and retain our customer base, it’s very important to deliver products that exceed expectations,” said an executive at a financial services firm in Africa.
While basic reporting and analysis of structured data has long been an industry staple, advanced predictive analytics on structured and unstructured data are enabling the forerunners to generate automation and actionable insights around areas such as improved marketing effectiveness, increased customer loyalty and profitability, greater risk management and regulatory compliance.
Telco companies listening to the data
The communications opportunity in Middle East and Africa is as massive as it is competitive: “With regional demand for the Internet increasing, enterprises and networks will produce much more data, leading to new opportunities,” explained the Head of Marketing at a telco in Africa.
In particular, rapid uptake has resulted in significant challenges around market saturation, leading to declining customer acquisition, high churn, lower average revenue per user, and difficulty in generation of new sources of revenue. As a result, telco companies are investing in analytics technologies to understand customer dynamics and improve decision-making, innovation, creation and efficiency.
As seen in the realm of banking, the various degrees of development among these telco enterprises means that some companies are just beginning to embrace the power of analytics, while others are deploying highly advanced solutions.
The more mature operators, driven by the need for greater customer analytics, are leveraging customer usage data across several countries. With these insights, they can build customer profiles that inform demographic client maps and guide marketing and development projects.
In conclusion, banking and telco businesses in the Middle East and Africa are leveraging analytics for various benefits. They can gain a better understanding of their customers in order to build deeper relationships, reduce fraud and risk, and build a competitive advantage.
The study did find a number of challenges that organizations are facing, such as concerns about sharing and integrating data and uncertainties around having the appropriate skills to get the most out of these newfound capabilities. But even so, many of these organizations are moving past such hurdles and are beginning to see success through analytics.