How to lend money to strangers - Podcast

11 July, 2022

The data you need when you need it, with Simon Gregory.

You may have noticed, but the world is a little unsettled these days. Incomes are variable. We’ve had government support programs come and go. And underlying industries come and go. Prices are rising. Fast. In an episode of this show that I recorded six months ago, I made reference to the price of fuel being £1.50 a litre. That had actually been a slight rounding-up for convenience but already, with fuel touching £2 a litre, it feels like a bargain.

I belabour the point simply because, the more turbulent the times, the larger the premium we should place on fresh data, and my guest today is out there trying to get the freshest possible data into risk decisions. Data on Demand is a UK-based fintech that provides data and insights to companies to help them better understand and improve engagement with customers – I speak to their Sales Director, Simon Gregory, about where they get that data and the situations in which it is being for up-to-the-minute decision making.

You can find Simon Gregory on LinkedIn here: https://www.linkedin.com/in/simon-gregory-84236114/

Or learn more about Data on Demand via their homepage (https://dataondemand.co.uk/) or via email using hello@dataondemand.co.uk

The Vulnerability Registration Service that was mentioned is here: https://www.vulnerabilityregistrationservice.co.uk/

You can learn more about myself, Brendan le Grange, on my LinkedIn page (feel free to connect), my action-adventure novels are on Amazon, some versions even for free, and my work with ConfirmU and our gamified psychometric scores is at https://confirmu.com/ and on episode 24 of this very show https://www.howtolendmoneytostrangers.show/episodes/episode-24

The full written transcript, with timestamps, is below:

Simon Gregory 0:00

Okay, yes, we can see there’s been default, maybe a drop in current account turnover, and you can see those trends once they’ve happened… but that doesn’t help us to help the customer at the point they require that help.

We have individuals who are applying for high cost short term loans to pay their utility bills. And that is a very real, very current insight into a consumer, which may lead a lender to make a decision on how they’re going to engage and interact with that customer. So what we’ve tried to do is enable people to get right down to that granular detail, but also from a high level, you can align your vulnerability strategy with the high level definitions of vulnerability that the FCA have set out and split your customer base down into those that are highly vulnerable, currently vulnerable, or maybe historically honourable.

Brendan Le Grange 0:54

Welcome to How to Lend Money to Strangers with Brendan Le Grange. I’ve been working in consumer lending for 20 years, and when I started out the data modelling techniques we had, they liked data quantity but they needed data quality. So while we would have appreciated the theoretical value of alternative data sources, if the data didn’t come in neatly packaged monthly drops, stamped with a name we trusted, and perfectly aligned with the history we already had – we just couldn’t use it. Oh, how times have changed. Now it seems like all data is fair game and nuance and timeliness hulking. Join me and Simon Gregory of Data on Demand as we chat about how alternative data can complement traditional data to build better customer experiences at all points of the credit lifecycle.

Simon Gregory, welcome to the show. Before I realised how much time these podcasts take, I also have a short run show on cycling. And I’ll be honest, I might have expected my first interview with a trained sports scientist to have been on that one, but here you are today!

So before we talk about data on demand, we’re your sales director. Let’s have a quick look at your background.

Simon Gregory 2:22

Nice to be on the podcast, Brendan, thanks for having me.

Yeah, you probably can’t tell from my current shape – there’s a little bit of lockdown weight still sitting around, which I think I can get away with still referring to it as locked down weight at the moment but maybe not for too much longer – but I’ve always had a love of sports, through school and through secondary school, always playing cricket, football, etc. It’s always been a big interest of mine. So yeah, when it came to deciding what to do at university, that was fairly high up on the agenda.

I went went to Liverpool to study that. And as we all know, the next logical step from studying sports science is to go into data sales! So I ended up after university working for a graduate recruitment company in Manchester, one of the people we’re hiring for was a business called Bureau van Dijk. So Bureau van Dijk which are now part of Moody’s, I think the big business data provider, they were one of our clients eventually ended up working for them. And that was kind of my first introduction to data from that, obviously, ended up most recently going through seven years with Callcredit, and eventually TransUnion, which was great time to be involved with business, really enjoyable.

You were there, you’re working in a job that was with a relatively big company but then you decided about 18 months ago to move to Data on Demand, a much newer, smaller company, what inspired that move?

I think the first thing to say is that I had a great time with with Callcredit. And then again, with TransUnion, after the acquisition. I was lucky enough to be part of a team that was involved in part of that growth of Callcredit into the business that TransUnion then acquired, I was very happy at a great team, great management structure above me as well.

But I got a LinkedIn message actually from a gentleman called Mark Davis and Mark Davis was one of the original executives at Callcredit, and he served as Chief Data Officer with that business, right the way through various different transactions and growth up to the point that TransUnion actually acquired the business. I didn’t work with Mark that often while we were both at Callcredit, we knew each other we had some engagement on different projects, but I effectively got this LinkedIn message a little bit out of the blue… in March 2020.

So it’s Mark’s pedigree that made me take notice. And he said, ‘look, I’ve just invested in a small data startup, also in Leeds, we’re looking for somebody to come on and scale out the business, help us grow help us set up a sales function. Is that something that you’d be interested in having a chat about?’ So I agreed to have a conversation, it sounded interesting. Then I met with Stuart, who’s our CEO – or our CEO now should I say – and I think with the backing of Mark’s experience, the small team they had at the time, 4 people at that point, seemed to have a really good structure of a data products and a good offering.

So I thought, yeah, this is this is something that could be interesting. And about a week after that the world shut down as the pandemic arrived.

To cut a long story short, we all agreed that it probably wasn’t the best time to immediately be making any life changing decisions. But I carried on talking to the guys over the first few months of lockdown, and by the end of that point, towards the end of the year in 2020, I’ve got to the point where I was happy that what they have is a great opportunity and something I was gonna go and pursue. I think really, it was knowing that there was a good team already in place, a good good potential for a product set in place with Data on Demand. And also it would be a great opportunity for me to take what I’ve learned over the past seven years with more Callcredit, watching that business grow and evolve, and actually help startup and grow something in partly in my own vision. So that’s worlds apart.

Definitely don’t get me wrong, and every day has got different challenges, but certainly not a decision I regret.

Brendan Le Grange 6:01

And you mentioned there that Data and Demand is in Leeds as well. Leeds is a city that I grew to love while living there but you hear about London and you hear about London and you hear about London. Where actually, there’s quite a thriving tech scene, a FinTech scene, up in the north. What is it like working in the north of England away from that London scene that maybe everybody’s thinking of, and still working in the cutting edge of tech and banking?

Simon Gregory 6:26

Yeah, as you said, I am a northern lad. Depending on who I’ve been talking to, and where I’ve been for the weekend, that can be more Northern or less Northern so we’ll see what the feedback’s like from any of the listeners. But yeah, the Data on Demand businesses is based in Leeds, we’ve got our head office there.

The North does have a very vibrant FinTech scene, a very vibrant scene, I think, for emerging businesses in general, but particularly for financial services. A lot of the lenders and Institute’s themselves may have bases in London, but a lot of the businesses that actually service those, you know, those institutions are based all over all over the country. And there’s a lot of those, particularly when you think about the data providers as an example of that, but also platforms that service financial services businesses, there’s a lot of those dotted in around the north as well – it’s definitely not a requirement for a FinTech business to be based in London, particularly in the digital age that we’re in now.

So we’ve all seen it across the pandemic, it’s much easier for people to work from home be flexible than perhaps some institutions expected it would be. And that helped a lot of businesses to establish talent pools that they maybe didn’t have before, based in Nottingham, in Leeds, even up into the Lake District, for example. And just on the talent itself, because of the businesses located around the region, there’s a lot of talent in the region and there’s also a lot of new talent coming out of the universities to help those businesses grow and attract new people. We’ve seen that ourselves, you know, we’ve hired two new graduates recently, both from Northern universities, and they’ve gone on to exceed expectations for us.

Brendan Le Grange 7:22

Maybe one day, there’ll be that high speed rail link but we probably shouldn’t go too far down that path. Let’s start talking a little bit more about Data on Demand. We both work together in a traditional credit bureau. And in the UK, traditional credit bureaus already have, relatively speaking, a huge amount of data. So balances, payments, missed payments, all that sort of stuff, but even things like income data. And so when we’re talking Data on Demand, what sort of data and data products are we talking about? And how might it vary from that context that people have become familiar with?

Simon Gregory 8:33

Yeah, so the big thing, and one of the things that attracted me to Data on Demand in the first place, is the fact that their focus is on alternative UK consumer data. Any financial services, business and any business that services end consumers, will know what the CRAs provides…

Brendan Le Grange 8:48

You’re listening to How to Lend Money to Strangers, with Brendan Le Grange, if you’re enjoying it, now would be a great time to find and hit that little plus button to subscribe. Now, let’s get back to Simon…

Simon Gregory 9:02

Particularly with all the changes going on in the world recently, if you’re looking at making a risk decision, or any other type of decision, when it comes to end consumers, because of the amount of change, the same data that’s always been used is not necessarily going to help you get to a strong risk decision. So what we’ve looked at creating at Data on Demand, is an alternative view of UK consumers.

You know, we’re all – or certainly the majority of the executive team – are ex-credit reference agency, we’ve all got good things to say about CRAs, they’re very necessary and they do a great job in servicing businesses. What we’ve tried to do is look at the areas where perhaps they’re not as strong, where there’s niches for us to help companies that are supporting consumers.

So we’ve looked at a couple of different alternative datasets. One is subprime loan applications. So one of our data channels is applications that come through web portals, through what would traditionally be known as the pin tree or aggregators. So, we’re taking data right at the front end of the application journey, right at the point when that consumer has the need, and looking at the information that they’re presenting there. We’re also then looking at new data sources and new people to collaborate with around vulnerability. So we’ve recently entered an agreement with a business called the Vulnerability Registration Service. They provide a self declared database of vulnerable UK consumers.

And there’s two other kinds of online channels that we take data from as well. One is what we call lifestyle subscriptions. So that can be, if we take something we’ve got a bit of an interest in, a monthly cycling magazine, you may have signed up to receive that online and we’re looking at the information a consumer enters at the point of sign up there. And we’re also taking data from competition sites. So if I go on a site online to enter my details to maybe win a car, or a house or a bike, we’re capturing those details as well.

So right at the front end of that consumer journey, and the information that’s provided by the consumer at that point, and the reason we’ve tried to look there is a lot of the data that is available at the moment is focused on after the fact. So it’s looking at performance on loans, performance on a mortgage, performance and payments on credit cards. But as most people know, that is, at the very least, usually 30 days out of date. In reality, by the time it’s been uploaded to the database, passed out to financial services, businesses, whoever they might be, it’s probably going to be 60 to 90 days out of date. And that’s if they’re actually asking for it. If they’re not asking for it, then they may have had one view of a customer application on boarded them, and then really not have as much view of, of how that consumer circumstances have changed.

And if we think about how much the world has changed at the moment, then that is a big factor. So we’ve looked at what data we can capture at the front end of the journey, we’ve aggregated that data, we do that every single night, we rebuild our products every night, so that all the information we have is very current and available to any business who has an in relationship with a consumer. And that is working right across the customer lifecycle. So we’re providing data to businesses for identity verification, fraud prevention, we’re providing the businesses for risk decisioning on affordability and vulnerability, we’re looking at that customer management angle as well. And back end wise, we’re also looking at providing data for for collections and recoveries purposes.

Brendan Le Grange 12:24

As we know, the most recent behaviour is the most informative of what’s going to happen in the near future. That’s normally their most recent data, as you said, it could be three months or four months old. So I think it’s interesting to hear how many different innovations are trying to bridge that weakness in the traditional reporting, or close that gap, I suppose, because you’re not looking to replace credit reference agencies.

I want to come back a little bit to vulnerability, which you mentioned there. Lock downs, or two years of lock downs, now, very unsettled job market, now, we’ve also got the added expenditure of the cost of living crisis to deal with – so it’s great to hear that you are looking at it, and it hasn’t been entirely forgotten.

How are you helping your customers with this concept of vulnerability and working with their customers, when when that’s the case,

Simon Gregory 13:18

It’s a difficult topic, but it’s a very popular topic at the moment across a number of different sectors, it’s getting a lot of airtime, especially in financial services. Firms have seen from the regulator that not only has the identification and monitoring of customers in potentially vulnerable situations been a focus of previous regulation, it’s stepped up again, in the consumer duty.

And I think that was, if I think back to one of the earlier questions about why I made that switch, the offering that Data on Demand were building around that was was one of the reasons that actually decided to move as well – because what I was being asked for, and what we were being asked for back at start to middle of the pandemic, from a CRA perspective, was ‘what data we had got to help us understand this new world that we find ourselves in?’

So okay, yes, we can see there’s been default, okay. Yes, we can see there’s been a drop in current account turnover. And you can see those trends once they’ve happened. But it doesn’t help us make a decision and to help the customer at the point when they actually require that help. A lot of the impact on the consumer has been masked by the support that was put in place by the government, by lenders, by regulators. You know, we had furlough, we have payment, holidays, all that type of support that was put in place. And it was great to see. But once that’s taken away, there’s a bit of a tidal wave of issues which is at some point going to comes to fruition. And talking to a lot of our customers, and talking to people in the industry, I think everybody is still expecting to see the main impact of that over the coming months and years.

But what nobody banks on was the fact that there was also then going to be all the different trouble relations that we’ve got in the world now. So you’ve got people who were already in a difficult position through the pandemic were then hit with the fact that support they had may be taken away. And you then got things like the rise in the cost of living, there is likely to be a significant increase in the number of people who were in in those types of situations. If I focus on financial services, and what we’re able to see in our data, particularly the application data from subprime hike or short term loan applications is those individuals who are in a position where they don’t have access to additional credit, they’ve got issues with paying their utility bills, they’ve got issues with with debt, and they’ve nowhere else to turn apart from some of these higher interest loans.

So we’re seeing these large volumes of applications, if we get down to the granular detail of that, it may be as granular as being able to say we have individuals who are applying for high cost short term loans to pay their utility bills. And that is a very real, very current insight into a consumer, which may lead a lender to make a decision on how they’re going to, to engage and interact with that customer. I am a prime bank. And I am looking to assess the vulnerability in in my portfolio, the way I assess that compared to a subprime loan provider, the definitions of vulnerability, certainly financial vulnerability will be very different.

So what we’ve tried to do is within the product that we’ve created, which is our ID.VU offering, is to enable people to get right down to that granular detail whereby they can look at the specifics of loan purposes, loan volumes and metrics and those type of things. But also from a high level, you can align your vulnerability strategy with the high level kind of definitions of vulnerability that the FCA have set out as an example, and split your customer vests down into those that are highly vulnerable, currently vulnerable, or maybe historically vulnerable. Vulnerability is fluid, and people can move into it, and and out of it, but hopefully, what we’re enabling lenders to do, is not just approach vulnerability from a regulatory perspective, but also understand their consumers whose circumstances may have changed and who need help right now.

Brendan Le Grange 17:11

There’s always a risk when we look at the headline numbers, the totals, and we look at something like the jobs market, it has rebounded really strongly post COVID so in theory, we came out of furlough into a strong jobs economy but there’s all sorts of underlying sectoral changes, some sectors are still down. And for you as an individual, it doesn’t help that on average is more jobs, if your industry isn’t hiring, if your role is no longer needed. Now, your income’s impacted, you know, furloughs long forgotten, people have moved on from there, now we’ve been hit with cost of living crisis, your utility poles are going up. And you can see how it would start. And you could see that somebody may be out of the stress or the situation things I need to go to a high cost short term loan to pay utility ball, when that goes through in a traditional data sense, those three months, they might be holding up very expensive data, and three, four or five months down the line, they finally default, and it will pick up on the credit bureau.

But they’ve got that or five months of bad habits set that happened that they now need to also reverse whereas if right at that moment, you can see what’s happening, you can hopefully step in and help them before that delay comes in before the extra costs come in, maybe there’s a way to stop the ballooning of the debt. So great to hear that there is still innovation and data coming through in that space. Now, obviously, related to vulnerability quite closely is the collection space. And you’ve got a lot of experience working in collections and recoveries. So how can lenders use data but I’m thinking in particular new data sources, some of these alternative data sources, how can lenders use that sort of data to get that balance, right, of trying to control the losses – as they’re always out to do – and also keeping a little bit of sense in the current situation there customers on who many of whom are going to be struggling to afford basic necessities, many of whom might need a helping hand?

Simon Gregory 19:07

There are plenty of very strong services and very strong datasets out there. Now, a lot of the new services that are coming about you know, most businesses now if we look in financial services are certainly well on the way to being digital, if they’re not already fully digital in terms of their current processes. Some of that tends to get lesser when you get to the back end. So you’d be surprised at how many well known very established businesses are yet to have a digital self-serve function for their their back end collections. I think that’s an area where there’s a lot of innovation at the moment.

A lot of new businesses that were out there, not necessarily selling, you know, full difficult to implement platforms, but quite easy to kind of bolt on services to certain parts of the journey to make it a lot easier for consumers to engage with because that stigma is nothing new. I mean, people have always been reluctant to discuss their financials in general. And when it comes to the fact of having missed payments or defaulted on loans, that becomes even more of a stigma and, and even more even more of a pressure on people not to want to discuss that I think what the pandemic again, without continuing to bang on about it, what that has driven is at least firms to know that they need to provide that digital engagement channel for customers, when it comes to things like talking about their debts, talking about the financial circumstances, and paying back the debts that they owe, is that they need to offer that almost anonymous way of doing things so that people aren’t having to necessarily speak to somebody themselves.

However, I think what we’ve also learned is, you can’t have a one size fits all. So it’s not about saying, Okay, everybody has to now digitally self serve you need agents for people speak to. And there’s a lot of interesting propositions which support with that as well for speech analytics to understand certain triggers and certain words that are being used, which links back to the vulnerability conversation we were having before. But from our side of things, I think the main thing that we’re seeing is however clever you want to be about it, however many propensity scores you want to use, however you want to segment your own collections portfolio and look to engage with people, if you’re not able to contact that customer, it’s going to be very difficult to get a good outcome for either you or for the customer themselves.

So because of those front-end online application journeys that we’re capturing data from, and because of the recency – we’re updating our full database – we already have a significant coverage of UK contact channel information, which we’re able to help financial services firms get access to and to engage with their consumer, so they actually can get that conversation started. And they can try and get that resolution for them. But then if they if they can’t have that first conversation, the rest of the clever stuff that they can do kind of goes out the window a little bit.

Brendan Le Grange 21:56

Yeah. And I said that you have some experience in collections and recoveries, you’ve actually been nominated for a few awards, haven’t you, in that area?

Simon Gregory 22:04

Yes, I think is a bit of a case of ‘always the bridesmaid, never the bride’ at the moment. We’re a very young business and I’m hopeful that this year, there’ll be some wins rather than just the nominations coming through! But yeah, it’s been great to be noticed and to be nominated for those type of awards, we’ve had innovation in collections and recoveries, very close to data and analytic solution of the year, fingers crossed this year will be a successful one.

Brendan Le Grange 22:28

Yeah, good luck. I don’t want to typecast you in collections and recoveries and vulnerability, though, you work across, as you said, the the full credit lifecycle and all sorts of different problems that a lendor might come into in their day to day lending businesses. So what other areas of the market are you seeing traction in at the moment?

Simon Gregory 22:47

Quite a lot. So I’ll try and keep it fairly succinct for the sake of your listeners. But the utility markets are a really interesting one, particularly at the moment, we talked about how the changes in the energy market are impacting the prices that have been passed on to the consumers, the cost of living increases are obviously very challenging for those guys on the back of what was already a challenging environment. And what we’re helping those businesses to do at the moment, is to help them identify the customers within their existing customer base who need the most help.

That kind of spins back to the vulnerability offering we talked through. But using that example I talked about before, if you think about how valuable it is to an energy business, to be able to understand from their existing portfolio, which of their customers are right now applying for some form of high interest loans, specifically to pay their utility bills, that’s really key information to help them engage with those customers, and hopefully give them access to the type of funds that are being put aside by those energy businesses and by the government to support those consumers.

And obviously, I don’t think we can get through a financial services podcast without mentioning buy now pay later. So buy now pay later is definitely interesting with it falling into regulation. Again, the need for data and the need to for those guys especially have very current and very up to date information is particularly of interest. So we’ve got some of those conversations going on.

ID&V. So from 10 to the journey, we’re starting to work with more businesses to give them access to corroboration and fraud prevention. In terms of the identity data we hold in the UK, public sector I’m sure will come it’s a it’s not a short process to get into that sector.

But again, those conversations and staffing insurance is looking quite interesting at the moment. There’s some regulation there which is prohibiting insurance businesses from offering, you know, fancy new products and discounts to new customers that they’re not offering to existing customers so commercially, that immediately drives them to want to understand more about their current customers than me as I said before, the difficult thing for us which is not a bad problem to have is the insights we have have quite unique were proving them out as we go through the different different kinds of sectors. But any company, you’ve got that in relationship with a consumer, we can probably tell you something about your consumer that you don’t already know.

Brendan Le Grange 25:11

So Simon, lots of areas of traction there, as we’ve said, lots of pressures in the world that are often impacting your area of the market as much as any other so really an exciting time but also a no doubt a really stressful and turbulent time to be in the startup business. What’s next for Data on Demand? What are you envisioning happening in the next six months to a year, for the business?

Simon Gregory 25:36

Without hitting a very high word count for the ‘vulnerability’ word, I think that will probably be the main focus of our conversations. As I mentioned, with the new new regulation coming in, we’ve got a lot of engagement on that from businesses, and working with our partners, we make sure that offering is as fit for purpose for as many sectors as possible, so that that’ll be a key focus.

For us, I think, as a business 2022 is going to be all about continuing to establish proposition and expanding some of the kind of core markets that we’re working in. So with lenders, but also with collections and recovery sector, as we move into 2023 onwards, that will be more about the kind of growth of our business, you know, one of the benefits of being a small businesses, we’re able to be innovative. So I’m sure there will be new uses for our data set that we haven’t quite thought of yet that will be suggested.

And we’re really lucky that we’ll be in a position to move quickly on that. So I would expect to move into next year growth and probably some innovation will be the will be the focus. But the main thing which I keep telling the rest of the team is to make sure we have fun along the way, and build a build a culture and a business that we can all be proud of.

Brendan Le Grange 26:44

Yeah, that’s a great motto to have. Even as the world looks a little bit gloomy outside, we can have fun and build businesses we’re proud of.

And if anyone wants to get involved in that journey, if anybody’s listening and needs help with the question of vulnerability, or any of the other topics we touched on today, how could they get in contact with you? Or where could they go to learn more?

Simon Gregory 27:06

Yeah, so by all means, I’m happy for anybody to link out through the usual channels, you know, LinkedIn, etc. No problem with that. You can reach out to us via email at hello@dataondemand.co.uk or the website, which is www.dataondemand.co.uk

Brendan Le Grange 27:25

Great, Simon. Well, thank you very much. It’s been great catching up wish you the best for those ambitions for the next six to 12 months.

Simon Gregory 27:31

Thank you, Brendan. Pleasure. And again, thanks for having me on. It’s been been good fun.

Brendan Le Grange 27:35

And thank you all for listening. If you enjoyed that, please do rate and review on your preferred podcast platform and share widely including on LinkedIn and while you they send me a connection request.

The show is written and recorded by myself Brendan le Grange in Brighton, England and edited with assistance by Kane Hunter show music is by Iam_Wake and you can find full written transcripts, show notes and more content at www.HowtoLendMoneytoStrangers.show

And I’ll see you again next Thursday.

Discover what Data On Demand can do for your business

Learn about how our products could benefit you.
Get in touch and find out about our solutions for Marketing, Verification and Trace.