Introduction to Survival Analysis: Design and Analysis
University of KwaZulu-Natal, South Africa
In a competitive world which is rapidly changing, with increasing complexity across the financial services industries, causing banks, investment management and insurance firm to face a diverse array of challenges and concerns. To achieve economic development, Financial Service Industry plays a crucial role in sustainable development by relying on the use of information to evaluate financial services. In order to ensure that Finance Industry continues to recover from the crisis and strengthen risk management through effective decision-making on regulations and cost reduction. A financial service provider uses a model builder’s data mining ability and skill to discover which customers are likely to switch to another provider. There is a claim that customers in a particular service group are 50% likely to migrate, which contradicts the company’s previous conventional knowledge. To ensure that a model builder has truly identified something new in an SPSS model, a company analyst runs a number of statistical analyses and displays the Kaplan Meier survival curves. These two survival curves are compared statistically by testing the null hypothesis that there is no difference in survival among the two service groups against the appropriate alternative. The null hypothesis is statistically tested by another test known as a log-rank test. The statistical significance of the discovered pattern is measured with the use of survival analysis output to help understand the length of customer relationships with the company before they migrate. Plots from the Kaplan Meier survival function curve compares the two groups to show the difference. Cumulative survival proportion appears to be much higher in one group (A) compared to another (B). To determine if there are differences in the survival distribution between the groups, a log-rank test is performed. The associated p-value is compared at 5% level of significance. Summarized report and a brief description of the statistical analysis procedure for the Kaplan Meier survival curve and output are discussed. The report informs the company on how to wisely invest resources to address migrating individuals identified by SPSS modeler and provides information to decision-makers.