In our 4th Privacy versus Personalisation session, we looked into the UK’s £250bn per annum mortgage market and discussed how, as an industry, we can create better outcomes for consumers by using data responsibly and respecting privacy in an increasingly digital environment. Our core areas of discussion included examining what trust really means to the consumer, the gap between what firms say they can do with data and what they deliver in practice, the implications of accelerating transparency and also how together we can improve accessibility and address vulnerability in the mortgage space. More below.

Background to the breakfast:

What: On Wednesday 13th February 2019, META Finance, in association with Instinctif Partners, brought together a broad group of industry experts, consumer champions, start-ups and established firms to discuss how the mortgage industry can build digital trust with consumers. As one of the largest financial commitments people make in their lives, trust is essential to the mortgage process and we sought to explore the role of personal data in both the propositional and operational aspects of this market.

Why: All around us, personal data plays an ever-increasing role in customer engagement and operational efficiency – bringing risks and rewards for financial services firms as they navigate the fine line between privacy and personalisation. Global research suggests nearly 90% of consumers say they are concerned about data security and privacy, but 80% demand a personalised service. While financial regulators press the need for suitability and good consumer outcomes, the media frequently highlights stories of data misuse – further eroding public trust in the sector. Our breakfasts bring together a small gathering of guests from established firms, start-ups, technology providers and consumer groups. Our goal is to promote debate and help all parties collaborate to build a better, more trusted, financial services sector.

Where: Instinctif Partners, 65 Gresham Street, London EC2V 7NQ

Who: Intro and welcome by Ben Leonard (META Finance) and Andy Lane (Instinctif Partners), followed by a keynote speech by Marc Plato of ID Co.

Ben Leonard – Founder, META Finance
Touched on the culture of change in the digital economy, and how this needs to be progressed alongside the technology that enables that change. Gave context on the Digital Trust campaign that META Finance is leading on, why we are doing it and how firms can help us to progress this.

Andy Lane – Partner, Instinctif Partners
Discussed recent media and regulatory attention on the opportunities and risks emerging from technology and data use in financial services, drawing on Instinctif Partners’ insights and client work to build and protect brand reputations with consumers, industry, policymakers and their influencers.

Marc Plato – Senior Client Executive, The ID Co
Gave an overview of Open Banking and The ID Co’s approach to enabling businesses to access ‘Open Banking’ API data to address the challenges of affordability, risk and compliance. This sparked a debate around the competitive advantage of providing a personalised and streamlined UX which enables customers to maintain control of their data, and how “digital data can be used to create trust and loyalty, and to ensure that you are not over paying on your mortgage”.

Breakfast synopsis
Over the 90 minutes we discussed four main themes connected to the role of personal data in the Mortgage market. Below are some of the points raised and issues covered:

  1. What does trust really mean?
    ● Rewarding consumer loyalty, the data “value exchange” and building a relationship with customers are all things that firms often fail to do. “Trust starts with getting the basics right”.
    ● How firms respond to data tragedies can play a big role in building consumer trust. “Firms should turn more often to their PR firms than their lawyers when things go wrong”
    ● Open banking is a year old yet is already providing solutions that help inform consumers about what financial products they could use and how much they should be paying for them. “The power of digital data to use it in a way to create trust and loyalty to ensure you’re not overpaying on your mortgage”.
    ● Open data offers a broader opportunity to make mortgages “a higher engagement product over the customer lifetime” and potentially could help people pay it off more quickly. Firms could, for example, offer tailored advice/guidance based on a customer’s circumstances delivering insights (e.g. potential savings and forecasted pay-off periods) and creating trust
    ● Trust is not just a consumer issue and some firms may delay adoption of open data due to the evolving regulation and question marks over the rate the adoption of data sharing. This could lead to a two-tier market and “a growing gap between perceived [data] proposition and operational capability”

2. Mind the [data] gap
● In building out both an operational framework and a consumer proposition, firms need to “be sure not to overpromise and underdeliver on the value-add that data sharing will enable”. It is important to understand the marginal gains that the data would provide in order to engage with it in a way that provides the customer with a personalised product.
“Data is a black hole if you don’t know what you want”, and the current data landscape can be compared to collecting bricks to build a development when you are not yet sure what overall purpose it has to serve. Some feel that banks and other financial service providers have yet to allocate resources to analyse data and use the resulting insights to truly understand what customers want from products and services; rather, they just want to build a data lake for an unspecified end.
● Experience over Compliance – the way that banks have historically interacted with customers has largely resulted in an information overload of emails, letters and calls, “driven by compliance or product marketing rather than addressing a genuine customer need”.
Firms like Monzo are attracting customers because  they offer a better experience focussed on marginal gains from data and improving operational efficiency. FirstHomeCoach is another example of personalising a product to the consumer using their data to help them first and foremost and then to provide a gateway to financial products.

3. Transparency is a 2-way street
● Richer data can be both a good and a bad thing, because how you manage your records is paramount to the service you receive. “Imagine having two doctors, one you see when you are sick, and one you see when you are healthy, and you only share your records from the healthy doctor with your insurance company”. The same goes for bank accounts. As we move towards more open data and connectivity, the ability to personalise products will grow but equally, the ability to hide information will fall away. Both firms and consumers will need to go on this journey together.
● Data isn’t about technology, it’s about understanding. “The intermediary market is much
more data rich than the provider.” Intermediaries tend to understand customers better than lenders, but only at a point in time.
● This raises the ethical question around whether people are aware that their information (around their spending habits etc) is being used, and how it is being used to tailor their products. When does this become a problem?

4. Accessibility & Vulnerability
● Data is not an interface; the power of personalisation can be consumed face-to-face or via mobile so we should be ensuring we make data work for all in society rather than thinking about digital as a proposition just for millennials. With a growing trend of gig economy workers, shared households and job mobility there is also a growing need for systems with greater flexibility.
● Consideration must be given therefore by firms about how to make the opportunity that data
presents accessible to all. “Data is not just about interacting with the internet (some people don’t want to or simply can’t)”.
● The self-employed present a good example of how data accessibility can lead to a better experience: As one of the 5 million self-employed individuals, “how can you guarantee that you can pay the same amount towards your pension each month when you’re not sure what you’re going to earn that month?” The same could be said for mortgage affordability.
● As an extension of our transparency discussion, we also observed that “Personalisation may put some people at risk as they become unattractive as a commercial proposition” (e.g. DNA screening provides risk profiles for cancer prevalence, which could ultimately make life cover more expensive for the consumer). As an industry we need to be alert to the evolving nature of vulnerability in a digital world and how this can work to accommodate and respect privacy.

These are the prevailing themes which came out of the breakfast session and we hope provided a useful starting point to stimulate further discussions around data and the digital landscape.

To sum up, people don’t buy a mortgage; they buy a house. A mortgage is a component and we need to
work together to support the user experience which helps to fulfil the consumers ambition. Put another way “market infrastructure and consumer outcomes should be the focus; not brokers and lenders.” We should also acknowledge that some firms want to build customer affinity and loyalty, while some simply want to sell products. Both ambitions are fine but we must work together to focus on better outcomes for consumers.

What next:
META Finance will continue to host its breakfast discussions and build a community around this topic. We are also happy to speak at events and provide bespoke workshops or board presentations to support clients on their own journey.
Our next session will be on Pensions which we will be running on 30th April 2019.

Links to contact us or sign up for updates.
Twitter: @Meta_Finance @the_idco @InstinctifPtnrs #PrivacyVsPersonalisation #DigitalTrust