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Last month Admiral, one of the UK’s largest insurers, revealed plans to use social intelligence about its customers’ personalities and behaviours to price their car insurance as part of a new initiative called, Firstcarquote. However, in a slightly awkward turn of events less than 48 hours later, Facebook forced the company to scrap the initiative just hours before it went live, claiming it breached Facebook guidelines, which banned businesses from using data “to make decisions about eligibility”.
So in this case, sadly it seems the financial services giant took a risk on something new, failed fast (really, really fast), and was penalised for its efforts. And to be honest, I’m not sure how I feel about it.
As the speed of disruption in the finance sector increases and new fintech players emerge onto the scene in droves, established businesses are having to look for new ways to innovate and provide a better experience for their customers. Adoption of social media channels by banks, card providers and insurers to service their customers, market to them, authenticate them and engage them in building financial literacy has been widespread. However, can we really call this innovation? Good business, and necessary – absolutely! But for the most part, are these not the same activities the finance sector has always carried out, just in a new set of channels?
Don’t get me wrong, there are many notable examples of financial services giants delivering improved customer experiences by ramping up their efforts in social media. For example, some retail banks have so mastered channels such as Facebook for servicing, that they have service requests handled in a manner of minutes; American Express will link a customer’s social profiles to their card, enabling them to target their customers with relevant and timely offers based on what they like, and the places they frequent; and more and more banks are using Facebook authentication and messenger bots to deliver ease and efficiencies to their customers.
These are all great examples of channel innovation – but actual product and industry innovation, the likes of which are demonstrated in Barclaycard Ring is harder to come by. Which is perhaps why I feel somewhat disappointed about Firstcarquote’s failure to get off the ground – using social intelligence to shape relevant products feels like exactly the sort of thing we should be seeing more of. And moreover – why should Facebook be making the decision about how my data is to be used without consulting me, the user?
Whose data is it anyway?
As a Facebook user – and insurance customer – should it not be up to me to decide if I find value in my insurance provider being able to access my social data to learn more about me, and possibly charging me a lower premium as a result, or developing a more personalised product to suit my needs? I felt pretty strongly this way, until reading a follow up piece from the Guardian that flagged some of the challenges we’re set to run into as data disclosure becomes more pervasive.
“Discounts can quickly become penalties once expectations about data disclosure shift from novel to normal. As surveillance by insurers “becomes more accepted”, argues law professor Scott Peppet, “it will give rise to its own stigma: when disclosure becomes low-cost and routine, those who hold out are suspect.”
So this leaves me questioning: where is the middle ground? How can we create a system where value can be added, and life can be made easier and fairer for customers who make access to their information seamless for services? But also one where those who choose not to share aren’t excluded from services, better pricing and products? And furthermore, how can the necessary frameworks be put in place that enable organisations to move past channel innovation into real innovation?
The answer, in part, likely lies with privacy and data legislation – which must find a way to start moving with the speed of technological capability. As up until now legislation, and regulation more broadly, has struggled to keep up with the demands of the market.
But all is not lost, for some regulatory bodies have acknowledged their limitations, and sought input from businesses and the entrepreneurial community to help identify the blockers and issues, so they can work through them. One promising local example is the recent launch of Innovation NSW’s Regulatory Sandboxes, aimed at enabling the development of new solutions and business models that would otherwise be constrained by existing regulations in NSW.
It’s sure to be an interesting space to watch, for while Innovation NSW’s Regulatory Sandbox can’t address all the consumer protection and privacy issues raised by the Admiral example, it demonstrates the steps being taken to improve how businesses and governments can create shared value from data. In an area that’s only going to become more complex, more nuanced, and more pressing, government, business and citizens must work together to build the right, equitable frameworks. Only then will service innovation that benefits all people become a much more realistic proposition.