DATA IS KING: MARKETING DATA IN ACTUARIAL MODELS? 26 January 2017: - - PowerPoint PPT Presentation

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DATA IS KING: MARKETING DATA IN ACTUARIAL MODELS? 26 January 2017: - - PowerPoint PPT Presentation

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DATA IS KING: MARKETING DATA IN ACTUARIAL MODELS? 26 January 2017: 09.50 - 10.50am 1 IS DATA KING? In God we trust. All others The worlds most The world is now awash in data and we can must bring data. valuable resource is no

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SLIDE 1 1

DATA IS KING:

MARKETING DATA IN ACTUARIAL MODELS?

26 January 2017: 09.50 - 10.50am
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SLIDE 2 2 Commercial In Confidence

IS DATA KING?

“The world’s most valuable resource is no longer oil, but data”

The Economist

“In God we trust. All others must bring data.”

  • W. Edwards Deming - Professor

“The world is now awash in data and we can see consumers in a lot clearer ways.”

Max Levchin, PayPal

“It is a capital mistake to theorize before one has data.”

Sherlock Holmes

“You can have data without information, but you cannot have information without data.” – Daniel Keys Moran, Author “If we have data, let’s look at data. If all we have are

  • pinions, let’s go with mine.”

Jim Barksdale, former Netscape CEO “The goal is to turn data into information, and information into insight.” Carly Fiorina, Hewlett-Packard

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SLIDE 3 3 Commercial In Confidence

MANY DIFFERENT TYPES

CENSUS DATA

MEDICAL RISK FACTORS

1ST PARTY DATA

CLAIM DATA

MODELLED DATA

WEB BEHAVIOURS

CUSTOMER DATA

BIG DATA

LIFESTYLE DATA

RESEARCH DATA

BIG DATA MODELLED DATA

TRANSACTIONAL DATA

BEHAVIOURAL DATA

SURVEY DATA

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SLIDE 4 4 Commercial In Confidence
  • 1. CACI Today
  • 2. CACI Data & Applications in Risk
  • 3. Beware GDPR and Regulation - Profiling
  • 4. Where to go for more information…

WHAT I WILL COVER TODAY

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SLIDE 5 5

CACI TODAY

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SLIDE 6 6 Commercial In Confidence W E D O A M A Z I N G T H I N G S W I T H D A T A £ 1 1 0 m 9 0 0 E M P L O Y E E S T H O U S A N D S O F D A T A S E T S A N D V A R I A B L E S T E C H N O L O G Y T O M O V E P R O C E S S A N D M O V E D A T A A R O U N D Q U I C K L Y O U R F O C U S I S T O D R I V E N E T G R O W T H F O R C L I E N T S W E U N D E R S T A N D C O N S U M E R S W O R K I N G W I T H L E A D I N G B R A N D S W O R K A C R O S S A L L M A J O R S E C T O R S

OUR BUSINESS TODAY

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SLIDE 7 7

WE WORK ACROSS FINANCIAL SERVICES AND OTHER SECTORS

INCREASED COMPETITION EVOLVING CONSUMER INSIGHT INCREASED REGULATION DIGITAL INFLUENCE LOOK & FEEL DIFFERENT CONSUMER CONFIDENCE GDPR UNCERTAINTY
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SLIDE 8 8

CACI DATA

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SLIDE 9 9 Commercial In Confidence

CACI DATA PRODUCT FAMILIES

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SLIDE 10 10 Commercial In Confidence Over 500 demographic, lifestyle & behavioural attributes on every UK adult. Individual-level segmentation based upon demographic & financial traits. Gross household income estimates and disposable income held at postcode level. Geo-demographic classification that segments the population at postcode level.

IN SUMMARY – FOUR DATA EXAMPLES

Differing styles of data have many useful applications in pricing and risk analysis…

510

Variables HOME & MOTOR FINANCIAL RETAIL EXPENDITURE TECHNOLOGY ATTITUDES DEMOGRAPHICS AFFLUENCE

761

Traits

26

Income Bands

833

Traits 6 Categories 18 Groups 62 Types Equivalised Lifestage Disposable 12 Segments 45 Sub-segments 134 Micro-segments
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SLIDE 11 11 Commercial In Confidence

CACI DATA PRODUCTS: ACORN

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SLIDE 12 12

ACORN IS THE INDUSTRY STANDARD CONSUMER SEGMENTATION

A GEO-DEMOGRAPHIC CLASSIFICATION THAT SEGMENTS THE UK’S POPULATION ACCORDING TO THEIR LIFESTYLE, LIFE STAGE AND AFFLUENCE

  • The UK’s leading demographic classification
  • Classifies every UK postcode
  • All you need is the customer postcode
  • Acorn contains 6 categories, 18 groups and 62 types
  • Coded onto leading market research & government surveys
  • Easily accessible data and easy to apply
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SLIDE 13 13

ACORN DISCRIMINATES BY AGE AND AFFLUENCE

I B C D E F G H J M K L N Q O P A Lavish Lifestyles Executive Wealth Mature Money City Sophisticates Career Climbers Countryside Communities Successful Suburbs Steady Neighbourhoods Comfortable Seniors Starting Out Student Life Modest Means Striving Families Poorer Pensioners Young Hardship Struggling Estates Difficult Circumstances SIZE REPRESENTS UK POPULATION
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SLIDE 14 14

City Sophisticates

These affluent younger people generally own flats in major towns and cities. Most of these are purpose built apartments although there is also a significant number that have been converted from older terraced town houses. These flats are over twice the cost of the average UK house and more expensive than the average property in these more expensive urban
  • locations. The majority are buying their flats with perhaps a third renting from a private landlord.
Group Description Brand Affinity

£55K

Demographics

2 D

2.1M

UK Individuals

3%

  • f UK

High

House Tenure

A

Privately Rented Younger individuals enjoying the city lifestyle with lots of opportunities to socialise and spend. Social Media Usage Children At Home Age Household Income

25-29

Shopping Eating Out Social Grade
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SLIDE 15 15
  • Acorn is postcode driven
  • Beware the naming conventions – it describes most not all
  • Successfully used by marketing, pricing and risk departments
  • Many different combinations of the datasets when used in risk and pricing analysis

ACORN IS ABOUT THE POSTCODE… NOT THE PERSON

Source: Matthew Edwards (Towers Watson) & Kandyce Tester Healthstyle – CACI’s Acorn and Wellbeing Acorn Tools Lifestyle – Ocean Lifestyle Variables

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SLIDE 16 16 Commercial In Confidence

CACI DATA PRODUCTS: OCEAN

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SLIDE 17 17 Commercial In Confidence

BUILDING A CONSISTENT VIEW ACROSS MULTIPLE DATA SOURCES

Hundreds of millions of records from research surveys, open data, government data and many other sources are collated together to create Ocean

  • Edited Electoral Roll
  • Rolling Registers
  • Presence Of Children
  • Lifestyle Surveys
NAMES & ADDRESSES ATTRIBUTE ENRICHMENT RESEARCH DATA POSTCODE DEMOGRAPHICS UK CONTROL FIGURES
  • National Register of Social
Housing
  • Private Rental Data
  • Land Registry
  • Presence Of Children
  • Energy Performance
Certificate Data
  • Online behaviours survey
  • GfK FRS
  • TGI
  • Understanding Society
  • Registers of Scotland
  • DWP Benefits Data
  • Land Registry
  • ONS - Census
  • ONS
  • English Housing Survey
  • National Readership
Survey
  • GfK FRS
  • Public domain sources
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SLIDE 18 18

400+

Propensity Models

88%

Age Accuracy

Statistical models are created and validated for over 510 different variables across various categories

Models are built using the combined data sources to provide propensity scores for each variable across every individual of the UK Model Build Models are validated against independently drawn samples and aggregated views of the UK Model Validation

510

Propensity Models

93%

Age Accuracy

PREDICTIVE MODELLING USED TO CREATE EACH INDIVIDUAL VARIABLE

HOME & MOTOR FINANCIAL RETAIL EXPENDITURE TECHNOLOGY ATTITUDES DEMOGRAPHICS AFFLUENCE
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SLIDE 19 19
  • Comprehensive UK consumer file containing 50m adults
  • Individual level insight and access to UK consumers
  • Over 500 consumer characteristics per individual
  • Constantly updated, calibrated and refined

OCEAN FORMS A COMPLETE PICTURE OF THE UK POPULATION

CACI pulls together hundreds of millions of records from over 20 different independent partners to create a unique picture of UK consumers – providing brands access to:

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SLIDE 20 20

EXAMPLES OF OCEAN VARIABLES

House Value Has Savings, Value £25,000+ Household Size Weekly Supermarket Spend Presence
  • f Children
Presence of Spouse Age Currently Smokes High BMI Eat out 4+ a week Exercise Regular Drinker
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SLIDE 21 21 Commercial In Confidence

CACI DATA PRODUCTS: FRESCO

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SLIDE 22 22

FRESCO IS A POWERFUL SEGMENTATION TOOL

50M

ADULTS

GFK & CACI

12

SEGMENTS

45

SUB SEGMENTS

134

MICRO SEGMENTS F O C U S E S O N L I F E - S T A G E & A F F L U E N C E , F I N A N C I A L P R O D U C T S & A T T I T U D E S

Classifies individuals within a household based on their financial behaviour

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SLIDE 23 23

Fresco has been built by using the richness of GFK’s Financial Research Survey data combined with CACI’s extensive data sets covering demographics and lifestyles

FRESCO COMBINES CACI & GFK DATA

50M

UK individuals with Fresco on the CACI database

510

Geo-demographic and lifestyle variables are used to shape Fresco segments

UP-TO- DATE

Geo-demographic and lifestyle variables are used to shape Fresco segments

FRS

The largest annual UK financial research survey used to build Fresco

60,00

UK consumers are surveyed by FRS annually Records of financial product holdings are supplied by FRS

400,000

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SLIDE 24 24 Commercial In Confidence

DEPTH AND VARIATION OF FRESCO VARIABLES u

Financial Product Holdings Mortgage Values Financial Attitudes Channel Usage and Preference Income Investments & Pensions Likelihood to Switch Arrange/Manage FS Products Credit Behaviour
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SLIDE 25 25 Commercial In Confidence

FRESCO FOCUSES ON AGE & AFFLUENCE

7 8 1 2 3 4 6 9 5 11 12 10 Starting Out Rising Metropolitans Poorer Parents Working Singles & Couples Home Owning Families High Income Professionals Older Working Families Mid-Life Social Renters Asset Rich Greys Road To Retirement Low Income Elderly Still At Home SIZE REPRESENTS UK POPULATION
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SLIDE 26 26 Commercial In Confidence

RISING METROPOLITANS: AFFLUENT, YOUNG & URBAN

43% 57%

Financial Profile

£42K

Demographics

32

Private Renting

£11K 7

Average Age House Tenure Children At Home Household Income Gender Savings & Investments Financial Products Held Has Credit Card

52%

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SLIDE 27 27 Commercial In Confidence

RISING METROPOLITANS: AFFLUENT, YOUNG & URBAN

Digital Engagement Social Networking (Weekly)

53% 49%

Uses Social Networking Communicates with friends Channel Usage Products Opened in Last Year Arrange current account In Branch /Face to Face Owns Tablet Internet Usage

38% High

Financial Attitudes 0% 5% 10% 15% 20% 25% Current Account Mortgage Savings account Stocks and shares ISA Personal loan Life product I would be happy to use the Internet to carry out day to day banking transactions I am likely to use financial price comparisons sites in the future

11%

Online

6%

By Phone

2%

By Post

3%

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SLIDE 28 28 Commercial In Confidence

FRESCO SUB-SEGMENTS BETWEEN FURTHER DISCRIMINATION

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SLIDE 29 29 Commercial In Confidence

FIVE YEAR MIGRATION

  • Using the Understanding Society survey
  • We have tracked individuals from year to year

by segment

  • CACI has been able to estimate the migration

rates of segments over a five-year period

  • This enables forecasts to be made, so that

companies can understand their customers’ wants and needs, and likely longevity

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SLIDE 30 30

NON-MARKETING APPLICATIONS

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SLIDE 31 31 Commercial In Confidence

NON-MARKETING APPLICATIONS

LONGEVITY ANALYSIS BULK PURCHASE ANNUITIES CRIME PREVENTION FRAUD DETECTION LOCAL SERVICES CLAIMS ANALYSIS

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SLIDE 32 32 Commercial In Confidence

GDPR IS COMING.. CONSUMER PROTECTION IS POSITIVE…

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SLIDE 33 33 Commercial In Confidence

PROTECTION OF CONSUMERS IS GREAT - BEWARE GDPR

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SLIDE 34 34

INSIGHT INTO PENSION SCHEMES?

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SLIDE 35 35 Commercial In Confidence

JUST A LIST OF POSTCODES…

POSTCODE LISTS

HP11 2AX SW19 6DD BH6 3BE NN14 2GH NE29 7AD DE6 1QN PO19 1RH SG6 3LE SY11 4PH GU9 9AS G51 1BQ DL14 6NG OX14 5QH RH10 1YJ NE30 2NB ST21 6GA EH49 7LS FY3 8ND SE3 7JY CM1 9QQ CH7 4RT TR11 5RR M32 8LR SS17 8NS CV35 7UA BB9 6EW NE48 2BX AB25 3UZ NE2 1EY S18 7TH B61 8HD PL31 1QF SW1X 9HB IV30 1SB TN14 7EF SO45 2PT

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SLIDE 36 36 Commercial In Confidence

CACI DATA CAN IDENTIFY KEY DIFFERENCES IN POSTCODES

POSTCODE LISTS

HP11 2AX SW19 6DD BH6 3BE NN14 2GH NE29 7AD DE6 1QN PO19 1RH SG6 3LE SY11 4PH GU9 9AS G51 1BQ DL14 6NG OX14 5QH RH10 1YJ NE30 2NB ST21 6GA EH49 7LS FY3 8ND SE3 7JY CM1 9QQ CH7 4RT TR11 5RR M32 8LR SS17 8NS CV35 7UA BB9 6EW NE48 2BX AB25 3UZ NE2 1EY S18 7TH B61 8HD PL31 1QF SW1X 9HB IV30 1SB TN14 7EF SO45 2PT SW19 6DD CH7 4RT

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SLIDE 37 37 Commercial In Confidence

SW19 6DD IS IN WIMBLEDON, SOUTH WEST LONDON

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SLIDE 38 38 Commercial In Confidence

CH7 4RT IS IN LEESWOOD, MOLD, NORTH WALES

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SLIDE 39 39 Commercial In Confidence

LEESWOOD, MOLD, NORTH WALES, CH7 4RT:

£66K

Household Income

35

Average Age Presence Of Spouse

42%

  • N. Of Children

1

£7K

Household Income

54

Average Age Presence Of Spouse

19%

  • N. Of Children

36% 26% 33%

Smoking BMI >30 High Blood Pressure Health Indicators Health Indicators UK Base

17% 2% 11%

Smoking BMI >30 High Blood Pressure UK Base

WIMBLEDON IS A MORE DESIRABLE POSTCODE

WIMBLEDON, LONDON, SW19 6DD:

UK Av: 40 UK Av: £39k UK Av: 40 UK Av: £39k UK Av: 34% UK Av: 34% UK Av: 1 UK Av: 1
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SLIDE 40 40 Commercial In Confidence

CACI’S DATA CAN DRILL INTO DIFFERENCES JUST STREETS AWAY

Average Age

29 35 1

SW19 6DD SW19 6DE

£66k

Number of Children Average Household Income Presence of a Spouse

£35k 0% 42%

Have BMI >30

10% 2%

Currently Smoke

26% 17%

Top Acorn Group STUDENT LIFE LAVISH LIFESTYLES

SW19 6DD SW19 6DE

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SLIDE 41 41 Commercial In Confidence

ABILITY TO DIVE DEEPER DOWN INTO A HOUSEHOLD

SW19 6DD Household X, Inner Park Road, SW19 6DD

Average Age Number of Children Presence of Spouse

42 2

Moneyed Metropolitans Household Acorn Type High Blood Pressure Drinks alcohol 6+ days a week

49%

Currently Smoke

1% 20% 61%

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SLIDE 42 42 Commercial In Confidence

EALING, LONDON, W13 9NJ

Mrs Kandyce Tester, Ealing, London, W13 9NJ

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SLIDE 43 43 Commercial In Confidence

CULMINGTON ROAD, EALING, LONDON, W13 9NJ

£100K

Household Income

43

Average Age Presence Of Spouse

43%

  • N. Of Children

1

Use Smartwatches House Value

£1m+

N of Cars

1 58%

Has Mortgage

54%

Has 2+ Credit Cards Has Cash ISA

45%

Has Pension Scheme

77%

Websites Likely to Visit

DEMOGRAPHICS: INTERNET & TECH: FINANCE: HEALTH & LIFESTYLE:

UK Av: 40 UK Av: £39k UK Av: 34% UK Av: 1 UK Av: 17% UK Av: 24% UK Av: 40% UK Av: 33% UK Av: 1 UK Av: £273k “I am happy to use the internet to carry out day to day banking transactions.” Attitudes “I am prepared to pay more for products that make life easier.” Attitudes Smoking BMI >30 Health Indicators

19% 11%

UK Base
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SLIDE 44 44

REGULATION & GDPR

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SLIDE 45 45 Commercial In Confidence

WHAT IS THE GENERAL DATA PROTECTION REGULATION?

  • A new EU wide Regulation on data protection

(173 Recitals and 99 articles)

  • Harmonises individual rights on data protection

across the EU

  • Replaces the current Data Protection Act (DPA)
  • f 1998
  • A need to update existing legislation:
  • Much more data and the impact of digital

channels and social media

  • Increased consumer awareness and concern

about what happens to their data

25.05.18

119

DAYS*

* Only 85 working days!
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SLIDE 46 46 Commercial In Confidence

HOW IS CACI PREPARING FOR GDPR?

SET UP GDPR TASK FORCE DATA AUDIT OF ALL PII DATA SUPPLIER DUE DILIGENCE DATA PROTECTION IMPACT ASSESSMENTS NEW & REVISED POLICIES

1 2 3 4 5

TRAINING & AWARENESS FOR STAFF PLANNING FOR CACI DATA PRODUCTS ECONOMIC IMPACT ASSESSMENT OF GDPR INVOLVEMENT IN THE DMA THIRD PARTY DATA HUB LOBBYING POLITICIANS & POLICY MAKERS

6 7 8 9 10

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SLIDE 47 47 Commercial In Confidence

GDPR IS LONG OVERDUE CACI IS WELL PREPARED

GDPR IS GOOD NEWS ISN’T IT?

IS THERE ANYTHING TO BE WORRIED ABOUT?

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SLIDE 48 48 Commercial In Confidence

SOME AREAS OF CONCERN FOR COMPANIES USING DATA CONSENT LEGITIMATE INTEREST PROFILING E-PRIVACY REGULATION

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SLIDE 49 49

PROFILING

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SLIDE 50 50 Commercial In Confidence

PROFILING…

  • Profiling is explicitly mentioned in GDPR as a form of data processing for the first time
  • GDPR states that individuals have a right not to be subject to a decision based on automated

processing that has a legal or significant effect

  • Profiling is considered to be a form of “automated processing”
  • The GDPR defines profiling as any form of automated processing intended to evaluate certain

personal aspects of an individual, in particular to analyse or predict their:

PERFORMANCE AT WORK ECONOMIC SITUATION HEALTH PERSONAL PREFERENCES RELIABILITY BEHAVIOUR LOCATION MOVEMENTS

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SLIDE 51 51 Commercial In Confidence

ISSUES AROUND PROFILING

“In many typical cases targeted advertising does not have a significant effect on individuals…However, it is possible that it may do, depending upon the particular characteristics of the case…” (Guidelines on Automated individual decision-making and Profiling, Article 29 Working Party, October 2017)

Is the kind of profiling marketers carry out likely to have a “legal or significant effect” on the data subject? Is the kind of profiling marketers do “automated processing” or is there some manual intervention? How much information do we need to give customers about the profiling we carry out and will they understand it?

The ICO is still to issue guidelines on profiling.

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SLIDE 52 52

SUMMARY

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SLIDE 53 53 Commercial In Confidence

FINAL THOUGHTS WIDE USE OF DATA FOR CONSIDERATION AND SUPPORTING ANALYSIS TEST COMBINING DIFFERENT SEGMENTATIONS TO REFINE YOUR MODELS COMPLIANCE/SIGNIFCANT EFFECT - REGULATION WILL AFFECT PRICING TALK TO THE EXPERTS (CACI) IF YOU NEED ANY SUPPORT

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SLIDE 54 54 Commercial In Confidence

PAPERS, BLOGS AND INFORMATION ON OUR GDPR PAGE…

Review your own postcode type on www.caci.co.uk/acorn and check our GDPR pages

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SLIDE 55 55 Commercial In Confidence

KANDYCE TESTER VICE PRESIDENT INTEGRATED MARKETING GROUP – CACI LTD E: ktester@caci.co.uk T: 07976 514428 Twitter: @testertalk Linked in: Kandyce Tester DO GET IN TOUCH…