Emerging Insight: Data, data everywhere

More data has been generated in the past two years than had been generated previously since the beginning of time. Sophisticated analytics are needed to make sense of these vast volumes of data and to gather insights that can be used in decision-making. In a new scoping note, Insight 2 Impact (i2i) Facility presents five categories of analytics that financial service providers can use to translate data into insights: descriptive, diagnostic, predictive, prescriptive and cognitive.

Each category is more advanced in terms of complexity, level of automation, amount of data required, difficulty in applying the method, and business value. Each category also represents a reduction in the level of human input required for decision making.

Descriptive analytics tell us what happened, when and where. Diagnostic analytics tell us why. Predictive analytics go a step further telling us what is likely to happen and prescriptive analytics what we can do to make a particular outcome more likely. Lastly, cognitive analytics advise us on the best action to take.

For illustrative purposes, imagine that you are an insurance provider in Abidjan trying to design a malaria insurance product.

• Descriptive analytics would look at malaria incidence rates (morbidity tables) and hospitalization records to price a product and target specific customer segments.
• Diagnostic analytics would overlay travel patterns on high-risk areas or rainfall patterns to understand why malaria is occurring at higher frequencies in certain areas during particular months.
• Predictive analytics would forecast future movements of customers and remind them to take medication before travelling to high-risk areas.