The case for early affordability checks in the gambling industry

There is no doubt about it: affordability checks can be intrusive. We would never claim otherwise, although a key aspect of our work is in making them as simple and straightforward as possible.

Given this is the case, when is the right time to ask? The conventional answer to this question has always been “as late as possible, and only when it becomes strictly necessary”, on the basis that, if at all possible, it is best to delay the process of customer churn that inevitably results.

But is the conventional answer the right answer? Not necessarily. There is a growing feeling that at least giving consumers the choice to share financial information early may be a preferable option. There are a number of reasons why, but they could be summarised as follows:

• Early checks eliminate the possibility of any customer getting into financial difficulty, and
• Early checks reduce friction at a later, more critical moment in the user journey

The first of these enables the industry to improve performance around responsible gambling. The second improves the bottom line. Given that a solution exists that can both protect customers and improve profitability at the same time, shouldn’t we at least consider it?

Customer protection

Before I go further let me be clear about one thing: at ClearStake we support the gambling industry. We understand that gambling provides pleasure and entertainment to millions of people, not just in the UK but around the world.

But that shouldn’t have to come at a cost. We have the technology to enable every bettor to spend what they can afford and no more. Should we not use it? Affordability checks at onboarding, even if initially only optional, can help ensure that every customer is properly protected.

The present enhanced due diligence (EDD) approach kicks in at (to use a fair estimate) a spend of perhaps £1,500 in a month. But this is a one size fits all approach. For some lucky individuals £1,000 is a drop in the ocean. For others it is unaffordable and can rapidly lead to real financial difficulty. The process as it stands today doesn’t catch those people, or more accurately it hopes that very basic credit data checks will.

Using real financial data at sign-up, however, will get the job done. It enables the operator to identify what each customer can afford to lose, and set dynamic deposit limits on this basis. At a stroke we solve the ‘velocity’ challenge - in which customers spend large (for them) amounts of money soon after sign-up. Dynamic deposit limits will protect our customers in that situation.

Protecting the bottom line

Today affordability checks in gambling lead to significant customer churn. Worse, those customers are by definition among the most valuable an operator has. It isn’t hard to see why: current checks impose a significant burden on customers, and it can take operators days or even weeks to reach a decision.

In that situation, many customers will look elsewhere. I will talk a little more about how easy the process should be below, but for now let’s talk about the core subject of this piece: timing. 

At present EDD checks are initiated when deposits pass a certain threshold. What does this tell you? It suggests that we are interrupting customers precisely when they wish to deposit and bet. That is seldom a good idea, and in the case of EDD it effectively ‘blocks’ a customer when they are focused on getting something done. No wonder they go elsewhere to do that.

But if we ask a customer to share financial data at sign-up, things are different. People expect to perform a few administrative tasks at this time, even if it is just sharing personal data and a credit card. Isn’t this the right moment to ask if they would like to ensure they can bet freely into the future (within a personalised limit) by running a quick affordability check?

Let’s be completely honest - we don’t know yet. But many of the operators we are speaking to are actively considering this course of action, and it is easy to understand why. Getting customers over this hurdle early (even perhaps with small financial incentives) means retaining more of them later down the tracks, and making gambling safe and sustainable - which it should be.

Making it easy

A final note: some readers may feel that EDD checks (or their equivalent) at onboarding are simply far too onerous. Will they not stop users registering entirely?

Firstly, as mentioned above we would advise that sharing of financial data is an option, not a requirement. 

Second, and significantly more important, it is essential that the industry as a whole understands that modern EDD, delivered via Open Banking and/or smart statement scanning, is incredibly easy for both the customer and operator. 

We’ve discussed this at length before, so I won’t extend an already long enough blog post. But understanding that sharing financial data takes less than a minute (on both sides) is essential. 

There are two responses to affordability checks being painful. One is to do less affordability checks. The other is to make them painless. We don’t recommend the former, so we’re dedicated to making the latter a reality.