In a conversation with Robert Lindsay, Chief Product Officer at ClearStake, Gaming Eminence delves into the intricacies of affordability checks within the gambling industry. Lindsay illuminates the formidable challenges operators face in acquiring financial data, which often leads to significant customer attrition. The central message here is the pressing need for simplifying these processes, not only to retain customers but also to optimise revenue streams. The interview shines a spotlight on the secure potential of Open Banking as a modern alternative to traditional methods for affordability checks. However, it's emphasised that operators must remain vigilant about data security and access control. Overall, this conversation underscores the delicate equilibrium operators must strike between compliance and revenue generation in the gambling sector, emphasising the pivotal role of streamlined affordability checks. For a deeper exploration of these insights, we invite you to continue reading.
GE) Given the revenue impact highlighted in recent reports, can you provide insights into the main obstacles that operators face when implementing and conducting effective affordability checks? How do these challenges influence customer retention and financial outcomes?
RL) There’s no getting around one simple fact - affordability checks require customers to share financial data with operators. There are any number of obstacles in the way of successfully making that happen.
At present, expecting the customer to find and download bank statements, and then share these with the operator before waiting for a result, is asking a lot. The process is almost designed to encourage those customers to go elsewhere. The method of asking for bank statements is a laborious process for both the operator and customer, often leading to high levels of customer churn, believed to be around 85%. As a result, operators today are losing hundreds of millions in revenue when conducting affordability checks on people who are by definition their best customers. In addition to the time wasted by players collating bank statements, they can be difficult to assess across a team accurately and consistently.
Historically, soft checks can only provide a rough estimation and are not accurate enough to assess an individual’s financial situation in real time. They provide no visibility of a player’s recent spending habits, including their gambling spend, nor any assurances from an anti-money laundering perspective.
GE) With the global trend towards stricter affordability regulations, how can operators strike a balance between compliance and optimising revenue generation? What strategies or technological approaches hold promise in achieving this delicate equilibrium?
RL) In three words: make it easy. Operators need to get their arms around this process and treat it like any other retention challenge. The goal is to smooth the customer journey, so the question is: ‘what is the fastest, simplest way for customers to share financial data with me, and for our organisation to return a decision’. It is amazing to say this out loud, but right now operators are losing up to 80% of customers during affordability checks. In any functional business, reducing that number would be the number one goal. I suspect it will be very soon.
One last thing to note is that there is no shortcut, and we should think in terms of ‘striking a balance’ between compliance and revenue. We need accuracy, and we need to make the right decisions. On that basis we optimise revenue by making the sharing of financial data as easy as possible.
GE) The substantial loss of potential customers during the affordability check phase is a concern. Could you discuss specific instances where operators have successfully reduced drop-offs by enhancing their affordability assessment processes? What lessons can others glean from these successes?
RL) We’ve seen operators increase retention during the affordability process by upwards of 200%. The process of sharing data should be as simple as two clicks and take 30 seconds. Operators that think creatively about timing can also see huge improvements in opt-in rates. Most customers who are going to hit the financial risk checks threshold know full well they are coming. A great approach is to offer the option to perform these checks early in the customer journey. By doing so, the organisation removes a key point of friction down the line and allows an accurate limit to be set for each customer - rather than a one-size-fits-all approach that blocks customers just as they are getting going.
GE) As technology like Open Banking reshapes financial processes, how can operators leverage these advancements to expedite and enhance affordability checks without compromising data security? What key considerations should technical teams bear in mind when integrating such solutions into their existing systems?
RL) Open Banking provides a secure, password-free process for accessing the transactional and account data needed to conduct a financial risk check. The traditional method of using bank statements pose real data security risks to operators that Open Banking can eliminate. These risks include the security of collecting financial data via email or the post, downloading PDFs onto computers or personal devices or leaving files and paperwork around offices.
The technology can provide up to 24 months of transactional data and account information to an operator, however this can sometimes present the challenges of holding on to too much customer data unnecessarily.
Account information services (AIS) with built in data analysis services can help protect the privacy of customers by only exposing key transactions or information needed for the particular assessment. They also help do away with the manual processing and archiving of bank statements which can be a headache and risky to manage. When acquiring customer AIS data, considerations to both security and access should be made, to ensure this data is being handled safely and used specifically for a legitimate purpose. Additionally, it’s important to guarantee that access logging and controls are utilised to ensure that customer data is only accessible when required.
It is important to understand the challenges involved in obtaining and analysing Open Banking data before choosing an AIS provider that can help you overcome them. Some example areas to understand are as follows:
Is the service provider secure and compliant with its handling of customer data and access controls? For example, does the provider hold best practice certifications such as ISO27001 or cyber essentials?
Can the service scale effectively? For example, what are their capacity limitations?
How robust are the service level agreements that govern their APIs and live services?
Does the service provider give you the data in a way that is useful to you out of the box, or do they require development work to assess that customer AIS data once retrieved?
Where is your customer data stored, in what region, and is it backed up regularly?
If applicable, how easy is the API to integrate with?
About our contributor
Robert Lindsay is CPO at ClearStake and employs his experience in product development to help optimise the company’s offering. With more than a decade of experience, Rob has developed a number of companies from the concept stage to reporting sustained revenue. Most recently, he developed a regulation technology for NatWest through its accelerator program and uses his passion for product, UX and customer success as ClearStake’s Product Lead. Visit: https://www.clearstake.com/solutions/gambling