Prediction & Prevention

The Absa Group is one of the strongest banks in the South African market. But being a large financial institution, Absa needed to make better use of data in order to take advantage of opportunities, as well as to change the ways the bank gathered and stored information and how it served its customers' interests.

One of the most important interests is security. The South African Police Service's Crime Information Analysis Centre reported 225 bank robberies in the first six months of 2001 causing a total cash loss of 27 million Rand (US$3.6 million).

Bank robbery is not just an expensive crime in the sense of the money stolen, because this is often completely covered by insurance. Robberies can be detrimental to a bank's reputation as a secure place to conduct transactions, to store one's money and valuables, and as a place to work. All of this means that, especially with bank robberies, an ounce of prevention is worth a pound of cure.

"Absa used to be one of the banks that was targeted more than other banks; now we're at the bottom of the list," says Dave Donkin, Absa group executive of e-business and information management.

To turn their vision of becoming a safer bank into a reality, Absa chose SAS due to its powerful analytical capabilities and, as Donkin states, "We share a common objective with SAS to better leverage information."

"Information technology is like a plumbing system," says Donkin. "Plumbing, like information technology, is useless unless it provides clean water (information), in adequate amounts and when required." Using the power of SAS predictive analytics, the company is continually finding ways to make its bank branches less attractive to bank robbers and more secure.

Astounding effects and phenomenal ROI
Absa's gains so far using SAS have been no less than amazing. Identifying the characteristics of those bank branches most likely to get robbed, Absa then modified its security measures – the number of armed robberies declined 41 percent in two years, with a 38 percent reduction in cash loss.

In comparison, according to police statistics, other major banks in South Africa have seen increases in the incidence of robberies of between 25 and 200 percent, with corresponding cash loss increases of between 50 and 150 percent over the last two years.

The analysis went beyond just discovering which branches needed more security. Absa predicted the beginning of a crime wave in Pretoria and took effective preventive measures. It also used the data to figure out where to build new branches and what types of branches to open. As part of the project, a team of IT specialists at the bank developed a risk evaluation model – using data mining and spatial mapping – of bank robberies. The model revealed various trends which allowed Absa to create a profile to identify which branches might be at risk for robberies. Absa has performed even more sophisticated analysis to uncover the patterns that would otherwise be impossible to know.

Another benefit to performing the robbery reduction analysis was an 11 percent jump in customer satisfaction rates with 91 percent of its customers reporting in a recent survey that they feel safe and secure while at an Absa branch.

Furthermore, when customers' opinions change so dramatically in such a short period of time, they are likely to be significantly more interested in purchasing additional products and services, which creates a perfect opportunity for targeted marketing campaigns. It's also a fact that happy customers are far more likely to share their favorable impressions with friends and colleagues.

And compared to the benefits, the costs have been nominal, considering that by using SAS for both significantly lowering robberies and for targeting customers with relevant offers, Absa has so far achieved a nine-fold return on its investments in SAS. The solution has already paid for itself and continues to save the bank considerable sums of money on its operational costs.

While security will always be a high priority for the bank, ultimately, having more accurate and complete customer intelligence is at the heart of why Absa uses SAS. The bank intends to remain ahead of its competitors by anticipating its customers' next needs in order to increase loyalty and satisfaction.

"The fact that we now have a more comprehensive view across banking and insurance products allows us to really get a good view of the customers." Donkin says. "By using the power of SAS to find out what those customers need, we can serve our customers better."

It also gives Absa the means to gain further advantage over its competitors in a very dynamic and growing market.

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