The Center for Data Innovation spoke with Jon Jacobson, CEO and co-founder of Omnisient, a South Africa-based consumer data collaboration platform. Jacobson discusses how non-traditional data sources can address gaps in financial reporting and the potential future of first-party consumer data for credit scoring.
Becca Trate: What problem do you aim to solve with Omnisient?
Jon Jacobson: We are addressing the problem of financial inclusion. Nearly two billion people worldwide are excluded from affordable financial services, primarily due to insufficient behavioral data for risk assessment by banking, financial services, and insurance firms (BFSIs). However, behavioral data does exist for these groups, it just is not from traditional sources like credit bureaus. We enable BFSIs to access this data in a secure and compliant manner from non-traditional data sources, such as retailers, telecommunications, and health and wellness organizations.
We work with our consumer business clients to develop the BFSI use cases for their first-party consumer data. We also act as market-makers for them and source legitimate BFSI buyers of their data, and we provide a data collaboration platform. The platform enables BFSIs to evaluate and test the predictive ability of the first-party consumer data, while safeguarding consumer privacy and company IP.
For example, a local retail grocer’s loyalty shopper data can be used by local banks to predict loan repayment by individuals without a credit history. In this case study, use of the retailer’s shopping data improved the banks’ ability to predict loan repayment by 40 percent for people with no credit history. As a result, the banks scored 8 million individuals with no credit history, and 3.2 million now qualify for credit if they wish. This equated to a potential 29 percent growth in credit revenue.
Trate: What consumer data sources can be used to increase financial inclusion?
Jacobson: While we do not engage in any data collection, our clients collaborate on first-party consumer data from a wide range of industries, such as supermarkets, telecommunications companies, gyms, and pharmacies. Our privacy-preserving data collaboration platform enables clients to tap into daily interactions, purchases, customer preferences, and more from various businesses to give each one insight into consumers beyond their own businesses. However, it’s essential to understand that this is done in a manner that prioritizes consumer privacy and company IP protection to ensure compliance with global data regulations and eliminates risks for all parties involved.
Trate: How do you serve businesses with anonymized sources?
Jacobson: We enable consumer businesses and BFSIs to rapidly evaluate and derive the value from data partnerships by removing the risks traditionally associated with these types of partnerships. We do this by eliminating the need to ever exchange or hand over raw consumer data by enabling businesses to use advanced cryptography to anonymize and tokenize their datasets locally before they upload them into our secure and neutral environment. Businesses are able to use AI and machine learning tools embedded in the platform to analyze the data, and build and test predictive models in a secure and neutral environment. By eliminating the concerns traditionally associated with data collaboration, we shorten the time for evaluation of data from 18 to 24 months down to an average of 3 months.
Trate: What are the long-term goals in terms of expanding access to financial services and continuing to leverage data to support lending decisions in underserved regions?
Jacobson: Our plans are to expand into emerging markets where our solution is most needed. We partner with large consumer businesses in each region to build consumer data ecosystems that regional BFSIs can tap into for lending and underwriting decisions. We are accelerating these ecosystems’ ability to deliver value regionally by taking the data products that we have developed with our clients locally and exporting them into new markets. Basically, once we’ve solved the problem in one market with a data product, we can repeat that process and export the model to solve the same problem in a new market—as long as data sources are available in the new market with similar features.
Trate: How do you see technology evolving in the financial services sector, particularly, with regard to addressing the needs of underbanked or unbanked populations? What trends or innovations do you anticipate in this space?
Jacobson: We see consumer businesses becoming credit and insurance score providers. We believe, in the future, this data will be delivered directly to the BFSIs to supplement bureau data, or to fill the gaps for consumer data not available from the bureaus. This will open a new source of revenue for their consumer businesses to harness their consumer data, and could potentially become more lucrative than traditional advertising. We also anticipate new advertising partnerships with BFSIs as more financial inclusion increases. For BFSIs, the benefit is obviously greater understanding of risk and the ability to target new audiences.