Paul Russell, director of analytics at Experian UK&I, provided an insight into what is concerning big business at the moment, and where the company’s energies will be concentrated.
Experian is one of the world’s largest credit ratings firms, although it’s famous for rating individual people rather than entire countries. With annual global revenues of almost $5 billion and total staff of 17,000 it is a company many in the UK will be familiar with.
Whenever you go into a bank and ask for a loan or a mortgage, chances are that the bank staff making the decision will consult Experian’s database, which will contain detailed information about your credit history, along with a credit rating.
Russell, who has been with the company almost 30 years, explains in simple terms the process behind what Experian does and his place in the company.
“The bit of Experian business that I work in is largely interested in matters around credit risk and identity and fraud issues,” says Russell.
“So if you think about credit scoring for instance, a long time ago if you wanted some credit, you would go into a bank, fill out a form and speak to someone who would then make a decision – maybe over two, three, four hours or even a longer time period – which would then end in you getting a letter saying either you’ve got it or you haven’t.
“Credit scoring is a way of gathering relevant information, applying some algorithms to that data to enable organisations to make predictions about credit risk, for example. All that could be done very quickly so instead of having a decision process that was perhaps running over hours, the decision process was done over seconds. The credit industry in the UK and around the world has grown on the back of the availability of reliable historical information about previous payment behaviour and the ability to make robust decisions at speed.
“So data analytics go hand in hand to help speed up the decision-making process.
“Fast forward to today and that sort of activity is still happening, new areas are opening up where new data is available. There are fraud detection systems which are used in the credit card industry, where it’s possible to detect fraudulent behaviour by looking at the pattern of behaviour of an individual card holder compared to the rest of the card holders. It is possible to use the data and algorithms to say, ‘Actually, that pattern is not typical of this individual, we think that might be suspicious’.
“Then there are, although we don’t do this sort of thing, companies out there that claim to be able to detect fraud by analysing the words that you use in a particular interaction. So you know that’s an example of using new data, that sort of data is relatively recently becoming available and analytics to predict a useful outcome.
“So if you have data about an activity or a part of commercial life then, in principle, that data can be used to make predictions and to help make a decision which will be useful to a particular business, conditional, of course, upon it being consistent and within regulation.
“We mustn’t lose sight of that, the use of data is highly regulated and there are very clear rules about what can and can’t be done with Credit Bureau data and we live by those rules every day.”
Regulations and laws were originally designed to protect the individual from being exploited by big business. These days, however, it could be said that individual cybercriminals or at least small groups of them can often cause massive damage to very large organisations.
One of the ways they do this is through stealing private data of millions of individuals in one go. No one, no matter how large their organisation, seems safe. Even the US national is dealing with the aftermath of having millions of government workers’ private data being stolen – data such as names, where they live and so on.
Then of course you have the hackers who steal for fraudulent purposes. They might steal your credit card details to go along with other electronic forms of ID which, when combined, could enable them to cause havoc in your name.
It’s not beyond the realms of possibility that many unfortunate victims have been virtually cloned – their private data, private information and their identities have been stolen and used to create an online version of them which can then be used for all sorts of purposes without them knowing about it, and probably not being able to do anything about it.
A nightmare scenario for the individual concerned, but also for the companies being potentially conned by the criminals using the clone.
Russell admits that this is one of Experian’s biggest concerns. “Because more and more of us live so much of our lives online, the ability to validate identity and prove that I know who I’m talking to, I know who I’m dealing with over this internet transaction, whether they’re applying for a bank account or registering for a service with the Government, has become fundamentally important.
“We want to get access to things like our bank accounts at 10 o’clock at night, on our connected devices, with the minimum of effort. The ability of financial services providers to validate identity – to make sure you are who you say you are when you log in – online, and also to determine whether or not this individual has the wherewithal to support their next commitment, is becoming a much more complicated procedure than it was historically.
“They might sound like relatively simple things, but they are very important for wider society, and when you look at some of the regulatory changes, the Competition and Markets Authority report recently about making data more freely available within the banking sector, for example, then organisations like ours will be looking to help consumers and businesses make decisions that are important to them. So it is data analytics which will be central to that and that’s where we will be focusing going forward.”
When it comes to “big” data, not many sectors produce data as big as the scientific community, particularly astronomers. And being chairman of the strategic advisory board at the School of Physics and Astronomy at the University of Nottingham, there seems no escape from big data for Russell.
“Astronomy is a very interesting big data problem because the datasets can be huge. There is very little signal in them sometimes – a lot of noise, and extracting useful information from these datasets requires a lot of serious computing but also some serious mathematics and computer science to process that data in a way that extracts useful information. Lots of other things as well. So, it’s a very interesting aspect of my work.”
Asked what kind of applications and tools that a company like Experian uses, Russell says it’s a variety – both ready-made solutions as well as those which are developed in-house.
“We have some tools that we have that we use for modelling which we’ve built ourselves because a lot of the work that we do with clients we will be developing algorithms and models and then we will be going to the clients premises and then talking them through the work that we’ve done and having them participate in that process.
“And then for other applications, some of our big data applications, we will be using open source packages because they have specific libraries of capabilities that we might need for a particular engagement. So we’re very much driven by the data that we hold, the problems that we’re trying to solve and then we will pick the best tool for that job, we’ll pick the best tool for that particular activity at that particular time. It might be an internal tool on one bit, it might be something external on another day. It varies really.”
He goes on to explain Experian’s fundamental activities, but ultimately accepts it’s difficult to summarise such a vast and sprawling enterprise. “We essentially do four activities,” he says.
“We help our clients by providing data and analytical tools which help them to manage credit risk, prevent fraud, target marketing offers and automate decision making. We also help people to check their credit report and credit score, and protect against identity theft. So that’s a rather abbreviated description of a very rich and complex business.”
Russell says that Experian, like many other enterprises, is experiencing strong growth in its data and analytics business. “There is an increasing demand for data and analytics,” he says.
“If you think about the pace of technological change, advances in computing technology allied to changes in consumer behaviour mean that you can see there is more and more data becoming available within society. We are seeing an explosion in the amount of data that’s out there in the world, so it’s a very interesting time for organisations who are looking to make sense of that data and help consumers and businesses make sense of that data.
“At a market level, data and analytics is definitely an area of growth and there’s lots of industry analysis out there that demonstrates that.
“We’re seeing from our clients an increasing demand for services that give them insights into the data that they hold and what that means for a better understanding of their customers and the same for consumers as well.
“We’re all doing more digitally, and we are all demanding services that are easier to consume, that require less input from consumers and data and analytics is one way of helping consumers go through what we call digital journeys.”
Paul will be speaking at the Banking Horizon conference being held in London on the 18th of October 2016, click here to reserve your place now.