If data is the new oil, how are operators unlocking their deep reserves? In the latest Executive Insights video, supported by Mahindra Comviva, MEF talks to Glyn Povah, founder and director of global product development for Smart Digits at Telefónica’s Data Unit, LUCA. He explains why Telefonica started an entire new business unit to explore the opportunity…
In the north of England, they have an expression: ‘where’s there’s muck, there’s brass’. It means you can always turn trash (muck) into money (brass).
For a growing number of mobile operators, there’s a growing realisation that this applies to them. The muck in question? Their network data.
For years, telcos did nothing with the information that showed how customers were moving between their cell towers. It was useless. Waste product, they frequently called it.
But then came the information economy and the idea that ‘data is the new oil’. Soon, it became clear that lots of companies – transport providers, retailers, health authorities and more – would be very interested in finding out from telcos how crowds were moving.
Telefónica was one of the first to act.
In 2012, it formally entered the big data space with Dynamic Insights. Its first product was Smart Steps, which promised to “measure, compare, and understand what factors influence the number of people visiting a location at any time.”
Later came Smart Digits, which gave businesses the option to access business insights related to individual customers (with consent) in order to speed up transactions or reduce fraud.
In October 2016, Telefónica wrapped up these various activities inside LUCA, a dedicated unit selling BDaaS (Big Data as a Service) uusing the Telefónica cloud infrastructure.
At the time, Chema Alonso, Chief Data Officer of Telefónica, said: “Big data has helped us at Telefónica, and we strongly believe it will help our clients in decision-making, more efficient resource management and in returning the benefits of this wealth of information not only to their clients and direct users, but also to society.”
To find out more about the Telefónica’s future as a data insights company, MEF spoke to Glyn Povah, founder and director of global product development for Smart Digits at Telefónica’s Data Unit, LUCA.
Telefónica’s is quite advanced in thinking about the value of its data. What’s behind this?
Well, if you look at Telefónica/O2 as a brand, we were early into the idea of using big data to drive better offers for customers. And in time we realised that the same data sets could drive new commercial business revenue too. It became pretty obvious that our data insights could help a wide range of third parties, while at the same time offering benefits to our customers.
Its essential that customers feel in control of how their data is used. We’re not like some Silicon Valley companies that earn all their revenue from selling people’s data. We are not in the business of harvesting and selling private information.”
What kind of data forms the basis of these insights?
If you think about a mobile operator, it has a cellular network and people are moving between these different cell sites constantly. In the case of O2 in the UK, that’s 25m people. We can also see what kind of devices people are using, and trends that help us understand the type of mobile content and apps they are interested in.
This used to be thought of as waste product. But actually it’s incredibly valuable – and it’s ubiquitous so we have instant scale. Even a company like Google can’t compete with that scale.
That led us to think about how we could become an information company, using anonymised and aggregated data to help businesses understand their markers and their customers better.
Can you give examples?
Our first use case was probably the MBNA bank, which we helped with overseas fraud alerts. MBNA found that it was declining lots of legitimate transactions just because a card holder was trying to make a purchase abroad.
Clearly, if you’re a card company, this is the last thing you want. It’s lost revenue but also a huge customer experience problem. You have card holders who can’t make payments and maybe can’t even call you because of the time difference.
After the card holder gave consent we were able to offer an insight that helped MBNA match the country where a transaction was being made with the country where the phone was located. MBNA can combine the result with other data sets and make a better decision about whether to approve, decline or refer a purchase.
In time, we will be able to extend this into the domestic region. So the bank could do the same kind of query when there’s a big ticket purchase in a trusted retail location.
Another big focus for us has been reducing the incidence of account takeover fraud. What happens here is that organised criminals using phishing to take over a person’s bank account, then the next step is to move money from the victim’s account into a bank account they control. To do that they need to take over the outbound authentication, which could be a PIN sent by text.
We can also see what kind of devices people are using, and trends that help us understand the type of mobile content and apps they are interested in. This used to be thought of as waste product. But actually it’s incredibly valuable.”
What we do is let the bank respond to a flag like new payee withdrawing £10,000 request. They can check to see if a SIM swap has been made in the last few days, and if it has, they could decline it or ask the customer to visit a branch.
It’s an extremely simple tool but it can have a big impact. In the UK, we’re working with four of the five big banks on this. Millions of financial transactions, where SMS authentication is used, are protected in this way every month, protecting both the banks and their customers from this type of fraud.
How is Telefonica extending these ideas directly to customers?
We’re just starting to roll out services that empower people to use their own data for their own benefit. The best example is probably LUCA Sign-Up.
If you’re trying to register for a mobile service of any kind, a big challenge is completing forms. You’re on the move, your keyboard is small, you’re pressed for time. LUCA Sign-Up recognises you’re an O2 customer and asks if you want to fill in the forms with the subscriber information you have already registered with O2, if available.
Obviously, we do look up in very secure way – you have to enter your phone number to verify – but its a very simple idea that reduces sign up time dramatically, removes frustration for our customer when signing up to services on their mobile devices and can significantly improve conversation rates on sign-ups for service providers.
Do you think customers will distrust and misunderstand your motives when it comes to personal data?
They might. However, we’ve been very clear that we are developing tools and enablers as part of our 4th platform strategy to put trust and transparency at the heart of all data products and services.
We announced at MWC this year that all our services are underpinned by three core principles of: Security, Transparency and Empowerment. Its essential that customers feel in control of how their data is used and that we create easy and simple tools for them to do so.
But we’re not like some Silicon Valley companies that earn all their revenue from selling people’s data. We are not in the business of harvesting and selling private information. We sell tariffs and connectivity – and we’re very good at it.
How big an opportunity is it?
This will not replace our core business. We are not trying to create a $6bn big data division. We want to give customers back some genuine value and empower them, so that they can see more benefits from staying with Telefonica operators.
How can your data help with wider social issues?
I think there are any number of ways to help societies make better decisions around things like traffic management, tourism and retail spending. And I believe there could also be a real impact in healthcare.
If we can observe patterns of movement, health authorities might be able to make better decisions about the spread of epidemics for example. And you can extend this down to the individual level. If grandma hasn’t left the house for a few days, that could trigger an alert to relatives.
So big data is one of our key themes and we are strong believers in using data for social good so that societies can benefit in all the countries where we operate.