The New Frontier: Unlocking the power of data

Transcription

1 2 nd Annual industry report by Forrester for Experian Issue The New Frontier: Unlocking the power of data

2 Content About Experian 3 Preface 4 Overview 6 Situation 7 Approach 10 Opportunity 13 Conclusions 16 Appendix 18

3 About Experian Experian unlocks the power of data to create opportunities for consumers, businesses and society. At life s big moments from buying a home or car, to sending a child to college, to growing a business exponentially by connecting it with new customers we empower consumers and our clients to manage their data with confidence so they can maximize every opportunity. We gather, analyse and process data in ways others can t. We help individuals take financial control and access financial services, businesses make smarter decision and thrive, lenders lend more responsibly, and organizations prevent identity fraud and crime. For more than 125 years, we ve helped consumers and clients prosper, and economies and communities flourish and we re not done. Our 17,000 people in 37 countries believe the possibilities for you, and our world, are growing. We re investing in new technologies, talented people and innovation so we can help create a better tomorrow. Learn more at

4 Preface It s my privilege to be sharing with you the second of our annual industry reports with Forrester, uncovering the key trends and challenges impacting large enterprises across Europe and what business leaders are doing to address them. Last year s industry report, Winning in the Customer Era, affirmed the unquestionable shift in power and focus to the digital customer with business leaders unanimously stating that improving customer insight was the number one business priority to win in today s digital economy. The report also highlighted the external mega-trends in terms of the explosion in data about customers, rising fraud, digital disruption - and changes in regulation, which just keep coming. In this year s 2017 report with Forrester, surveying 590 CXOs across Europe s largest enterprises, we see business leaders continuing to struggle with these same challenges, putting pressure on traditional business models and already constrained internal resources only accelerated. While the strategic intent to capitalise on data insight remains core, we see the focus shifting beyond getting the data and technology foundations in place, to leveraging advanced analytics and decision-automation to turn data into actionable strategies for real-time execution across the lifecycle. However, the scarcity in analytics talent (and fit for purpose tools) combined with rising demand is forcing companies to re-think traditional approaches to close the analytics gap. The research findings are consistent, regardless of industry, with the business challenges we see across our global customer base and what we are doing to help customers resolve them. Read,, to understand where organisations are looking to invest to become truly insights-driven and to discover the three key strategies for success that underpin this. Sincerely, Charles Butterworth Managing Director, Experian UK & I and EMEA

5 The new frontier: Unlocking the power of data

6 OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS APPENDIX Insights-Driven Organizations Will Be The Digital Economy Winners With the unquestionable shift in power and focus to the customer, organizations must digitally transform their business to keep up. The digital era goes hand in hand with the age of the customer. This requires a fundamental shift toward an outside-in approach that focuses on outcomes and customer experience. To deliver on these new expectations, companies need to become data-insights driven, focusing on getting the most out of the data they have access to, and turning it into insights that can help better serve customers in real time across the lifecycle. But, well-established organizations face many challenges. The changes required put huge pressure on traditional business models and already constrained internal resources. Additionally, the ongoing battle to fight ever more sophisticated fraud, meeting constantly evolving regulatory requirements, and new digitally savvy newcomers aiming to take a piece of the pie, all add to the burden for many organizations. Use of advanced analytics techniques and decision automation can enable organizations to become insights-driven and to take fast action based on insight. While some claim to be insights driven, few organizations truly are, and with the proliferation of data in today s digital world, this is becoming even harder. In June 2017, Experian commissioned Forrester Consulting to conduct a survey of nearly 600 business decision makers in Europe, the Middle East, and Africa. Respondents were responsible for, or had a significant role in, the decision-making process for enterprise risk, analytics, customer data management and fraud management. Region Europe: 65% Middle East: 14% Russia: 11% Africa: 10% Industry Financial services and insurance: 42% Telco services: 32% Retail: 25% Revenue $50M to $499M: 56% $500M to $999M: 24% $1B or more: 20% Role C-level/VP: 26% Directors and managers: 74% This study investigates three key areas: Advanced analytics Fraud management Customer insight How this study is structured: 1. Situation. Investigating the current market pressures and business priorities 2. Approach. Exploring the challenges that organizations face in responding to market demands 3. Opportunity. Identifying the top strategies to succeed 4. Conclusions. Key takeaways and calls to action

7 OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS APPENDIX Advanced analytics Organizations remain challenged to become truly data driven To differentiate and react quickly in today s competitive environment, organizations are required to become customer obsessed, adopt deeply embedded insights from their data, and weave these insights into how they operate. Yet the evidence shows that only 35% of business leaders are able to use analytics to extract value from their data. And around half said they are not able to get the relevant insights from their data to drive actionable decision making. Data is only as good as the insights it produces, the actions it influences, and the results it fosters. This is an area firms are really struggling to master, which explains why 40% of C- level and functional leaders still rely on their own opinion and gut feeling when making important strategic decisions. In many ways, this isn t surprising: Keeping up with fast-changing analytics and regulatory requirements is putting pressure on already heavily utilized resources. Organizations stated they lack the resources and skills (50%) to ensure they can cope with the growth, variety, and quality of data (53%). Data security and privacy are also seen as posing a challenge to companies ability to turn their data and analytics vision into reality. Organizations are responding to these challenges by ramping up their investment in analytics capabilities to support the delivery of products and services their customers demand. Regulatory compliance: necessary, but a strain on resources and cost 69% of EU and 67% of non-eu respondents said they are very prepared to meet existing regulatory needs. But in today s world, regulatory requirements are a moving target and, although necessary, they add a burden on organizations already limited resources and time. Only 15% strongly agree they are very prepared to meet PSD2 requirements, and 55% of EU organizations agree that security implications and costs of PSD2 are stretching their resources. However, 55% of non-eu organizations said they see PSD2 as an opportunity to deliver value to customers, and 58% will change their online payment operating model to meet PSD2 needs.

8 OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS APPENDIX Fraud management Fraud is the top barrier to companies accomplishing their business priorities Cyberfraud is the top challenge for organizations in achieving their business priorities, with 57% of C-level and functional leaders stating that increased exposure to fraud is now the main inhibitor to success. High-profile incidents and the increasing sophistication of fraud are directly impacting organizations reputations, customer trust and loyalty, and, ultimately, their bottom line. While much effort is being put into managing fraud, many organizations struggle to manage the complexity of modern fraud. Only 33% of respondents said they can tackle fraud across all channels. The result? Organizations reported that in the past 12 months they have seen an increase in fraudulent transactions (48%), cost of online fraud (38%), level of bad debt (37%), and number of fraudulent cases (36%). To stop fraud without compromising the digital experience with cumbersome and intrusive processes, or hiring large numbers of fraud analysts to support increasing levels of manual review (43%), fraud teams need more effective, reliable, and automated processes to deal with suspicious transactions.

9 OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS APPENDIX Customer insight Current approaches to customer insight are insufficient Firms are being pressured by rapidly changing customer behavior, technology enhancements, and increasing regulatory demands. The need to fight fraud effectively, along with pressure from existing and new competitors, has resulted in changing business environments for large organizations. Over the past 12 months, 52% indicated the cost to service customers has increased, which explains why gaining better insights is a top priority for 77% of firms. A 360-degree view of the customer helps organizations deliver insights into behaviors across various channels and touchpoints. Unlike their new digitally savvy competitors, traditional, well-established organizations tend to be burdened with legacy systems and processes that are unable to respond to customer demands in a timely manner. Incumbent firms are typically organized around the optimization of their own internal processes rather than the customer. In fact, 65% of respondents said their customer insight effectiveness can improve, and only 19% of organizations can harness all available data to optimize customer interactions. Organizations customer insight capabilities are being held back by disparate legacy technology systems (49%) and customer data being siloed across multiple systems and functions (46%). This disjointed and siloed view of their customers has meant that firms tend to be focused more on tackling point problems rather than addressing customers needs throughout their journey.

10 OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS APPENDIX Advanced analytics Today s business environment demands more advanced analytics Organizations have a variety of advanced analytics and artificial intelligence (AI) techniques at their disposal that allow them to improve the products and services they provide, while at the same time also helping to detect and prevent fraud. Hence, it is heartening to see that organizations are indeed responding to the challenge of becoming more data driven. Seventy-eight percent of respondents are increasing their investment in advanced analytics to ensure they are able to deliver business value: 76% highlighted investments in big data technology and 71% identified enhancing advanced analytics capabilities as being high business priorities for their organization in the next 12 months. But, while firms are collecting mountains of data, many are still missing the mark when it comes to transforming insight into action and effective decision making. Fifty percent of respondents highlight that the one of their biggest challenges was being able to create customer and business insight to drive decision making. Firms must systematically harness data and analytically apply it to respond quickly to internal and external challenges. In other words, firms must gain more data accurately and then turn those insights gained into actionable strategies for their customers to add business value. While the processes, techniques, and technologies associated with this are an essential foundation, there s also the imperative to move on to more advanced analytics in order to keep pace.

11 OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS APPENDIX Fraud management Organizations struggle with the complexity and cost of fraud To minimize fraud risk and maximize early detection, organizations must collect as much data as possible about customers behavior and the devices they are using. However, 73% of C-level and functional leaders said they are not confident they can mitigate fraud. A further 69% of organizations said they don t have a simple way to manage the complexity and variety of fraud. Exploring what is behind this revealed that only 35% said they continuously monitor attempts of fraud. Only 30% of respondents highlighted they have access to accurate and up-to-date data sources for fraud and that they use predictive models to reduce attempts of fraud. Furthermore, the cost of fraud is increasing with 39% reporting higher costs in online fraud. Today s fraud prevention approach is suboptimal from a consumer perspective. Fraud prevention measures often cause friction, forcing customers to abandon their journey. Only 19% strongly agreed they have a balanced approach to fraud with just 29% confirming that they have noninvasive means in place for customer authentication to reduce friction as well as enable early fraud detection.

12 A Custom Technology Adoption Profile Commissioned By Experian September 2017 OVERVIEW 1 2 SITUATION APPROACH OPPORTUNITY 3 Disconnected approaches across the lifecycle result in suboptimal performance Organizations need to create value for their customers by applying analytics and insights across different stages of the customer lifecycle. But organizations are unable to do this, as customer data is split across multiple and disconnected platforms. Less than a third of organizations said they have a strategy to deliver consistent customer experiences across the lifecycle. This makes it challenging to respond to customer demands quickly and effectively in a digital environment. Exploring the customer lifecycle from origination, to customer management, to collection revealed that few organizations consider themselves to be very effective at each stage. Origination: Only 36% said were very effective at offering seamless and fast onboarding of new customers. This results in low customer satisfaction levels as well as increased cost. Customer management: Only 39% said they were very effective in the time taken to resolve customer issues. This negatively impacts customer satisfaction and cost as well as cross-sell opportunities. Collection: Only 39% have the ability to identify and monitor new events and changing status of customers. This lowers the chances of successful collection and effective customer management. CONCLUSIONS APPENDIX Customer insight

13 OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS Strategies for Success Use third-party expertise to boost your analytics strategy APPENDIX Advanced analytics Rapidly changing analytics requirements and technologies mean that to fully exploit each customer interaction and touchpoint, companies need a combination of technical skills and domain expertise that s rare, and few organizations have enough resources. They need resources that can blend analytical expertise that can make sense of a variety of data, with how this applies to their organization s unique context, industry tactics, and best practices to unlock new ways to maximize the value of the available data. To keep up with the pace of change, many organizations are turning to trusted partners that can build, run, and manage a broad range of analytics solutions on their behalf. Seventy-seven percent of respondents said they are currently using, or planning to use, such partners in the next 12 months. Regardless of their analytics maturity, C-level and functional leaders are looking to partners that can help them support complex and rapidly changing analytics needs, uncover new opportunities, and offer the flexibility and agility to scale analytics operations as the business and market demands. For those with fewer in-house skills or less-advanced analytics practices, this means access to expertise and resources they otherwise wouldn t have. For other organizations with more-sophisticated analytics practices, it means the ability to augment internal expertise; this increases flexibility and also allows teams with precious advanced skills to focus on new areas that can bring competitive differentiation.

14 OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS Strategies for Success Take a holistic approach to mitigate risk, cost and complexity of fraud With rapidly evolving fraud capabilities and technologies, organizations need to keep up with the pace of change. This means taking a holistic approach to tackle the complexity and cost of fighting fraud while at the same time protecting the customer experience. APPENDIX Fraud management Fraud prevention and detection measures shouldn t be or become a burden. Organizations can use analytics to authenticate the data acquired from customers in the origination phase to help distinguish bona fide transactions from fraudulent ones. This in turn enables companies to develop much more granular customer segmentations, devise new products and services, and decide in real time where appropriate how to guide customer interactions. Over the next 12 months, organizations are looking to achieve this by sharing data with other third-party agencies to prevent fraud (48%), adopting fraud analytics to better predict when fraud will occur (46%), incorporating more noninvasive authentication methods (45%), and implementing a fraud management road map (32%). Companies should also look to implementing management dashboards as an element to help decision makers cope with the complexity of fraud, through having relevant metrics available to them at a glance, ideally in real time and with appropriate trend information.

15 OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS Strategies for Success Automation enables insights to be embedded at every stage of the lifecycle APPENDIX Customer insight Organizations struggle to turn insights into action. Insufficient automation, decision support, and analytics capabilities prevent companies from taking the most appropriate action quickly at scale across all channels and stages of the customer s journey. But C-level and functional leaders are responding and planning on leveraging automated decision systems to better manage high-risk debt (46%) and customer onboarding (42%) and optimize the customer-level decision in collection (44%). Automation is the enabler for speedy implementation of insights to maximize customer lifecycle value for customers across: Origination, by improving time-to-completion. This is essential to improve customer satisfaction, help contain costs, and lay the foundation for cross-sell opportunities. Customer management, by preserving the customer relationship when they are most active to improve cross-sell and upsell opportunities. Collection, by minimizing losses. Deeper customer understanding enables firms to act earlier on collection risks and take a more nuanced approach; this helps to reduce losses.

16 OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS APPENDIX 1 2 Unlocking the power of data to become an insights-driven business: Three strategies for success Our research shows that to thrive in today s digital world, organizations need to maximize their use of available data to become insights driven. Traditional analytics approaches are not up to scratch. Rising customer expectations, increasing competition, ever more sophisticated fraud, and demanding compliance requirements are creating increasing pressures. Organizations must be able to turn data insights into actionable decisions in realtime to boost growth and ultimately better serve the customer. The research revealed that the strategy to achieve this is underpinned by three pillars: Push analytics to the next level: Unlock the value of your data. Organizations need to enhance their current analytics capabilities in order to solve business problems and discover new opportunities. To do this requires a clear and well-articulated data and analytics strategy which enables them to capitalize on insights from increasingly complex and multiple data sources, internally and externally. This requires firms to break from traditional approaches to deploy the right tools, technologies and resources so they can flex their analytics capabilities to changes in volume and type of expertise. Organizations should consider third parties to gain access to the combination of capabilities and resources required in a cost-effective and agile way. Tackle fraud holistically: Reduce cost and complexity while protecting the customer experience and your business. Organizations should take advantage of data-sharing schemes with third parties for early fraud detection. Added to this is advanced analytics techniques for understanding, in real time, the behavior of both people and devices. The same techniques can also reduce friction in customer transactions, minimizing the need for intrusive authentication requests. Seeking ways to streamline the management of the fraud estate into a consolidated dashboard approach will reduce the overall burden of complexity and cost on the business as well as make it faster and easier to adopt new technologies to fight fraud. Take a unified approach to customer insights: Gain visibility of customer interactions across the life cycle. To deliver the outcomes and experiences customers want, companies must understand the customer as an individual at every stage of the life cycle. To achieve this, they must capture and analyze all relevant data to ensure they have a consistent approach across the customer journey. Companies should also seek to automate as much as possible. Leveraging a unified and integrated automated decision platform enables quick and consistent processes and frees up valuable resource to tackle more complex opportunities and drive business value.

17 OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS APPENDIX 1 2 Methodology This Technology Adoption Profile was commissioned by Experian. The custom survey questions were fielded to 590 C-level professionals (26%) and functional leaders (74%) in Europe, the Middle East, Russia, and South Africa. The study focused on traditional brick-and-mortar organizations in the financial services, retail, and telecommunications industries. Respondents were responsible for, or had a significant role in, the decision-making process for enterprise risk, analytics, customer data management, fraud management, and customer data management. The auxiliary custom survey was completed in June For more information on Forrester s data panel and Tech Industry Consulting services, visit Forrester.com. ABOUT FORRESTER CONSULTING Forrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging in scope from a short strategy session to custom projects, Forrester s Consulting services connect you directly with research analysts who apply expert insight to your specific business challenges. For more information, visit forrester.com/consulting. Project Director: Varun Sedov Principal Market Impact Consultant 2017, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to forrester.com. [1-13UL1GX]

18 Appendix: country summary OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS APPENDIX Key business priorities over the next 12 months EMEA Overall Denmark France Italy Middle East Netherlands Norway Russia South Africa Spain Turkey UK 84% 80% 90% 84% 84% 63% 84% 83% 86% 90% 89% 90% 81% 81% 70% 80% 69% 80% 86% 80% 92% 85% 80% 80% Improve the experience of our customers Growth through new customer acquisition 79% 71% 77% 75% 80% 76% 72% 79% 77% 84% 89% 90% 78% 77% 61% 66% 65% 66% 72% 71% 74% 81% 90% 72% Enhance our cyber fraud mitigation capabilities Adoption of advanced analytics capabilities

19 Appendix: country summary OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS APPENDIX Top business challenges over the next 12 months EMEA Overall Denmark France Italy Middle East Netherlands Norway Russia South Africa Spain Turkey UK 57% 57% 68% 59% 45% 67% 48% 55% 63% 62% 60% 40% 58% 65% 56% 58% 59% 36% 62% 54% 74% 63% 40% 56% Increased activity from existing competitors Increased exposure to cyber fraud 53% 48% 55% 43% 62% 53% 52% 52% 49% 62% 48% 60% 52% 45% 40% 50% 63% 48% 62% 43% 39% 58% 50% 42% New competitors moving into our space Being able to create a single view of the customer 49% 48% 54% 27% 49% 46% 38% 56% 64% 50% 50% 52% Legacy technology systems

20 Appendix: country summary OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS APPENDIX Percentage of respondents that have reported an increase in the past 12 months in the following metrics: EMEA Overall Denmark France Italy Middle East Netherlands Norway Russia South Africa Spain Turkey UK 37% 46% 39% 33% 26% 61% 36% 31% 42% 46% 37% 47% 23% 42% 50% 39% 51% 39% 45% 42% 61% 52% 50% 34% Level of bad debt Collection cost 37% 37% 32% 47% 31% 49% 30% 31% 39% 34% 39% 27% 35% 42% 44% 18% 55% 43% 31% 29% 26% 44% 60% 28% Fraud losses Customer churn 51% 65% 56% 31% 53% 51% 48% 53% 70% 60% 57% 38% Cost to serve customers

21 Appendix: country summary OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS APPENDIX Advanced analytics Year-on-year increase in budget for advanced analytics EMEA Overall Denmark France Italy Middle East Netherlands Norway Russia South Africa Spain Turkey UK 44% 26% 33% 54% 29% 43% 31% 35% 39% 76% 43% 55% Advanced analytics Percentage of respondents that said their customer insight was very effective Customer insight 35% 39% 33% 36% 41% 30% 38% 32% 34% 31% 60% 31% Customer insight effectiveness

22 Appendix: country summary OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS APPENDIX Percentage of respondents that have reported an increase in the past 12 months in the following fraud metrics: Fraud management EMEA Overall Denmark France Italy Middle East Netherlands Norway Russia South Africa Spain Turkey UK 39% 46% 32% 41% 33% 61% 44% 38% 32% 30% 50% 47% 30% 48% 64% 43% 49% 48% 45% 39% 46% 61% 27% 31% Cost / loss due to online fraud The attack rate 43% 35% 45% 30% 57% 41% 48% 30% 52% 50% 60% 34% Level of manual review rate

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24 Research conducted by