As seen in this month’s Master Investor Magazine.
James Faulkner: Thank you for taking the time to speak with Master Investor. Please give our readers a brief overview of GB Group, for the benefit of the uninitiated.
David Wilson: GB Group, trading as GBG, is a global specialist in Identity Data Intelligence. This means we help organisations make decisions about the customers they serve and the people they employ. Through our fundamental belief that the digital economy relies on everyone having access to data they can trust, GBG enables companies and governments to fight fraud and cybercrime, to improve customer experience and to keep children and vulnerable adults safe.
We have a strong financial track record with a revenue compound annual growth rate of 19%, increasing operating margins after investing for growth, high revenue visibility and high profit to cash conversion.
We are headquartered in Chester, UK and have 18 offices across the world from where we provide solutions to many of the world’s biggest organisations as well as disruptive newcomers.
JF: Cyber-security is now right up there with terrorism as one of the gravest threats facing society. How significant is the specific threat from identity fraud in terms of the wider cyber-security picture?
DW: Identity fraud is a constant threat organisations must address in order to ensure they comply with regulation and build trust with consumers. The recent number of high profile data breaches will add to the already growing concerns amongst business leaders and the public around cyber-security. These attacks emphasise how much pressure organisations face in trying to stay one step ahead of the fraudster. It is our continuous demand for better customer experience and instant access to products and services that is fuelling the growth of data exchange between organisations and consumers. We all want what the Internet offers and are prepared to share our data to make the experience as quick and easy as it can possibly be but this leaves the organisations we interact with in possession of a hugely valuable commodity – the data that identifies us. They must be properly equipped to cope with this.
JF: What unique capabilities does GBG possess that enable it to compete in such a complex and sensitive marketplace?
DW: GBG has a range of services, from registering data about new customers and verifying them to KYC and AML standards, to using data from ongoing interactions to help build customer relationships, monitoring for risk and fraud, and employing and locating people. We have access to over 280 datasets that cover 190 countries and can verify the identity of over four billion individuals – more than half the world’s population.
Our differentiation is our global capability. GBG’s software platforms provide customer onboarding and risk and fraud solutions globally. We currently have clients in 60 countries, and on premise installations in over 40 countries.
Our clients value our approach to innovation and our focus on delivering solutions that they can depend upon. Our product development teams apply the Unique Value Proposition process to every product in order to clearly differentiate us from the competition – we call this UVP3. We work collaboratively with our clients to draw the greatest intelligence from the datasets to which our products connect.
JF: GBG boasts a number of high profile customers including the Serious Fraud Office, Barclays, Microsoft and John Lewis. Have private companies and public institutions been too slow to react to the threat posed by identity fraud?
DW: We work with our customers to help them combat identity fraud and I have sympathy with the management teams of such large organisations – keeping on top of what is happening with every customer account, all the time, is an immense challenge. But it is one that, in the identity data intelligence sector, we have to join forces to overcome. The best chance we have of doing that is to ensure that we don’t cut off the supply of data that helps us understand the bigger picture. For instance, data sharing among organisations helps to identify potential new trends in fraud or cybercrime before they hit; and electronic ID verification systems reference data from outside the organisation to check if what the customer is saying is really true.
JF: Recent high-profile hackings must have been a wake-up call to many companies. Have you seen any increase in activity levels on the back of such news events?
DW: In a recent survey by PwC, it was revealed that nearly 9 out of 10 large organisations have suffered some form of data security breach in the last 12 months. Whilst the mainstream media is now devoting greater attention to this topic, particularly where household brands are concerned, we have seen consistently growing interest in the solutions we provide over many years. Data is one of the most valuable assets an organisation now owns – the criminals are proving that. But it’s our belief at GBG that the transparent and responsible use of our personal data is also the most powerful tool we have to take them on.
JF: Acquisitions have been a key component of growth of late. How have they strengthened GBG’s offering? And given that the entire sector is now rather highly rated, do you still see M&A activity remaining a feature of growth going forward?
DW: Our recent performance has been one of continued success. The teams at DecTech Solutions and CDMS (Transactis) have successfully integrated into the wider GBG family. With the addition of California-based Loqate in April 2015, we have further strengthened our group capability and global presence. We are in an excellent position to not only develop into expanding markets ourselves, but enable our clients to move into new global markets by utilising the Identity Data Intelligence we provide.
M&A activity will remain a potential avenue for us to grow the breadth of solutions we offer our clients and we have a team dedicated to identifying and examining opportunities that fit our business model.
JF: You recently rolled out GBG ID3global, a software tool that can verify the identities of over four billion people worldwide using publicly available data. That sounds pretty impressive! Is this a world first? What plans do you have for this part of the business?
DW: We are the first to provide access to verify this number of identities in one single platform with the powerful ability to define the exact requirements you are screening for. With increased global movement of people and opening of new markets, organisations need to know individuals are who they say they are and GBG ID3global is a formidable tool that enables them to do this. The solution can be easily integrated into a customer’s own infrastructure and we are increasingly working with clients who choose us to help facilitate the positive disruption of business models.
Whilst this solution can provide Identity Data Intelligence on over half the world’s population and is now compliant to KYC standard across 38 countries, we are constantly working to increase our coverage. Part of our service is to advise especially new or growing companies on best practice and what they need to do, including supporting them with anti-money laundering (AML) requirements they have to meet. The solution can provide robust ID checks as part of an AML process for nearly 40 of the world’s largest economies.
JF: You’re on record as saying you’ve only “scratched the surface” in terms of the potential of the identity intelligence market, and headcount is set to grow three-fold by 2020. What are the long-term challenges and opportunities facing the business as it looks to dig deeper into this market?
DW: We can already provide identity data intelligence on more than half the world’s population, and as the spending power and connectivity of developing markets increases, we have an enormous opportunity to help organisations innovate and grow whilst fulfilling their responsibilities to regulators and customers.
There are challenges around legislation and the way data is stored and managed, but we see this as an opportunity to ensure identity data is of the highest quality and handled securely, to build increased trust amongst consumers. One of the biggest challenges for this market is keeping ahead of the myriad fraud and criminal processes.
Whilst GBG will face the challenge of developing and attracting new talent as we expand globally, we believe we are targeting a nascent market, with a number of global clients. Any organisation that has multi-jurisdictions or carries out cross border trade is a potential client of ours; hence we are just scratching the surface.
JF: R&D must play a crucial role in making sure GBG stays ahead of both the competition and the fraudsters. How does the company approach product development and how is that funded?
DW: New proposition development and continued innovation is vital in our industry. We approach this internally within our own technology team; approximately 30% of our staff work in product or technology development – fundamentally our R&D resource. But we also develop partnerships in key areas of expertise, particularly relating to use of data in specific application areas like Politically Exposed or Sanctioned Persons (PEPs) and understanding what is happening on the ‘dark web’ with regards to client data so we can understand what we need to develop to help protect us all.
JF: GBG aims to “internationalise” its products and services. Where does the group operate currently and where do you see the best opportunities for expansion?
DW: GBG has customers in over 60 countries and operates from 18 offices across 10 countries in Europe, North America and Asia Pacific. We see opportunities in three main areas. Firstly: to continue building the breadth of our offering in the UK where the foundations of our group lie and to look at how we can apply this leading knowledge and expertise to further markets. Secondly: to expand our expertise in combating fraud and risk internationally in both the public and private sectors. Thirdly: to enable our existing clients, large and small across all sectors to grow their own international business through the opportunity to verify identities and understand customer needs in new territories. For example, online purchases by APAC consumers are set to be nearly three times higher than European ones by 2020 – that presents a tremendous opportunity for retailers, but they need to be properly equipped for success.