iSelect pins growth strategy on Consumer Data Right
- 25 August, 2021 11:05
Comparison services provider, iSelect, has highlighted Australia’s Consumer Data Right (CDR) legislation as its next big customer growth opportunity and an instrumental part of its five-year strategy.
The i26 strategy was detailed as the ASX-listed company reported its full-year financial results this week. ISelect recorded a $12 million dip in underlying revenue to $110 million, with underlying EBITDA including JobKeeper contribution reaching $20.8 million. Underlying NPAT was also up by $4 million to $7.1 million in the 12 months to 30 June, and the company reported an overall net loss of $5.1 million, down from the $43.5m loss reported in the 12 months prior.
ISelect noted a number of positives over the 12-month period, including new partnerships with News Corp and Seven Affiliate Sales promoting its iSelect and Energy Watch brands to Australian consumers. The two-year News Corp deal is expected to be worth $4.5 million. New products were also launched over the second half including business loans, with more products coming online from July this year and into 2022.
However, Covid-19 wreaked havoc on consumer demand, impacting leads and revenue during FY21. The biggest impact was on iSelect’s energy, telco and car insurance verticals, with declines of between 40 and 50 per cent recorded. During the first half, health insurance also recorded a 21 per cent decline in leaders, finishing 13 per cent down for the full year.
While volatility due to Covid continues into FY22, iSelect CEO, Warren Hebard, also noted increased competition in the company’s space. Both of these are expected to impact performance. While one focus is improving operational execution, the other path forward iSelect is betting on is its ‘i26’ strategy, he said.
Central to the i26 strategy is the Consumer Data Right (CDR) legislation, which passed as Australian legislation in 2019 and is now being rolled out to the banking sector under the Open Banking initiative. This is due to be followed by the Open Energy initiative, scheduled to commence with major retailers in October 2022 and the rest of the energy retail market a year later. Telecommunications and insurance are then expected to follow.
At its core, the CDR is about giving consumers more control over their data by allowing them more access to their personal data held by providers in the banking, utilities and telco spaces, as well as the ability to easily share this data with other providers. The legislation is expected to be a game-changer for consumers wanting to switch, compare, combine and tailor services, creating a new operating environment and ever-higher expectations of the brands they engage with.
The introduction of CDR will empower consumers to compare and switch products and service providers, iSelect stated, growing the switcher market in totality. The company said this “represented a future opportunity to deliver new, simplified and seamless journeys, building ongoing relationship with customers by providing continuous comparisons and one central location to manage their needs”.
For example, instead of the current process prospective customers go through of filling in 14 questions to get to a review of products matching their needs, iSelect’s process would connect securely with Open Energy to generate personalised recommendations based on their actual usage data.
The process would also see the 30 or more clicks currently taken to switch and buy another energy product online reduced by more than half, iSelect claimed. The company said it could follow up with continuous comparisons, personalised content and further recommendations on behalf of that customer.
According to Insurance Monitor research quoted by iSelect, this ability to switch more easily could help consumers save $3.6 billion in ‘loyalty taxes’ resulting from renewing insurance policies rather than selecting a new provider. Yet currently, 74 per cent of consumers are not considering taking action on their bills, an iSelect survey found.
“During FY21, we have invested in our data platforms and focused on growing our iSelect account base, which is now up to 1.1 million customers. We will continue this ahead of the arrival of Open Energy in FY23, when we will look to leverage these investments to deliver new and innovative digitised journeys for our customers, providing a frictionless, always-on comparison experience,” Hebard said.
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