Responding to challenge and change: An interview with TransUnion’s chief product officer Shail Deep

Digitisation has been reshaping various aspects of our lives. Could you share your insights into the impact of digitisation on the finance sector?

COVID-19 has undoubtedly accelerated the digitisation of finance, with a fifth of consumers expecting to apply for a current account with an online-only bank or app in 2022, which is twice as many as in 2019, according to our Consumer Credit 2022 white paper. 

The last two years of the pandemic have also fuelled consumer expectations, and people are increasingly turning towards credit solutions that support their new normal lifestyles. In line with these changes, people have become less likely to visit banks in person. In fact, over a fifth still haven’t returned to a bank branch since the pandemic began.

Today’s consumers hold significant power and have high expectations for brands — demanding easier payment options and more personalised experiences. This has sparked emerging market drivers, including the adoption of super-apps and digital wallets which are changing payment behaviours. Fintech products are growing in popularity across all age groups: from BNPL uptake to Open Banking usage. 

We have been talking about Open Banking for eight years as an industry, and even more so after it was made effective in 2018. Has there been any recent progress in its adoption? 

Open Banking saw an increase of more than 500 per cent over the 12 months in 2021. This is aligned with an increase in the adoption of digital propositions. Our Consumer Credit 2022 research revealed that nearly seven in 10 UK consumers say they have heard of Open Banking. As for the usage, the main drivers behind it are the ease and convenience of automated processes, which means the CX is friction-right. 

Of those who have used it in the past, 93 per cent would be likely to use it again in future, which means the customer journey is creating a positive experience and we expect Open Banking adoption to grow significantly which is great news for consumer empowerment!

Talking about the point-of-sale finance, what is TransUnion’s position regarding buy now, pay later?

Consumer demand for this new type of product is undeniable: nearly two in five consumers now use BNPL at least some of the time when shopping and one in four consumers have used it more than twice in the past year. The top reasons for use were spreading payments over time and interest-free payments, while there was a significant proportion of UK consumers choose it for ease of use.

Given the scale and rapid growth of the sector, it’s important that consumers are supported and that lenders have a comprehensive picture of a borrower’s financial position. TransUnion responded to this need by working closely with BNPL providers and the wider industry, leading the way in becoming the first UK credit reference agency to include buy now, pay later data within consumer credit reports as we announced in February this year. 

By incorporating this data, buy now, pay later transactions can benefit those with thin credit files, helping them to build their credit profile by displaying positive payment behaviours, supporting financial inclusion and wider access to credit.

This represents a key innovation in the way buy now, pay later products are treated within the credit ecosystem and will help support consumers and enable finance providers to ensure that payment plans are affordable and sustainable.

In what way will these new changes impact consumers’ credit reports and scores?

Buy now, pay later payment behaviour will become visible to lenders, so it could be taken into account in lending decisions but won’t have an immediate effect on TransUnion credit scores.

As the data becomes more widely incorporated, this is likely to evolve, and TransUnion will be working closely with the relevant finance providers and industry bodies and updating our scoring mechanisms as required.

Presumably, such rapid digital acceleration has also caused a rise in digital fraud. What role do you think credit reference agencies can play in protecting businesses and their customers from cyber threats?

You are absolutely right, the continuous growth of e-commerce throughout the last two years has raised the risk of digital fraud dramatically. 

According to TransUnion’s Consumer Pulse survey, almost one in three consumers say they were targeted by digital fraud in Q1 2022. Phishing continues to be the most common method of attempted fraud, followed by third-party seller scams on legitimate online retail websites, stolen credit cards, account takeovers and identity theft. 

At TransUnion, we monitor digital fraud attempts reported by businesses in varied industries such as gambling, gaming, financial services, healthcare, insurance, retail and travel and leisure, and many more. We can help businesses take a proactive approach to dealing with data breaches, and better protect consumers, whilst helping to reduce financial losses. 

We do this by developing an efficient and effective response strategy that can help organisations equip customers with tools for combatting identity theft, to help mitigate impacts to reputation and credibility, and rebuild trust.

As a global information and insights company, you must have a pretty good steer on how the pandemic and the current cost of living crisis have been impacting the average consumer’s finances – are you able to share some information with us?

You are right to say that UK consumers are facing an unprecedented cost of living crisis. Inflation is at its highest level in 30 years, with rising energy bills and living costs. All these can reduce consumer’s disposable income and lead to significant pressure on individual and household affordability. 

Six in 10 UK adults are concerned that increases in the cost of living will make it harder for them to improve their financial position in the coming year, according to our Consumer Credit 2022 report, with 71 per cent and 70 per cent respectively saying their food and energy bills have increased in the past year. 

Moreover, the cost of living crisis is being compounded by the wider unrest as the UK and nations all around the world respond to the plight of Ukraine, which will have resounding global repercussions, economically as well as politically. 

Since we talk a lot about uncertainty these days, in your opinion what can help consumers navigate this uncertainty?

In a competitive market such as financial services, purchasing decisions often come down to trust. Indeed, it remains the most important factor influencing a consumer choice of financial provider. 

In our recent Consumer Credit 2022 research, more than four in 10 consumers said that trust in a brand is the factor that holds the most sway when it comes to their purchasing decisions. 

Interestingly, digital challengers, such as online-only banks or apps, saw an increase in levels of consumer trust, reaching 63%, up from 57% in 2019, as they continue to close the gap with their high street counterparts. 

What do you consider the best way to build up consumer trust is?

At TransUnion, we enable trust through the use of data and insights. We call this Information for Good—it’s our purpose, and what drives us every day. 

For businesses, this gives a better understanding of consumers to help make more informed decisions on who to trust and build the experiences that earn consumer trust.

For consumers, this helps them be more confident that their data identity is safely leveraged to get the opportunities they deserve.

One thing the pandemic has shown us is the sheer resilience of both businesses and consumers. Whilst there is still uncertainty ahead, we want to work alongside you, responding to challenges and change.