TransUnion: Transformation and the Path to Economic Development
By Charles W. Stryker
The “computer age” of the late 1960s and early 70s marked an historical period that witnessed hyper growth in today’s version of the Big Data and Analytics ecosphere. Early Information Industry adopters of computing capabilities were able to capitalize on their first mover advantage to lead their sectors in the marketplace. One company that embraced technology from the beginning of the computer age is TransUnion. TransUnion got started in 1968. Originally, TransUnion was established as a rail car holding company.
The first acquisition TransUnion made that set the company on the path of credit information was, according to Wikipedia, “the Credit Bureau of Cook County, which possessed and maintained 3.6 million card files.”
Referring to the early consolidation in this burgeoning credit information industry, Mark Furletti of the Federal Reserve Bank of Philadelphia, wrote that, “Also during this decade, the industry harnessed the power of computers and databases to process, organize, and report on credit data. Those agencies that adopted computer technology realized operating efficiencies that allowed them to move data faster and attract more business. This, along with the costs associated with migrating to computer-based systems, compelled smaller operations that were not yet automated to sell their files and exit the industry.”
Consolidation in the 1970s led to the establishment of three main credit reporting agencies that would compete for market share for the next nearly 50 years. All competitors used strategic acquisitions to build data volumes. Today TransUnion, one of the original three, is using Big Data and Analytics best practices to better serve its customers and to advance the company’s core capabilities and core data assets.
To help understand how TransUnion is able to lead the credit/risk information sector’s Big Data and Analytics strategy, we had a conversation with TransUnion’s CEO, Jim Peck. Jim talked about TransUnion’s strategy of embracing Big Data and Analytics as a cornerstone of the company’s business plan. He said he knew the future would require TransUnion to continue to build its data assets and also go a step further to embrace the added value that strong technology and analytics would bring to the success of the company.
“I still believe that you have to have the data, the content. If you don’t have that, your analytics are meaningless. But the analytics and technology transform the data into actionable insights that help our customers make smarter decisions,” said Peck.
“To answer the challenge, we completely overhauled our technology. We built a platform that was going to allow programmers to ingest data, clean the data, act on the data, integrate the data, amass the data, and in our case, in a global way, prepare to do the analytics on top of it.”
Peck was determined to have TransUnion be the market leader so he looked for ways to have the analytics edge engrained in the company culture.
“We decided that the answer was to bring in industry experts to lead specific vertical markets and appoint leaders who really understand sectors like financial services, credit card markets, or the mortgage, auto or insurance industries. These people fundamentally understand these sectors so they know the problems, and the opportunities, facing these businesses. They can articulate needs and help drive much better decisions around risk or policy setting.”
Before Peck’s arrival at TransUnion, Experian and Equifax had moved into the credit information industry leadership roles, especially in the 1980s and 1990s. As Jim Peck himself says, “TransUnion was rolling forward and doing a good job, but it was a market follower as opposed to a market leader.”
Peck believes that the Big Data practices TransUnion has undertaken have, over time, propelled the company to a leadership position in the Information Industry.
“The Big Data story here, I think, is that TransUnion was a very good company, but it was sitting on wonderful data assets and needed to evolve for the company to take advantage of all these assets. And so, when I came on board I had a clear vision of what we needed to do to unlock its value in meaningful ways.”
TransUnion is very customer responsive these days, which Jim Peck attributes to both culture and smart technology choices. “We’ve organized the information and we’ve built the tools that will allow our customers to look at all our data and see how the decisions they make compare to the rest of the industry. They can play with different parameters, allowing them to predict different outcomes. Maybe they could expand their portfolio by lending in different ways, or examine other solutions from the data. And, with our technology they can do this in minutes or hours, where it used to take weeks.
“This kind of collaboration expands our customer’s addressable market, and also benefits the end consumer. What produces this value, frankly, is analytics. It’s all analytics. For the customer, the analytics might produce certain kinds of scores based on certain kinds of data. From this point, our customer can say with confidence that ‘this person appears to be this kind of risk right now.’ With that information, our bank customer can take this group of people and safely give them better offers of credit. That’s really what our customers in the banking sector are trying to do. We allow our customers to precisely decide what kind of individuals they really want to do business with and not treat everyone generically. That’s really important when you’re dealing with someone who’s historically been “underbanked” – our data can evaluate the risk to the bank and help them get better credit terms.”
“That’s really a powerful spot to be in and we believe at the same time it promotes good things for society. We believe that the more information an organization has, the better they will be able to do business and we believe the more the consumer understands their own situation, the better they’ll be able to control getting access to credit and insurance. We call this Information for Good.”
TransUnion operates in over 30 countries, and has strategically focused on countries like India, Colombia and South Africa, that have the social and economic foundation to increase the middle-class standards-of-living. According to Peck, “If you go to a country that’s struggling with institutions providing credit, it’s really hard for that society to develop. When you can’t borrow or lend money, people don’t get access to things they need for social mobility and advancement. We provide the best information and analytics possible so that banks and lending institutions can make credit granting decisions. As a company, we want to embrace that and keep advancing the ball. We believe that we can help keep the wheels of commerce turning and even improve the standard of living for people. That mission helps everyone.”