The smart use of data

Ready to explore the extraordinary world of tech? Welcome to the XTech Podcast where we connect you with the sharpest minds and leading voices in the global tech community. Join us as we cut through the complexity to give you a clear picture of the ideas, innovations, and insight that are shaping our future.

Hello and welcome to XTech. I’m Debbie Forster, MBE. I’m the CEO at Tech Talent Charter, and an advocate and campaigner for diversity, inclusion and innovation in the tech industry. I’m delighted to be working with Fox Agency as the host of the all new XTech Podcast, and as a curator for the XTech community. Today I’m delighted to be joined by Dr. Christine Bailey. She’s the Senior Director and Head of KYC Marketing in Europe and Africa for Moody’s Analytics. Christine, thank you so much for joining me today.

Oh, thank you for having me.

Christine, with my audience, we love hearing how people get into the tech industry. Some people have a very direct line, born and bred with it. Others find their way, like me, sort of stumbling our way and finding ourselves in tech. What’s been your journey?

I had a very lucky stumble into the tech world. I studied German and business studies at university and as part of that degree course I spent a year in Germany. And while I was in Germany, I made contacts with some people who were working for Hewlett-Packard. When I graduated I went straight back out to Germany and started working for Hewlett-Packard. I remember my friend arranging for me to go and interview there and he said, “They’ll ask you if you are afraid of technology.” He said, “The correct answer is no.” I was like, “Right, I’m armed with that.” They did ask me, “Are you afraid of technology?” “No, I’m not.” I said, “I love technology.” And that’s what started off. I always knew I wanted to be in marketing, but I wasn’t sure which industry. Because I think when you were at university you think, “Oh, FMCG, that’s, that’s where it’s at in marketing.”

But actually it was a lucky stumble into technology. And as I started out working for Hewlett-Packard, I’ve never left the technology industry, but I’ve worked for some of the industry giants like Hewlett-Packard and Cisco Systems. I’ve also worked for much smaller companies, so systems integrators and tech consulting firms. I worked for a PR agency that specialized in tech PR for a couple of years. Then more recently I’ve been in the FinTech world and the RegTech world, regulatory technology. I’ve worked for also much smaller companies, but always in tech and I love it.

And it’s interesting because I think we’re finding more and more as time goes on, ultimately all roads lead to tech. When I say to people where they’re like, “Oh, I’m not in tech.” Well, not yet. You’re going to find yourself. Resistance is futile as it becomes part of everything. You’ve also written a book. We don’t always get authors on the show. Tell me about that. What did you do? What’s it about? And if I were a tech reader, what would I get from your book?

I did a doctorate, which was published in 2008, and that was looking at how large UK companies use customer insight for customer acquisition development and retention. Because at the time it was where a lot of CRM projects were perceived to be failures and people, it had all been about sort of call center and automation and Salesforce automation, but nobody had really thought about the data and the analytics side and the marketing side of things. I was working for a CRM consulting firm at the time, and they didn’t really have that marketing expertise. They funded me as I started out my doctorate journey to do that, they actually got acquired and I ended up leaving them. And it was, yeah, that’s another whole story. But that got me really interested in customer insights and how you could use data and turn that into insights, which wasn’t really known when I started in 2004. And my goal was always to publish a book. But as it happened when I was finishing my doctorate, I was handing in my thesis when I was nine months pregnant and about to start a job at Cisco.

The ultimate multitasking. I mean, if there’s a picture of multitasking, that’s [inaudible 00:04:07].

I really can’t say I recommended that period in my life, that was multitasking on steroids. But yeah, so I never got to write the book then, but I always wanted to write the book. 12 years later I published the book, it’s called Customer Insight Strategies: How to Understand Your Audience and Create Remarkable Marketing. And I really wanted it to be a book for practitioners, written and contributed from practitioners. I interviewed 33 people for the book who are a mixture of experts, practitioners, academics. It’s full of expert opinions, case studies. I probably wouldn’t choose to read a book on data and analytics, and that’s coming from me when that’s kind of my specialist subject. I really wanted it to be an accessible book that data and analytics, it’s not something for the tech department or something for data analysts.

I want it to be for marketing practitioners because everybody should be using insights throughout the marketing process. It’s not just something that’s done in a separate department, a bit like technology. The fact is that you use technology at literally every stage of the marketing journey and you should use insights at every stage of the marketing journey. That’s what the book was about, is trying to weave in technology and insights into every part of the marketing process. It’s actually quite useful for people who aren’t marketers to read as well because it helps, or say technology people understand how marketers are using technology at every stage of the marketing journey.

And that bridging between roles within companies and functions within companies is vital. If we’re going to on both sides of the desk, if I am in charge of the tech, to be most useful for my marketing department, I need to understand that. And equally for marketing to really understand the richness that we can get from that. And so the kind of bridge building that you can find learning on both sides of the desk in your book is very valuable. I think it’s interesting as you’re saying that to know that actually 12 years on, there were still things to learn, you would do this. You first did your research before anyone was digging deep, but 12 years later we are still trying to understand and getting that. Is there any insight from that book at the time that you think still resonates today?

Yeah, totally. At the time I said that inbound marketing would outpace outbound marketing. That absolutely has come true. I said that we would be using a lot more artificial intelligence and machine learning in marketing. That’s very true. Couldn’t be more true today with ChatGPT. And of course what’s also happened is this massive explosion of data. There is more and more data, but it’s actually in a way harder to understand what data you should be listening to, what insights you should be listening to because there is so much of it. And that’s largely because of the digital world. There’s an absolute explosion of digital data available. And if we think, people focus very much on the 3% of people who are buying something right now, how can we get those people to buy right now, that 3%? But what about the 97% that aren’t ready to buy right now?

And how do we make sure that when they are ready to buy, we are top of mind so that they think of including us in their research or including them in their buying process? Everybody leaves a digital footprint. How can you listen to that digital footprint and use technology to help you create nurturing journeys and help people find what they want when they’re looking for it, when they … Sort of meeting people where they are making sure that you can be found and you’ve got the right information for somebody when they’re ready to receive that information.

And I think there’s a golden thread through every podcast episode we’ve done to date. And that golden thread is the smart use of data.

Absolutely.

It’s no longer the quest for how do we get data? It’s actually getting companies from a really pragmatic business sense to take a look at their data, to mine it, to use it in richer and more powerful ways. And to get the whole of the organization in the way that maybe 20 years ago we were trying to get every department, every function within a company to understand the power of tech. I think if we look at where we are now with companies is taking everyone in an organization on that journey to understand and to really harness the rich data that we already sit on. Now that’s been carrying on through your career. And you’ve done some more recent research, some people may not even understand the title for your job. Tell me more about this recent research and what do we mean by perpetual KYC?

Yes. As you said, each function has been on a journey of digital transformation and in sales and marketing that happened a while ago. In marketing now, Scott Brinker does this MarTech landscape graphic and there’s over 10,000 different pieces of marketing technology. And of course you can’t begin to be using all of those 10,000, but we are very used to using technology. There will be technology to support you in whatever you are doing in marketing, but that journey hasn’t really hit the risk and compliance function. That’s still quite manual and quite time consuming. Now what changed of course was with COVID-19, because suddenly everything had to happen digitally, teams had to work remotely. Previously people were sitting together in a team, so suddenly they had to be able to work remotely and share work between each other. And of course everybody was going to be onboarded digitally.

KYC literally stands for know your customer, but that’s the process of identifying a customer in this case, or an individual. For example, if you are applying for a new financial product, the company has to go through a process of identifying and checking that that person is who they say they are and they don’t have any court judgements against them or criminal records or whatever, checking address, simple things as well. There’s about 11 different types of checks that people can go through, but also there’s a KYB, which is no your business. That will be about identifying or confirming the identity of a business which actually is much harder. But anyway, those processes were very manual and then the pandemic happened and the world went digital. In parallel, of course, whenever you get disruption, you get criminals who are going to exploit that disruption.

So, a rise in financial crime, a rise in all the bad stuff of human trafficking, modern slavery, money laundering, financial crime, sanctions. That’s become a big topic in the last year. With all of those things, we felt that now was the time for the risk and compliance function to really go through that transformation that sales and marketing have already been through. We set out to explore this concept of perpetual KYC, so KYC or KYB, know your business, or KYS, know your supplier, KYV, know your vendor. There’s lots of different variations of it, but it’s all about-

The KYs.

The KYs. Exactly. The KYX, let’s say. People typically think of that as the initial process of verifying somebody’s identity or checking them, but of course things change constantly and technology is there to support us. What about that ongoing journey and what about you sort of doing it more based on the risk profile of a company? For example, it could be that they onboard a customer and they say, “This customer is in a high risk category,” so every 12 months or every six months, whatever a company’s risk appetite is, we are going to run those checks again. And if they’re low risk, it’s going to be two years that we’ll run those checks. But what if we could use technology to listen to triggers and events and we would only run checks in that moment that something got triggered? Maybe something came up on the transaction monitoring or maybe something got triggered because suddenly they’ve become what we call a politically exposed person, or maybe there’s now a sanction sanction against them. Let’s run the check in that moment that we get a trigger.

And that’s this concept of perpetual KYC is not just the initial onboarding, but the ongoing monitoring throughout the customer life cycle. And of course you can’t do that without technology. What we wanted to understand is were people using technology now in this risk and compliance process? Did they understand the concept of perpetual KYC and did they understand or could they demonstrate the benefits of a perpetual KYC approach? We did 60 interviews with people around the world. We covered a number of different sectors, so corporates, people that have a physical supply chain, also financial services, FinTech, insurance, professional services. And we interviewed UK, France, and Germany, plus a few other countries. We had Asia-Pacific and we also had Americas and Canada. We had a nice rounded view across regions and also across different sectors. And we were speaking primarily to senior risk and compliance professionals.

And in looking at that research, what was your most exciting finding and were there any surprises?

The first thing that came out is we sort of said, “Right on a scale of one to 10, where one is it’s totally manual, it’s all paper based, and 10 is it’s completely real time and it’s automated, where would you put yourself on that scale of one to 10?” And I was surprised that three in four people rank themselves in that not very sophisticated in those early stages of the journey. And that surprised me. And of course there was some difference across industries. The FinTech people tended to be ranking themselves a lot higher. We also had some country differences. The UK is pretty advanced actually compared to other countries or maybe people were, France and Germany, maybe they were just being a bit more modest about where they were in their journey. There’s always that as well. I mean, they were self-ranking, we weren’t-

Of course, of course.

… marking their scorecard, they were self-ranked. But that quite surprised me as how far people have to go on this journey. Although everybody said they were on the journey, there wasn’t a single person that said, “No, we are not on the journey to digital transformation.” I guess that was the thing, everybody is on the journey. Then we learned a lot about the challenges and I think I was encouraged that there were definitely companies where right from the top they saw risk and compliance not as a burden or as a cost or something that just had to be done, but actually saw this as a, let’s call it a revenue opportunity because there was an opportunity to differentiate the customer experience. People that had a great experience with risk and compliance were more likely to be customers for a lifetime and they’re more likely to buy more products, they’re more likely to recommend the company.

Lots of customer experience benefits. It’s what we’ve talked about actually where I was at PassFort, we were a SaaS RegTech company before we were acquired by Moody’s. And we talked about not having to compromise. You can have both. You can have compliance efficiency and a great customer experience. It’s not one or the other. And that came out again in the research is the people that were the most sophisticated were seeing those benefits of how they could improve the customer experience, but also how they could add more products, they could sell more products to existing customers, how they could expand to new geographies. Because if you think about risk and compliance, it’s very different across different jurisdictions and different countries and there are more jurisdictions than there are countries. We serve 211 different jurisdictions and 197 countries at the moment.

Every country has got it or jurisdiction has got its own legislation that has to be … You have to adapt your risk policy to that different legislation. If you’ve got good technology and good automation, it’s much easier to add additional countries or additional jurisdictions or additional product types or additional customer types. As we said, it might be an individual, it might be a company, it might be a supplier. That’s what pleasantly surprised me is that the more enlightened mindset CEOs were saying, “It’s not a cost burden. This can add real value to the organization if we invest in really good risk and compliance processes and technology.”

I’m hearing two great things for the audience to be thinking about is one, have we taken our company on that journey to move from seeing the compliance burden into another opportunity? But I also think different companies are on different points of the journey. And I like the way, I don’t know if it’s been used elsewhere, but we’re going to use KYX, that know your fill in the blank in an ongoing, perpetual automated way to turn that into an opportunity. If I’m in tech, if I’m hearing that and I either want to go down that journey of turning that compliance burden into an opportunity or I want to dig in to one of my functions within the business to really take the KY to a different level as well as reading your research, where should I start? What’s my way into that part of the business to help make that work?

I think if you think of benefits of of PKYC, it’s a bit like a Maslow’s hierarchy of needs. If we think of a triangle, is if you’re going to start at the bottom of the triangle, there are foundational things. Table stakes, you need to have technology in place because you’ve got to fulfill your regulatory obligations. Particularly if you are a financial company like the FCA, the Financial Conduct Authority in the UK got to fulfill your regulatory obligations, or the Supply Chain Act in Germany, for example. And you’ve got to make sure that you are future-proofed to adapt to any future regulations because as I said, the perpetual nature of things are changing all the time. Legislation is changing all the time. If you think of that COVID period from March, 2020 to August, 2020, there were over 1300 new pieces of legislation because of COVID around the world.

You’ve got to be able to future-proof yourself with your technology that you can adapt to future regulationary changes. Then there’s of course, everybody needs to reduce their operational costs. Budgets never get any bigger, do they? You want more efficiency, you want to be using technology to improve your efficiency. But also another really big one which has become table stakes is the peace of mind in that you are protecting your reputation. Of course it’s going to hit the headlines every time somebody doesn’t do what they’re supposed to do, they’re accused of human trafficking or modern slavery or failing to prevent money laundering. None of this is good for a corporate reputation. Those four things I would say are table stakes. Then you sort of move up the triangle and these are more sort of motivational factors, but there can be really differentiators.

What I spoke about earlier is tailoring your approach according to your own risk appetite. And this will differ across companies. For example, somebody might say, “This is really high risk to us” and you’ve got a different risk threshold. You can use technology to say, “If this happens, then we need to do that.” And that risk appetite will be different in each company and you can actually really improve your risk identification and mitigation if you’ve got those data and insights and the technology to do that in real time, you know can act in the moment. One thing that people often don’t think about is the satisfaction of the staff or the people that are having to use the technology. And McKinsey did a nice study, every year they do a study of KYC and they found that there was a 10 to 15% increase in staff retention if people had good technology to do their jobs. And we all know how hard it is to recruit and retain staff across the board, not just in risk and compliance. That’s another benefit of good technology is more job satisfaction for the people operating the technology.

And I don’t hear that being thrown out as an argument often enough. And I think in today’s economy that’s going to become a more powerful thing to bring to the table and to talk about it in those terms.

Definitely. And of course it just gives you better control over your processes and then of course you get to the top of the pyramid and you get to the things that I spoke about earlier, which is better user experience, better retention, the ability to cross-sell and upsell and just greater intimacy and insight into your customers, which is going back to my specialist subject, which is how you can use insights to better understand your audience. Again, KYC technology will help you understand your customers a lot better.

Okay, super. You’ve left us armed on our conversations that we’re going to go through. I’d like to finish up our conversations to let you think more widely, look towards the horizon in that respect. And we’ll start with the bad news, then we’ll go to the good news. If you look into the horizon, what annoys you, worries you, concerns you that’s coming up?

I think a big debate still going on is about the right to privacy versus the right to personalization. And I can talk about that in two contexts actually. If I just talk about the marketing context, this has been going on for a while now, is that now we have all these controls, do you give permission for your data to be used? And it sort of ebbs and flows, doesn’t it? There was a sort of wave of people not wanting to give up their data because they didn’t want people to sort of know all about them because let’s face it, who hasn’t been creeped out by looking at something on a website and then going into Facebook and suddenly an ad appears for the thing that you’ve spoken about? That’s less creepy to what I find really creepy is if you’ve had a conversation about something, I was having a conversation with a friend about looking at my roof and going, “Oh my God, I need to get somebody in to get the moss off my roof.”

The next thing I know I go into Facebook and suddenly there’s an advert for somebody that gets moss off roofs and I’ve not typed anything into the search engine, so my phone has been listening to me. That creeps me out a bit and I know this stuff goes on, but the allergic reaction is, “Don’t give anybody permission to have my data.” But then we get annoyed when nothing’s personalized, like why am I being served up this ad that has absolutely nothing to do with anything I’m interested in? Well, that’s because you didn’t give permission for your data to be used. It’s a double edged sword, isn’t it? We want companies to understand us and make us offers that are relevant and in the moment that we’re waiting for them, but in order to do that, we have to give our data. That’s the dilemma there. And then-

There’s that challenge, isn’t it? About communicating with our users, our customers, our clients, that value exchange?

Yes.

And to really demonstrate the value to get that of value. But carry on, you were talking about something else on that.

And people aren’t honest about that. Again, I’ve been annoyed when I’ve bought something for Christmas and they’ve said, “Can I have your email address because I want to send you the receipt?” Well, no you don’t. You actually want to send me a marketing newsletter, be honest about why you want my email address. Sort of moving on to if we think of the risk and compliance space, again, there’s our dilemma that you want to collect as much information as possible about your customers because you want to protect yourself against risks associated with customers. And you want to make sure you are fulfilling all your regulatory obligations, but the more data you hold, the more responsibility you have with that data. Again, there’s this dilemma between we want to collect lots of data, but then with it comes a lot of responsibility both from a cost perspective and a reputation perspective and on all of those things. Inevitably there is a trade off.

And it’s something for all of us to keep an eye on that legislation that’s on horizon to always be aware of what’s coming so that we’re not caught short in that. But on a positive side, is there anything that you are excited about that’s coming up on the horizon?

I am really excited about artificial intelligence. I wrote about that in the book that it would increase in importance. I love to experiment, especially with a bit of technology. Whenever we have a problem we want to solve, I’m like, “There must be some technology that could help there.” And we get to experiment all the time in marketing. I love doing an experiment. About 18 months ago, we experimented with a piece of technology that would write blogs using artificial intelligence and it was rubbish. It really was. We are like, “Oh, well we tried,” but now with ChatGPT, it’s like oceans better than it was.

Absolutely. And moving quickly, isn’t it?

Yes.

I think I’m struck by just in the last 12 months, how that is suddenly moving forward in a way that’s quite exciting, and it’s getting our head around and experimenting again.

It is.

To understand the potential, the limitations, where it will add value, where it’s just a gimmick. And I think we’re going to go through that same thing of the gimmick use, that hype curve before we really settle in and start getting its full value.

Yes, the challenge I think with artificial intelligence is unconscious bias. It’s learning from what we tell it and we could be unwittingly giving it an unconscious bias and then that is just going to get replicated and amplified that unconscious bias. But again, it’s using technology to enhance what we’re doing as opposed to replacing it. Because the same thing comes up with risk and compliance is we don’t want to use technology to replace the compliance professionals. We want to use technology to add automation to tasks that are manual and can and should be automated. Then we free up the compliance professionals where they can add most value. Where they’re needed to make a decision or some analysis or a value judgment, then you need the individual. But let’s use technology to make the best use of somebody’s time rather than the machines taking over the world and replacing individuals.

I think it’s the same. I’m chatting to people all the time actually about, “Have you experimented with ChatGPT? Which areas have you experimented?” And it’s mostly in creating content at the moment. And somebody said to me recently, “It’s brilliant if you’ve got writer’s block.” If you’re sitting there in front of a blank screen and thinking, “I’m not sure how to tackle this, get some help.” And it kind of unleashes that writer’s block rather than completely, again, people are like, “Oh God, are we suddenly as the writing profession, no longer valid?” No, it just makes better use of your time.

Which is again, bringing human judgment to think about the use of which becomes exciting and the creativity comes in and using a new tool in a new and different way to enhance what we already want to do. Perfect. Really exciting to think about and we’ll keep an eye on that and we’ll expect another book from you in 10 years thinking about that too. Listen, Christine, it’s been fantastic having you in the show. Thank you for sharing all your expertise on this. I really, really appreciate it.

Oh, thank you you very much for having me.

We’d love to get your comments, your thoughts on what you’ve heard today, and you can share them with us at fox.agency/xtech. If you’d like to appear as a guest on the show, don’t waste a moment, we’d love to hear from you. Email us now at xtech@fox.agency. The people that make this show possible are Zoe Woodward, our executive producer, Hannah Teasdale, our podcast producer, and our whole team of tech experts at Fox Agency. I’m Debbie Forster and you’ve been listening to XTech.

Keep exploring the world of tech. Subscribe to our podcast and never miss an episode. To discover more opportunities for global B2B tech brands, visit Fox.Agency today.