Switching: the future is... bot?

Stephanie Lomax photo

Stephanie Lomax

Senior Legal Adviser, Consumers and Competition
15th February 2017
Areas covered:
Consumers
Futuristic microchip
In the tech industry, all the talk is about “chat-bots”, like Samsung’s Viv and Amazon’s Echo: AI (Artificial Intelligence) assistants which interact with your apps and devices. All kinds of robots (or “bots” for short) are set to become more commonplace in everyday life.

 

We’re told that bots will navigate life’s annoying tasks more ergonomically. Why work through a text-heavy process, clicking through various preference filters, filling in your name, address, phone number, payment details when, with a few voice commands or emojis, a bot can sort out the details? Bots can learn and predict our preferences. They can provide a user-friendly - sometimes almost human - interface. Experts predict we’ll be using them more and more in our daily transactions.

Bots could also be one way of making energy switching simpler. Certainly, these are early days and we’re not there yet: as with all new technology, there have been teething problems which need to be dealt with. But it makes sense that Ofgem, which promotes the interests of existing and future energy consumers, designs today’s regulation with tomorrow in mind.

Many people still do not switch

Around two thirds of customers are on standard variable tariffs, which are typically more expensive than fixed deals. In fact, many consumers on these tariffs could save over £200 a year if they switched to a cheaper deal. Some customers could save significantly more.

Yet while more people are shopping around for better deals, a large proportion of consumers are still not switching their energy tariff or supplier.

Research carried out for the Competition and Markets Authority suggests that it is inertia not satisfaction which is driving the lack of switching.

It found that 56% of those surveyed agreed with the statement that “switching is a hassle I do not have time for”. This figure increased to 66% among those who had not switched in the past three years.

robot helper

Making switching less of a hassle

So what puts people off switching and what can be done to about it? It’s certainly true that in terms of the mechanics of switching, there is still a lot of grit to be removed from the system. We need to continue to reduce failed switches and speed up the process.

The increasing use of price comparison websites and apps has helped to improve switching rates but significant numbers of people still can’t or won’t use them.

Collective switches can play a part in reaching out to disengaged consumers. These use the collective purchasing power of a group of consumers to get a better energy deal via a third party who negotiates on behalf of the group.

In many ways, consumers have more choice than ever before when it comes to shopping around for their energy. We’ve seen a mushrooming of new suppliers in recent years. Energy is also being bundled with other services. For example it’s possible now to buy energy packaged with mobile and broadband.

The diversity in products and providers should be a great opportunity for consumers to choose the service that suits them best – but only if consumers are able, and feel able, to make informed choices.

Busy lives

So despite the new technologies and services available to help people switch and the choice on offer – not to mention the savings – too many consumers still perceive switching as too much of a hassle.

In our busy lives, energy switching has to fight for our attention.

Even if the prospect of saving hundreds of pounds piques your interest, some people find the process burdensome. How do you compare offers if price is not your only concern? How long will that online form or phone call take?

Will the supplier cater for my exotic time of use metering arrangement? If things go wrong, how much time will I spend chasing my old and new providers to put it right?

A personal assistant for all

This is where bots may be able to assist. Imagine a busy executive with no time to sort out her utilities contracts. She could use a switching site, but frankly it’s not worth her time. Luckily, she has a personal assistant who reminds her that her energy contract is up for renewal. He’s noticed that there’s a low-priced deal on offer, combined with a TV package that includes several movie channels – he knows she loves to watch the latest releases. He asks if she wants it sorted; he contacts the provider and sends her details across, including her payment preferences and consumption. He also deals with an address error on the supplier’s system.

We’re closer to that personal assistant being a bot than you might think. It is easy to envisage bots, with access to our smart energy feeds and personal data, integrating with switching services like Flipper and Money Saving Expert’s Cheap Energy Club to make them more accessible and bespoke. As the technology develops, this type of bot personal assistant will become available to more people, bringing to the mass market a personalised service that currently only a few enjoy. Less stress, more tailored deals: more switching.

The role of Artificial Intelligence

Bots are already elbowing their way onto shop shelves and simplifying people’s lives. Domino’s Pizza lovers can now simply send a pizza emoji via Facebook Messenger and wait for the doorbell to ring. Bank of America customers will soon have access to Erica, a bot that uses AI and predictive analytics to offer tailored advice. There are a number of London-based start-ups already producing bots which offer intelligent personal financial services (Cleo, Plum and Chip to name a few). It is easy to see how such services could expand into the energy sector in the near future.

As AI technology improves, things will start to get more exciting. We should see services integrate more with social apps and smart energy systems, delivering end-to-end, personalised services: what Dag Kittlaus, co-founder of Viv, calls “conversational commerce”. Think how eerily well Facebook and Amazon adverts predict our preferences … most of the time.

Imagine if service providers could use this data to present a bespoke energy deal: better than anything a price comparison website can do now. A recommendation based not only on price and service rating, but on a more holistic view of our lifestyle. Of course, this raises a number of ethical and legal issues, not least fair marketing and data privacy and protection. Whatever technology delivers for consumers, Ofgem expects sales and marketing of energy services to be carried out in a responsible way. People would have to give their permission for their data to be used and it must be protected. There are also technical and commercial implications from people switching more frequently, which are being considered as part of Ofgem’s Faster and More Reliable Switching Programme. 

Nevertheless, if we can get it right, bots could go a long way to solving the “hassle to switch” problem.