Unlocking Data: A Conversation with Tom Noyes, Founder & CEO of Commerce Signals


Navigator Edition: April 2017

We recently had the opportunity to connect with Tom Noyes, Founder and CEO of Commerce Signals, a privacy centric data exchange.  Prior to creating Commerce Signals, Tom was Head of Channels for Citigroup’s Global Consumer Group (leading teams in 29 countries), SVP of Online and Payments for Wachovia, and a rocket scientist at NASA.  In this article we discuss Commerce Signals, the challenges of using proprietary information to enable consumer marketing, and the future of payments.

Commerce Signals enables banks and mobile operators to collaborate with retailers and marketers through permissioned use of data.  The company’s platform allows businesses to publish and discover data in real time.  Data owners can control who will receive their data and how it can be used through bilateral agreements managed by Commerce Signals.  Commerce Signals makes money the same way Visa and Mastercard; through message exchange between trusted partners.  Whereas payment networks have one set of operating rules and a standard message set, Commerce Signals provides for bi-lateral rules and an open message set.  The company’s current payments data partners represent issuers and networks handling 70% of U.S. payment card transactions.

1. How did your background in banking and payments lead you to found Commerce Signals?

Banks hold valuable data through their roles in managing risk, creating trust and facilitating commerce through credit and payments.  I believe banks have tremendous value to bring, but that value is in supporting commerce not leading it.  Thus the challenge for banks, mobile operators and other regulated companies is: “how can I partner with thousands of companies to enable thousands of use cases where my data can deliver value in commerce?”

The challenge with collaboration is not technical – it is more about control of use.  Once data leaves the owner’s control, data is of unlimited supply which decreases its value.  Commerce Signals delivers tools to control the use of data and create a trusted marketplace for data exchange.  We do not hold data; we enable consistent access to data held by its owner.  We do not enable unlimited use of data; we manage data owners’ bilateral agreement with counterparties.  Just like Visa and Mastercard are networks for the exchange of payment messages within a network of  bank counterparties, Commerce Signals is a platform for the exchange of custom message sets between trusted counterparties.

2. How does Commerce Signals differ from card-linked offer platforms?

Banks learned some very hard lessons in card-linked offers.  Banks attempted to bring marketing content, targeting, and delivery within their control but that is not how marketing dollars flow nor is it how consumers use online banking.  An executive at a very large bank told me that after spending $400 million on card-linked offers they realized that even they weren’t big enough, nor was their data unique enough, to make the marketing world come to them.  Now this bank and its peers are looking for a common network for data to compete against Google, Facebook, and other tech companies.

We built Commerce Signals around enabling data to deliver value within existing demand (i.e., marketing and advertising flows) to support both consumer and merchant value propositions in a privacy compliant manner.  In our model, banks control both WHO they work with and HOW their data is used.

Our initial use case is ad measurement.  This means we can enable advertisers (e.g., retailers) to obtain aggregated sales insights based on specific customer sets.  In other words, for the 100,000 consumers that heard an ad for Macy’s on Pandora, we can identify the total spend of that group of consumers. This information is enormously powerful for advertisers looking to understand how their ads are performing.  Measurement is the #1 area of focus for marketers in 2017 according to IAB.

3. What do marketers and financial institutions have to gain from making their data available to third parties, some of whom might be competitors?

Companies can build better customer experiences and value propositions through partnerships.

Mobile has the opportunity to be the greatest marketing device in the history of man.  However, when was the last time you purposely clicked on an ad? When was the last time you received an alert from your bank for something that was relevant to you (outside of your banking relationship)? Mobile operators, banks, and retailers each hold a treasure trove of information but mobile marketing is broken today because this deterministic first-party data – which offers a much stronger signal than anything Google has in search – is locked up and unable to interact.  By combining data with other entities, banks can deliver more personalized services and create new value propositions.

Mobile operators, banks, and retailers are all concerned about consumer privacy, value sharing, and control of use.  Control of HOW data is used is key to solving these constraints.  That is why our architecture allows data owners like banks to keep their raw data in-house and stay in control of its release.  Commerce Signals then enforces provisions around the use of released data by tracking the merchant, agency, publisher, financial institution, and ID translator involved.

4. Recently, the CFPB raised issue with FIs for purposefully limiting third party access to financial data.  In your view, whose data is it: the FI or the customer?

Data ownership is a very complex topic, in no small part because it is the wrong description.  The real issue is who has rights to use data and who can stop others from using it.  Today much of the regulation globally is due to the terrible controls around data integrity and flows caused by aggregation, which translates into potential misuse and consumer harm.  The future of the world can’t be aggregation (by either Google or the NSA).

Generally speaking, in the U.S., aggregate and anonymized uses of data are not regulated nor is there much regulation when explicit consumer consent is present.  However, in general, most of our customers believe that consumer-level insight requires consumer-level permission and merchant-level insight requires merchant-level permission.  Most of our clients view data through a lens something like this:

RIGHT TO HAVE THE DATA

  • Contract with customers, issuers/acquirers
  • Op Regulations of MNOs, Payment Networks, Consortiums
  • Consumer consents
  • U.S. law Privacy/collection restriction (HIPPA, FCRA, COPPA)

RIGHT TO SHARE THE DATA

  • GLBA consumer rights/consent/opt out—annual notices that we all get
  • Merchant/Data Owner consents
  • FCRA restrictions—credit, employment, rentals, “character or mode of living”
  • Local/Regional Laws
  • PII issues (Consumer/Object Identifiers)

RIGHT TO USE THE DATA

  • Use restrictions for sensitive data (e.g., GLBA marketing, FCRA not-for-credit pre-approval, opt-out of pre-screening for credit)
  • Onward transfer restrictions (GLBA, FCRA) which require permissible purpose or legitimate interests

5. How do consumers perceive monetization of their data?

My time working with Google taught me that the average consumer understands the explicit value exchange in data: in exchange for reading your searches, Google provides better search, better maps, and better services.  Unfortunately, banks have not shown the ability to improve the consumer value equation with data.  They will need to be very thoughtful in building consumer trust as they seek to use data for the consumer’s benefit.  One way to do this could be giving consumers a voice in how their data is used and providing them with an audit trail on where it is going.

6. Bill Gates says, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” What themes in payments do you think embody this saying?

In my own blog I wrote that we will see data democratization drive massive changes to the structure of banks and retailers and enable new forms of collaboration.  Information intensity and the ability to manage data across boundaries and interfaces will be more important to growing future margin than economies of scale, asset intensity, and competitive barriers.

Historically, acquisition and JVs were the approach of corporates to boundary growth. The future will see a much more loosely coupled approach to deliver value – one focused around common platforms, standards and networks.  The best examples today are the long-standing PC standards alliance between Microsoft and Intel, Apple’s App Store, Wikipedia, and Uber – all examples where many independent nodes can leverage successful networks to innovate with control over their unique value.

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