Regulatory change: what the gaming industry can learn from the finance sector

In this blog Adam Hancox, Head of Sector – Gaming, explores the effects new legislation is having on the gaming industry, the importance of all operators being responsible and the benefits of having a single customer view.

The gaming industry is not alone in facing increased legislation and regulatory scrutiny. Having recently started working in the sector I’ve been reflecting on how it compares to financial services, where I’ve spent most of my career. While terminology and understanding of certain areas differs slightly, there is one area where there is no difference: the requirement to empower and ‘treat the customer fairly’.

Since the 2007-8 recession the finance market has become increasingly diversified, driven by the fact that high-street banks reduced lending to all but credit perfect people and the largest, most well established businesses.

In this post-recession period I worked closely with large short term lenders, as they filled the void and allowed many consumers to access the finances they wanted.

These lenders have, in recent year, been subject to scrutiny from the FCA and wider regulatory pressure in the market. Subsequently most have diversified into other longer term, lower APR lending products but are now facing additional technology-driven industry changes including PSD2 and Open Banking. And I’m certain there will be more to come – change is one of the only constants in recent times.

The level of changes that the banking sector worked through are now being experienced by the gaming industry.

As increased regulation comes into play I’m immersed in conversations with market leading gaming operators and over the past couple of months have been seeking to understand their views, pain points and the disruption they’re experiencing.

From my perspective the sector seems to be experiencing the same trend in regulation that was introduced in financial services markets five years ago.

In an effort to put a positive spin on regulation, let’s not think of it an obstacle you need to spend money to get around but instead view it as providing a green field for long-term benefits like transparency, driving innovation, and more stable markets. Immediate returns on any investments made for on new processes might be negligible but reductions in longer-term operational costs from improved efficiency and the fact that it will support your compliance approach to TCF should really be steering your strategy.

A recent report by the Gambling Commission stated over 2million people in the UK are either problem gamblers or at risk of addiction and that those deemed to be problem gamblers had grown by a third in three years. It warned that there are areas within the industry where more action was needed to tackle the problem.

The Remote Gambling Association, which represents online operators, commented: “Compared to areas like lotteries and bingo, online gambling is usually classified as ‘harder gambling’ and is always likely to attract a higher proportion of problem and at-risk gamblers and this study reflects that.

“The relatively high levels of regulation for online gambling reflect that as well, but it’s something we have to accept responsibility for and proactively seek ways to minimise those risks for all consumers.”

As an operator increased pressure from regulators, combined with the need for you to automate internal processes, is a challenge that can be solved through the right data and software. This will allow you to become more agile, facilitating easy compliance with changing regulatory requirements. The pay-off will be better customer experience and a competitive advantage through better products and higher margins by being more efficient and reducing cost.

To reach this key strategic goal organisations need to choose the right partners and experts to work with. These partners should be able to provide ongoing, reliable solutions and cutting-edge thinking.

A good example that demonstrates the need for a partner is a single customer view (SCV). Just collating everything you know about a customer and deduping is not enough and I’ve been surprised at how many conversations I’ve had where organisations feel this is what a SCV equates to. In these conversations I’ve had to ask, “What happens when someone gets divorced, changes their name, moves address, adds financial instruments, creates a new email account and changes their phone number?”

It may sound like a lot of information to miss but I’ve frequently seen this happen. This is where a credit reference agency data-driven solution, that offers both financial and digital identity attributes, can create a true, dynamic SCV. Thinking in this way will support your approach to being compliant while improving your commercial performance through accurate, streamlined data and reducing Bonus Abuse.

It’s an exciting time in gaming as the industry continues to grow, products and services expand, and new ideas and concepts enter the market. Regulation, which on the face of it may seem a blocker, could be viewed as an enabler.

I think alternative finance, and lending more generally, can give us great insight to support our existing and new gaming clients. TransUnion (formerly Callcredit) offers products and services to make sure organisations have a better understanding of their customers and attributes such as a customer’s source of wealth, personal and demographic profile. We can use email and mobile data to understand where a bet was placed, how it was placed, minimising chargebacks and disputes.

Responsible, safer gaming is a key area that our wider products and services can help support. TransUnion (formerly Callcredit) are also already helping our customers in the gaming sector to have a true, dynamic, single customer view.

Mastering the wider picture will help your organisation increase profits and be responsible. To hear more about how you can prevent fraud in the gaming sector, embrace the right software and mitigate risk to your customers, join us at the Gaming Innovation Day.