Eight years ago, a prominent South African bank collapsed because of irrecoverable unsecured loans. A major municipality in the country recently wrote off over a billion rand in debt that was deemed irrecoverable despite efforts described as “vigorous” in the media.
One of the challenges for South African companies is that it can be next to impossible to verify an address without quality data. A lot of companies either don’t have a process to verify addresses or, if they do, it’s often based on free, crowd-sourced data, which is unreliable.
Historically, we are accustomed to trusting people. Relevant regulations place the onus on obtaining an address from someone rather than verifying the existence of that address.
Another challenge is that people expect data to be free. A lot of data is free, but is seldom the quality data that supports sustainable decision-making. But many businesses have now moved beyond the tipping point. It is now more profitable, for example, for banks to accurately verify addresses to reduce credit-loss ratios. Many retailers have found similarly.
Relevant regulations place the onus on obtaining an address from someone rather than verifying the existence of that address.
Fraudulent addresses go hand in glove with the many varieties of fraud that have flourished in South Africa. The challenge that businesses face is enormous.
The global average for economic crime is reportedly 49%, while in South Africa it is 77%, according to the 2018 Global Economic Crime and Fraud Survey conducted by PwC South Africa.
South Africans lost over R1.5 billion to banking and card fraud in 2020 alone, according to the Banking Risk Information Centre.
A metric that begins to demonstrate the effectiveness of verifying addresses using quality data relates to loan defaults. Media reports based on data from Experian’s Consumer Default Index show more South African consumers are defaulting on loans, particularly personal loans. It is noted, however, that defaults on retail store accounts actually improved, typically because stores have stricter criteria now before they extend credit. A big part of these stricter criteria includes verifying address data.
But which type of South African companies use quality address data and how?
Fraud: Insurers use verified good quality address data to curb fraudulent claims, improve service delivery, and be more profitable. Accurate weather data correlated with quality address data ensures they can quickly assess claims on structures following storms and other weather events, for example.
Retail: Retailers use address data and geospatial analyses in a number of ways. Fast food franchises, for example, use it to assess the commercial viability of franchise locations. Fast-moving consumer goods retailers use it to assess expected revenues, product desirability and special promotions, among others, for specific neighbourhoods. Retail and wholesale groups use it for credit assessments.
Logistics: Couriers, mobile network operators and online retailers use address data to improve first time delivery success rates, which improves customer service delivery and reduces operational overheads.
Cellular networks: Mobile network operators and tower companies use address and topographical data to inform coverage maps, plan cells and design the network.
Distribution: Newspapers use it to streamline deliveries and drop-offs, as well as support marketing to justify advertising sales.
Marketing: Even a paint company has used quality address data to plan a targeted marketing campaign that improved sales by 40%.
The key to success is understanding that quality data supports risk management, efficient operations and better customer experiences.
Many projects or programmes have a much higher success rate when they use current, verified and trusted spatial data. That highlights another important aspect: the currency of the data.
Spatial data is constantly evolving. Whenever you see property development, for example, you can rest assured that address data is in the process of changing. Between November 2021 and February 2022, for example, we added 262 new suburb extensions to our South African address data.
Each time a new development is erected, such as a townhouse complex, you could change a plot or erf number to a new extension of a suburb. National Treasury’s Housing Market report of 2020 estimates there were 1.8 million households on over 805 000 properties in Johannesburg alone, based on deeds registries. From January to August 2019, more than 32 000 new houses were built, of all types. Nearly 60% were flats and townhouses.
How you run the business, the data used to make decisions and the data that informs operations determines your appetite for risk. The question is: how much do you want to gamble on the success of your company? Good quality spatial data means you can verify addresses with certainty.
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