We live in an increasingly digital society. We shop, meet friends, research our holidays, learn and play games online using computers, smartphones and tablets. GPS-enabled smartphones broadcast our position and smart electricity meters can now broadcast our electricity consumption 24 hours a day, 365 days a year. We’re all leaving a trail of data that describes our likes, habits, preferences and behaviours. The headache is that it comes in huge volumes, it isn’t in one convenient location, and lots of it is unstructured free text and images. However, with all this data now pouring into customer management and collections departments, the opportunities to exploit this information and make it profitable are rising. But questions remain – ‘What should we do with the data?’ and ‘How can the information gleaned be used to create value?’
GPS information gathered by mobile phone companies has the ability to reveal where people are walking within a shopping centre, but also which departments they are visiting within an individual store. This insight opens up the possibility of location-based advertising. Similarly, credit cards generate masses of information about people’s behaviour, detailing what shops people go in, what time of day they shop and what they spend. Some card issuers are already using this data to better understand their customers’ behaviour. For example, unusual patterns of cash withdrawals or someone starting to pay utility bills with their credit card can be an early warning of trouble ahead. But even this only really scratches the surface of what insight can be gleaned from Big Data.
The problem is that the volume of information is coming in faster than companies (and their technological capabilities) can deal with. Businesses will have to spend money to harness the power of the data, which includes hardware to store data on and investing in analytics. There is also the added cost of building this data into customer management and collections strategies.
However, new data exploration and visualisation technologies are helping to tease out insights from the data. These techniques can help to pick out important relationships within the data, reveal segments of interesting behaviour and point towards the true value in these data sets. The biggest challenge is linking the new data to existing sources and into existing business processes. But just how much insight can and should be used is a highly contentious issue.
Big Data is expanding at a faster pace than the regulatory and compliance framework surrounding it. There are some big questions to be resolved: do we all understand the uses to which this data will be put, do the permission clauses we sign really deliver informed consent, and will the data be stored in a jurisdiction with an open and transparent compliance regime? Are we as a society happy that a collections department could, for example, locate a debtor via their internet activity? Do we really want to see satellite images of our homes that show more detail than they do today? Some people believe that this is intrusive and that this area should be more tightly regulated. Regardless of which side of the argument you stand, the debate around this issue will continue.
To keep up with Big Data businesses will need to make sense of the information and the issues surrounding the data sooner rather than later. As people’s use of digital devices and the online space increases, Big Data is going to keep getting bigger. Failure to re-think how this information is managed and analysed could be costly – and not just in a technological sense.
In an increasingly time-poor society, consumers are demanding more personalised services that are available more quickly. When a customer is contacted by a business – whether for marketing, account information or collections purposes – they expect businesses to know who they are, what their product holdings are and their full history. Big Data offers can help you get there, but it needs to be done in a way that is transparent to society and at a pace that society is happy to accept. However, if managed sensitively and imaginatively, Big Data has significant benefits. Those with the ability to extract meaning from their data as it continues to grow will be in the best position to harvest these rewards.
Paul is Director of Analytics for Experian UK&I, responsible for credit risk, marketing and fraud.
Paul has more than 20 years of experience within the credit industry and during that time he has designed and delivered complex, integrated risk management solutions across the credit life cycle.
To learn more about managing and analysing Big Data, see our latest guide.