Online casino operators are failing to protect problem gamblers or prevent money laundering, the Gambling Commission has warned. It wrote to all 195 UK operators in 2018 warning them to review their procedures because it found many were unable to spot signs of financial crime and compulsive gambling. It is investigating a range of companies for failings, with some under licence review.

It found “potential signs of problem gambling based on consumers’ gambling pattern and spend” that in many cases “did not trigger a customer interaction.” Pretty worrying, given that a third of all gambling in the UK now takes place online, and the industry is worth billions of pounds. Add to this the fact that the legislative direction of travel is towards more consumer protection and you can see that this is an issue that is going to be increasingly problematic for gambling.

But what amazes me, as a data analytics specialist providing platforms that tap Open Banking, is that technology has existed for some time now that can drastically reduce problem gambling - and money laundering. And do it for very little cost.

One of the aspects of the Open Banking revolution that has not had much air time, is how much it can give gambling companies incredible insight into their customer base. It has always been the case that customer checks have been something of a hit and miss business. At best, a gambling provider may have the credit history of a client. If they are spending considerable sums of money, or many want significant credit, ‘historic’ proofs of status - a print out of a recent bank statement, a pay slip, and proofs of address - may be obtained. But all these are ‘indications’ rather than anything else and are worryingly vulnerable to fraud. Thankfully, Open Banking means an end to all this.

No more over-reliance on credit history and paper proofs. No more rough-and-ready assumptions made on limited data. And, significantly, no more need to estimate a person’s ability to afford the activity they are undertaking.

Open Banking effectively forces banks to share their line-by-line detailed customer statement data with other parties. This treasure trove - which has always been jealously guarded by the major banks - has been made the property of the consumer. Banking transactions can now be shared with a third party, so that it can help make better decisions about whether to allow an individual to gamble and at what level.

So, with a consumer’s permission, months of transactions can be looked at automatically in milliseconds. Read-only data comes directly from the bank that holds a current account, so the chances of fraud are drastically cut. And it is supplied in real time. Someone applies to gamble, agrees to limited timeframe and read-only access to their accounts, and thousands of lines of transactions can be analysed by computer. In an instant, this can pull out salary details and all financial commitments, to be then tested by algorithm to determine whether you should be allowing this individual to gamble.

The third parties that access and analyse this data - Account Information Service Providers that are authorised and regulated by the Financial Conduct Authority, such as LendingMetrics - produce extremely accurate assessments in a matter of seconds. Under the old system, with the out-of-date documentation, this assessment was far from ideal.

With Open Banking, companies - for the first time - you can make an affordability assessment likely to be extremely accurate. Gambling that really should not be okayed because of fraud or affordability issues, is now far less likely to be allowed.

In the past, the problem has often been that the gambler has had a rose-tinted or incomplete view of their finances - they actually believe that they can gamble when in reality they can’t. With real-time data to examine, this will no longer ever be an issue. The data and subsequent analysis will provide insights that even the borrower will be ignorant of.

The technology can pick up on things that would otherwise be overlooked: spending patterns that if continued would lead to budgeting problems, such as spending that indicates gambling with multiple companies.

All this is done digitally and, as mentioned, in milliseconds. No more paper applications, no more laborious supplying of paper ‘proofs’, no manual assessment. It is all automated. I would like to say that all gambling companies are embracing this change and that their customers now benefit from products such as OpenBankVision. But we are not quite there yet: old habits die hard. Reliance on credit histories, paper proofs and manual review still persists. However, this banking revolution is now well underway and will not be halted. So, at last, gamblers can look forward to a much more user-friendly, fairer and accurate assessment process. And gambling operators can look forward to having rigorous assessment regimes in place that they, and the Gambling Commission, can be proud of.

Originally published in:
Casino International, March 2019 edition