Will TransUnion be able to maintain its edge in proprietary data and business analytics?

TransUnion is a global risk and information solutions firm, which leverages its large trove of data in an oligopolistic market (with Experian and Equifax as the top 2 players). Its services include consumer reports, risk scores, analytical services to businesses (in various industries ranging from financial services, insurance, automotive, communications, etc.) and credit reports and scores, credit monitoring, fraud protection and resolution and financial management for individual customers. Some of these businesses rely heavily on consumer risk reports to acquire new customers, assess ability to pay, prevent fraud and verify customer identities. The consumer segment constitutes c.20% of the revenue.

The analytics industry has grown at c.12% since 2009. IDC estimates spending on big data and analytics services to be c. USD 52 billion in 2014, growing at c.15% through 2018. Going forward, there is great opportunity in leveraging their data analytics capabilities to serve the burgeoning middle class in emerging markets, who are in need of financial, credit and insurance services. Helping these economies manage risks and improve the efficiency of the financial system will be key in driving growth across these international economies as lending increases. Some additional trends supporting growth are the increasing amounts of data and adoption of analytics as a tool to provide business insights and efficiency of decision making.

According to some reports, TransUnion provides credit information and services to over 45,000 businesses and 500 million consumers worldwide. They obtain credit and risk data from over 90,000 data sources – with over 30 petabytes of data that grows at a rate of 25% annually. Using deep analytics and predictive modeling, TransUnion helps their customers take more informed risk evaluations. According to the CIO, Mohit Kapoor, the company “offers a deep understanding of its data to customers and helps them improve efficiency, manage risk, reduce costs and increase revenue by delivering comprehensive data, advanced analytics and decisioning capabilities.”

Through TransUnion currently has only c.3% of the data analytics market as a whole, it strives to improve its position in this growing market through further investments in data and analytics capabilities. According to the IPO prospectus, TransUnion introduced the concept of trended data to provide the trajectory of a consumer’s risk profile, used public records data to enhance the scope of business issues that can be addressed and incorporated alternative data to better assess risk for banked and unbanked consumers, allowing deeper insights into risks to provide differentiated solutions. Through ownership of several proprietary datasets such as consumer credit information, driver violation history, healthcare eligibility information, business data and rental payment history, TransUnion is uniquely positioned to create more value in this industry. For example, products like Credit Vision have been made possible by expanding the data fields in the consumer reports and providing greater granularity of data over extended periods of time, which is more useful than existing solutions that present a snapshot at a particular time. It also helps customers recover uncompensated health care bills through the Insurance Coverage Discovery tool, offers digital marketing services through AdSurety, and also helps the public sector prevent fraud and assess threat using TLXOp. The extensive data and analytics tools have allowed vertical specific solutions that provide more customized products.

But the company is facing increasing competition in the sector, which has resulted in continued pricing pressure. Some of the data sources that TransUnion uses can be reconstructed by competitors, though in a time-consuming manner through public records and existing credit data. Unless TransUnion can maintain its proprietary data advantage and analytics advantage, it will find it very difficult to survive in this increasingly competitive world.


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