By: Peter Murray, Director of Alexem Services Ltd
For over two decades, traditional KYC (Know Your Customer) has been the bedrock of compliance in the gambling sector. But the old methods are increasingly unfit for purpose.
From the UK to the Australia, Norway to the Netherlands the ability to "match" an individual on tried and trusted databases has been the accepted way. The fact this approach to verification was clearly limited, static and underpinned by legacy data sources, as well as time consuming and complex to implement, was for most part accepted and has been the basis of the verification process regardless of you location or jurisdiction.
Regulators were comfortable in their understanding, operators happy that they had something the regulators signed off on, and suppliers were happily working on the understanding that there was no "silver bullet" and that a commercial model existed that brought revenues regardless of the success of the verification. For far too long now there was no real alternative and no appetite for change and hence we have all drifted along serenely unaware or unable to accept that the world around us is changing.
Change is already here...
However the world is changing, and rapidly. When it comes to truly knowing the identity of the consumer, the important components such as who they really are, what they do, when they do it, and what they like are not being captured by traditional KYC. It is thus increasingly obvious that the old methods and the traditional approach are no longer fit for purpose.
For the sceptics, happy with what they have and unwilling to embrace change, I can assure you that we have passed the tipping point and there is now no going back. How can I be so certain? Well, two critical parts of the gaming ecosystem have already recognised that things have moved on and are forcing through change.
Firstly regulators, driven predominantly by the need to better protect players and minimise harm, have begun to challenge the way we use data and technology to support player understanding and produce effective measures of support. The UK is probably the most high profile of these at the moment, but the focus is global. Regulators recognise that for many reasons they need to support, engage and protect the consumer better and it is right at the top of their agendas.
Secondly, and probably most importantly, the consumer wants change. If the industry has not embraced this then the customer most definitely has. The next generation, tech and data savvy and for whom customer experience is the key differentiator, will not accept a slow, costly and complex approach to verification and engagement. They want less friction not more, they want more accuracy and a seamless experience that is tailored to their needs, provided in an environment that places its emphasis on trust and transparency. Ultimately they want control and if we don’t provide this they will vote with their feet (or smart phone).
...and the need for new solutions is urgent
The standard mantra that "if it ain’t broke don’t fix it" may have got us to where we are now, but the industry can no longer fall back on this. The system is broken, we need to fix it and what’s more there are solutions available to enable change. RegTech is transforming the supplier base and how we consume and support KYC solutions. Moreover, the speed of change is fast and exhilarating.
Be it biometrics, AI, digital data or behavioural analysis, there are now disruptors vying for a place in a market ripe for change and we are struggling to keep up. Regulators have recognised this and are looking to adapt. Consumers are demanding less friction and a better experience and there are solution providers trying to help. This is now about trust and sustainability. Gambling is sadly lacking in the former and should be deeply concerned about the latter. For those that do not heed these messages and adapt accordingly, there should be an acceptance that they won’t be around for long.
Collaboration is key
For all of the above to work we are still missing one final part of the jigsaw: Collaboration. One of my own personal problems with the sector is their failure to share... well... almost anything.
This must be addressed. The industry has had long enough to come to terms with data and knowledge sharing. Financial institutions do it, insurance companies do, law enforcement do it it and I can’t see any plausible reason why the gambling sector is still resisting it.
If other industries can do it for fraud, then surely the gambling sector can follow suit to address problem gambling and protect the vulnerable. It is the right thing to do and it is no longer tenable to think we can work in isolation on this. Collaboration is going to be vital and old tribal differences, be it operator, regulator or supplier have to be set aside. We need to work together and share the results if we are to raise the bar in key areas.
To learn more, visit the GiH Conference
I will be presenting on this critical topic at the 2019 Gaming in Holland Conference in Amsterdam on June 5th and 6th, where I will be looking at what this means for the Netherlands. Come along and join the debate. It won’t be resolved without your support.
See you there!
Peter Murray Alexem Services Ltd Director
Peter Murray is a specialist in identity with a focus on regulated markets and the global Gaming sector. For over a decade, he has worked closely with governments, regulators, operators and key industry stakeholders to define best practice and ensure innovation in the areas of data and technology is adapted to meet regulatory requirements and industry challenges. He has testified in the United States and presented globally on issues of identity, KYC, AML, fraud, self-exclusion and responsible gambling.