What Your Data Trail Says About You

Wearables and IoT sensors mean new opportunities for service providers to gather data from customers, for better or worse

By Xische Editorial, September 15, 2018

Source: Shutterstock

We have all been in the uncomfortable situation where a telemarketer invades our sense of privacy with a benign offer. They disrupt our day at the worst times only to offer an unnecessary loan or a useless car gadget. When it comes to debt collectors, the experience can be even more jarring. If you have an overdue loan payment or late on a credit card bill, debt collectors can be downright aggressive as they attempt to claw back outstanding debts. 

Despite smartphones transforming how we connect with each other, telemarketers and debt collectors are stuck in the past when it comes to grabbing our attention. Several startups are trying to change this by using the personal data we create across the internet to nudge behaviors. 

Last month, Wired profiled several Silicon Valley startups with radically new ideas for collecting debt. By studying how people with debt use the internet, these startups can make use of targeted ads and nudges on popular platforms such as Instagram to push debtors to settle their bills. The approach might sound draconian but technology companies like Google and Facebook track user behavior to serve up targeted advertising every day. Our digital lives create rich profiles revealing how (and where) we spend our time. Might as well use that information for good. 

“We believe that we can use technology to radically change the user experience and really help people with their day-to-day finances,” the CEO of TrueAccord, Ohad Samet, told Wired about his debt collection startup. At the core of TrueAccord’s approach to debt collection is the recognition that companies can learn about their customers through a close analysis of their online behavior. Such information can then be used for targeted campaigns through text, email, and even Facebook ads. The problem these companies are solving for is how to establish new know-your-customer (KYC) benchmarks for debt collectors in the 21st century.

KYC and Silicon Valley

Debt collection is the latest area in which Silicon Valley is using the power of data to transform KYC benchmarks. The biggest example of this practice is the transformation of health tracking and the insurance industry over the last decade. As technology companies invest greater resources into expanding the power of fitness trackers, insurance companies use the rich data to create bespoke medical plans and offer incentives for customers to improve their health. This isn’t limited to fitness, Internet of Things devices can be installed in cars to track driving habits as well.  

Discovery Health, one of the largest medical aid programmes in South Africa, is a great example of this shift in practice. Through a health tracking programme called Vitality, Discovery Health offers customers a slew of discounts and benefits for tracking their daily health and getting regular health checkups. The company has even become one of the largest distributors of Apple Watches in the country by giving devices away for free as long as customer continue to maintain daily fitness targets.

Information obtained from fitness trackers such as the Apple Watch is used to evaluate the cost of medical aid rates and life insurance premiums. As Apple and other technology companies continue to develop health-related devices (Apple’s latest watch is packed with fitness tracking features), the insurance industry will continue building out this bespoke coverage model for every type of lifestyle. Just as TrueAccord is solving the problem of debt collection by using data we leave behind to influence our behavior, the insurance industry is streamlining the sector through the collection of data and its practical application.

Solutions beyond the private sector

It might seem like a jump to go from debt collection to government services, but in the contemporary digital landscape, the use of data is interconnected. India is in the midst of an ambitious programme to give each of its 1.3bn citizens a biometric ID. The system, known as Aadhaar, will give Indians access to a variety of services and transform KYC targets.

The second stage of this digital strategy, dubbed the India Stack, includes a multi-pronged approach to link Aadhar biometric IDs with digital payments, the allocation of government services and voter registration. The result will be a streamlined system of money management for digital welfare dispersal, digital medical records, and the foundation of a cashless society. 

Through the India Stack, the Indian government is hoping to influence behaviors for both citizens and government officials. The government will learn valuable details about every citizen that can be used to tailor services across the country. This is no small task in a country of 1.3 bn people and multiple state governments that operate according to their own standards.  

Across these disparate industries, the deployment of data to update KYC benchmarks has already encountered a few speed bumps. The India Stack, most notably, has had several privacy challenges, some of which are being heard in the Indian Supreme Court. The Fair Debt Collection Practices Act, which governs debt collection in the US, was written before the advent of email. But few can argue that the transformation of the services industry, both private and public, is well underway. We have all created data-rich profiles without even thinking about it. In the right hands, these profiles will radically transform relationships between customers and companies as well as citizens and governments.