Compliance
Consider this seemingly innocuous scenari five college students having a great time and spending a great deal of money at the blackjack tables. The laws of probability are on your side and your casino is making its cut. Still, they’re pretty good and they walk away with about 80 percent of their starting funds. What you didn’t know was that their starting funds came from the organized distribution of illegal narcotics. What you didn’t know was that your casino is laundering their money for them.
A company must ensure that it is in compliance and operates in accordance with all the laws and regulations governing it—gaming regulations, the Patriot Act, anti-money laundering laws, privacy legislation and Sarbanes-Oxley to name a few. A company’s investors need to have the confidence that it will not become the Enron of the hospitality industry. One cannot afford the adverse publicity that results from contested licenses, regulatory violations and bad publicity.
Fraud
What about the outstanding employee responsible for negotiating a new purchase agreement with one of your major suppliers? She worked her way up to the executive office and you trust her to represent your company. But what you didn’t know is that her neighbor is negotiating for the supplier and they have a personal agreement in place.
On average, fraud typically accounts for 2 percent to 4 percent of a company’s annual revenue. That could easily be $20 million to $40 million a year for a major hotel brand. But fraud can be prevented and that money can be saved. How many non-obvious relationships are never identified as a source of fraud? Does your purchase agent have a relationship with your supplier? Is the trip and fall plaintiff actually the same victim who suffered an accident at another property last year? Does she share a mailing address with the key witness? Did the witness and attorney once share a common telephone number? Does the new laundry provider share a tax identification number with the company terminated for improper billing two years ago?
Loyalty
Consider this example: A young, married couple on vacation arrives by shuttle bus at your hotel. They’re checking into discounted rooms and taking advantage of the early bird dining special. Your staff is courteous, but the guests are obviously not VIPs. They have fun, but aren’t blown away by their experience. What you didn’t know is that he is the son of a loyal customer that visits many times a year. What you didn’t know was his father convinced him to vacation at your hotel. What you didn’t count on was that the son’s experience would affect his father’s long-time loyalty. Not because you didn’t treat him like a king, but because you didn’t treat his son and daughter-in-law like royalty, too.
You know who your loyal customers are but what about who they know? How much more effective would your marketing campaigns be if they targeted likely customers who already have a relationship with your loyal customers? Tremendous value can be gained or lost by how effective you are at recognizing and rewarding your loyal customers. By recognizing relationships between your patrons, your company can maintain its loyal following and protect its reputation. Moreover, your marketing campaigns will be more effective and less costly if you can target likely new customers who already know your loyal customers.
The Information Management Solution
Truly knowing who your company is doing business with in today’s world is becoming more difficult and costly. Identity theft is soaring. Millions of people have crafted elaborate false identities with credible drivers’ licenses, credit cards and other forms of identification. Businesses from around the globe operate under numerous names and tax IDs. People move, marry and change names. Most often these changes are harmless, however there are occasions where they are laden with malicious intent.
Fortunately, while the evil-doers are getting more sophisticated, so is the industry. Today’s hotels and casinos have access to literally millions of data entries and entities within their data systems—players and guests, other customers, employees, sub-contractors, vendors and management. Resolving identities from all of your data sources (and potentially outside data sources, such as watch lists) to know who is who, and resolving relationships between identities to learn who knows who, is being done today. It is critical for hospitality and gaming companies since billions of dollars are at stake.
How Identity and Relationship Resolution Works
In general, identity and relationship management systems are customized on a company-by-company basis, based upon the identifying attributes in the entity data being collected, and depending on desired alerting and business needs. But there are certain core attributes to any identity and relationship resolution solution.
Data Privacy – The privacy of customers must be held sacred and maintained at all costs. Data must be encrypted or hashed and kept secure, even while resolving the identities and relationships between them. Policies must be put in place to protect the data from theft.
Maintenance of Attributes – The identity and relationship resolution solution must maintain full attribution of identifiable attributes. Many data warehouses and data cleansing tools exist to try to create a perfect data record. By establishing rules to determine if an address or tax ID number is valid, invalid data may be cleansed away. The fallacy of this method is that the loss of identifying attribute data significantly reduces your ability to link together intentional ID fraud. It is impossible for someone who commits fraud to maintain completely unique identifying attributes across numerous ID packages. Furthermore, the very attributes most often cleansed may be used to establish relationships between entities. By maintaining and using all attributes associated with an entity, accuracy of identity and relationship resolution can be increased over time.
Scalability – Since you want your identity and relationship resolution solution to improve in accuracy with more data, it is imperative that it scale well across your network infrastructure and be able to issue alerts in real time.
Persistence – The identities and relationships resolved by the solution must be persistent. Your company doesn’t have time to waste on repetitive search algorithms that are overloading your IT network infrastructure. Only by persistently maintaining previously resolved identities and relationships is such a solution useful for real-time alerting.
Data/Platform Agnostic – The solution must be able to integrate data from disparate source systems, regardless of underlying technology or data structure. In addition, the solution should integrate with your central reservation system, procurement systems, gaming systems and more.
Knowing who is who, and who knows who, is within the reach of every company. The benefits of implementing identity and relationship solutions are limited only by a company’s desire and need for the information, while results are measured in the millions of dollars. By choosing the solution that is best for its needs, a company can gain immediate return on investment in the prevention of fraud, ensuring compliance with regulations and developing a loyal customer base.
Brad Iverson (brad.iverson@us.ibm.com) is based in Chicago and works with leading hospitality and gaming companies developing innovative IBM solutions to address the industry’s needs. Cory Shields (cshields@us.ibm.com) works in entity analytic solutions for IBM and is based in Cedar Park, Texas.