Have you Noddled yet? Noddle is a new Callcredit service that gives consumers free access to their credit ratings, on an ongoing basis. It's upsetting the credit referencing apple cart, because rivals Experian and Equifax are trying to sell the same information to consumers via subscription services.
Callcredit's offer completes a transformation of the credit referencing industry. Until recently it was pure B2B play, where agencies collected data about individuals' credit agreements and payment performance (mostly without their knowledge) and sold this data to companies extending credit.
Then, agencies started trying to sell this data back to the individual. Now they're all eyeing a new honey pot: the opportunity to become consumer-facing brands offering people a broad range of information services. Noddle, for example, flips the old business model by turning free access to data for consumers into an invitation to a relationship offering new services, such as loans and credit-card recommendations best-suited to the user's credit rating.
Underlying reason
This trend of giving consumers access to such data concerning them, and releasing this data back to them, is not restricted to credit referencing. Right now, for example, every major high-street bank, energy firm and mobile phone company, as well as several retailers, are joining forces to agree processes to release data back to customers. They plan to do this in a portable, machine-readable form - so that customers can use it for their own purposes.
The customer data of many of these companies is worth billions of pounds.
So why are they exploring this new direction of travel? It's partly because the government is asking them to, under its 'mydata' initiative *. The underlying reason is much simpler, however: it's a massive business opportunity.
Take energy, a classic commodity business, selling an undifferentiated product via an undifferentiated channel, where the only real differentiating feature is price. Now the UK is moving toward smart metering. Instead of sending someone round to read a meter once a quarter, the smart meter creates a flow of information from the consumer to the company, so the latter can monitor energy consumption minute to minute.
Some of the privacy implications are quite scary, but what could happen if energy suppliers handed the data back to the individual and surrounded it with a suite of new services? Companies could analyse the data to advise consumers on ways to reduce energy bills and become greener. They could conduct 'people like you' analyses so customers have a benchmark to compare themselves against.
They could construct or advise customers on tariff structures that fitted their lifestyle: when is your peak energy consumption? Is it in the evening, when you come home from work, or is it during the day, when the kids are at home? They could drill down even deeper to offer consumers a better understanding of the energy costs of their activities, such as having a bath, or using a tumble dryer. They could offer advice around appliances that are energy-heavy and energy-light, including when best to use them.
In other words, energy companies could morph from 'boring margin-pressured commodity supplier' to 'trusted provider of added-value information services'.
Ditto for the banks. Paper statements provide you with a certain amount of information about your spending. Digital statements add a bit more flexibility. What could happen, however, if banks and credit-card companies provided consumers with details of their transaction histories in a standard format, so that the data could be mashed together and individuals could build an accurate picture of their spending across many different banks and financial-services providers?
Wealth of information
That creates a goldmine of data to analyse spending trends, review financing and payment options, and recommend better ways of spending money.
Banks face the tantalising prospect of putting their mis-selling 'big bad wolf' days behind them by providing added-value information and advice services that consumers want. Barclaycard chief executive David Chan comments: 'Imagine if people could easily access and review all their financial transaction data from their banks, in one place, using simple web-based tools. We believe that could make a real difference to people, and that's why we support mydata.'
Or, take retail. Imagine a simple digital receipt that's automatically sent by the retailer to your own personal data store when you make a purchase. Inspecting this list may seem little better than watching paint dry, but it quickly makes useful things possible. The ability to handle returns in a new way, for example. Or to construct a dashboard for 'my warranties and guarantees' so that if something goes wrong, there's a single, easy way to do something about it. Or a new basis for making insurance claims.
Then there are the longer-term implications. Over time, for example, this simple flow of digital receipts could build a bigger, richer, deeper picture of the individual - his lifestyle, purchasing habits and preferences - than any organisation could ever generate from its own transaction data in isolation.
For decades, the assumed way of operating was for organisations to collect data about their customers and use it for their own purposes. However, by releasing this data back so that customers can use it as a tool, brands can build trust, gain access to a much richer, rounder view of their customers (if customers are willing to share the information), and develop innovative information services, which secure loyalty and open up fresh revenue streams.
The flip-side of the coin is that if incumbent brands don't seize this opportunity, up-and-coming competitor brands will.
Transparent and obvious
To be sure, there's a long list of hairy technical, standards, privacy and security issues that need to be cleared. Also, as the behavioural economist Richard Thaler, author of Nudge and adviser to the Government Nudge Unit that created the mydata initiative notes, the new approach threatens some companies' profits.
This is because previously, they made a lot of money from 'an explicit strategy of obfuscation'. In contrast, he says in a McKinsey Quarterly interview, the new information-sharing dialogue with customers envisaged by mydata is designed to make 'everything transparent and obvious'.
For decades, many marketers have regarded customer data as their crown jewels. Now there's a counter-intuitive twist to this story. Perhaps the best way to safeguard and enhance of the value of your crown jewels is to give them away - back to your customer.
Alan Mitchell is a respected author and a founder of Ctrl-Shift and Mydex.
*Disclosure Alan Mitchell currently sits on the mydata Project Board.