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Credit providers have long relied on data to lend insights into how their customers are faring—and help predict what's to come. The pandemic, however, introduced unexpected anomalies that have made understanding the actual credit landscape far more challenging. For example, while government assistance programs have enabled customers to stay up-to-date on their payments, they've also made it harder to discern the true financial impacts of the crisis. Our recent research gives voice to these challenges. We surveyed businesses around the world three times from July 2020 through January 2021 for our annual Global Decisioning Report. The results reveal that business confidence in credit risk analytics models has declined over the pandemic, dropping by nine percentage points for Tier 1 lenders, and 15 percentage points for Tier 3 lenders. As we look ahead, credit providers need ways to improve confidence in their analytics models so that that they can make smarter, faster decisions on behalf of their customers and businesses. This is where synthetic and alternative data are beginning to make a real difference. The rise of AI and machine learning solutions has opened the door for lenders to leverage this data. Understanding how to put it to use—and why it's imperative to do so—will help lenders navigate the end of this crisis and prepare them for any economic volatility in the future. The data differentiator  Before we dive into how lenders can best utilize alternative and synthetic data, let's quickly define what we're discussing. Credit providers have traditionally used credit bureau data to assess their portfolio risk and inform credit decisions. But as noted, in times of crisis, supplementing that data with additional context can significantly improve its effectiveness. Alternative data does just that. Alternative data refers to primarily unstructured data from non-traditional sources. For example, social media data can help paint a more complete picture of customer behavior. And location data can provide information about customer geography, such as opportunities for travel-related purchases. Synthetic data complements alternative data but is not the same. Synthetic data is new data created by altering existing data. So a lender might change the profile of its customer base and then use that dataset in analytics models to better understand what the future may hold. Both types of data work together, with alternative data providing a more complete customer view and synthetic data allowing lenders to account for additional variables and offset their risk accordingly. New data in action  Confidence in analytics models may have dropped during the crisis. But lenders aren't resting on their laurels. Instead, nearly half of businesses report that they are dedicating resources to enhance their analytics efforts. Those that include alternative and synthetic data in their improved models have the opportunity to leverage the information in multiple ways. Some of the most exciting applications of alternative and synthetic data include: Anticipating purchasing behavior New data sources, especially from social media, help lenders understand what's happening in their customers' lives and how that may translate into purchases. For example, a customer who has recently moved into a new home may be considering purchasing furniture or home décor. Or customers who are celebrating life milestones such as birthdays or graduations may be buying gifts or spending on events. Predicting credit risk In this realm, synthetic data can be beneficial. Lenders can use synthetic data to understand how credit profiles may change in specific circumstances, such as modeling a higher unemployment rate or dramatic income shifts. They can then use analytics models to determine the related impact on customer affordability. Improving fraud detection With an improved customer view, fraud prevention teams can more easily identify unusual patterns in customer behavior and spending. For instance, does a customer's current location (per location data) match their most recent transactions? Or has the number of contacts on their phone dramatically changed (it may not be their phone)? Enhancing pricing Both types of data are useful in improving pricing models across company portfolios and at a personal level. The additional context can help everyone from lenders to insurers to banks assess customer needs and provide products that meet them—at prices that make sense. What's more, machine learning automates that pricing, allowing companies to scale personalization across the organization. Improving marketing In the same vein, new sources of data can also give marketing efforts a boost. The ability to access more real-time information about customer behaviors uncovers opportunities to provide them with credit, insurance, and other lending products that may prove immediately helpful. Data can also help identify new markets entirely or highlight rising needs that may demand the development of additional products or services. The past year was an anomaly in so many ways. However, as we ease out of the crisis, financial service companies have the opportunity to strengthen their data models—and leverage new types of data to reduce their risk and provide improved decisioning no matter what the future holds.

Did you miss these June business headlines? We’ve compiled the top global news stories that you need to stay in-the-know on the latest hot topics and insights from our experts. Fintech Interview with Executive Vice President, Experian – Eric Haller FinTech Buzz talks to Eric Haller, VP & General Manager, Identity, Fraud & DataLabs, about various key trends and challenges in the Digital Identification domain and how fintech prevents fraud in the financial market. Experian on Fraud: 2020 Was a Big Year for Nefarious Actors and Illicit Activity in Financial Services David Britton, VP, Industry Solutions, Global ID and Fraud at Experian, recently shared with Crowdfund Insider Experian’s insight into fraud and what the business is doing to combat nefarious activity in financial services. Evolution of digital identity Professional Security Magazine Online talks to David Britton, VP of Industry Solutions, about how the preference for digital-first was sparked and then accelerated through the Covid-19 pandemic, but the concept of digital identity and the need for its evolution will remain prevalent for both consumers and businesses way beyond that. Preventing fraud without compromising the customer experience Finextra looks at Experian's Global Identity and Fraud Report 2021 to uncover why customer experience is central to the approach for businesses when balancing fraud prevention and revenue. Three things lenders need to do to navigate today’s complex lending and credit landscape Business Information Industry Association covers Experian's Global Decisioning Report 2021 highlighting the dual-lane economy and what lenders can do to succeed in this complex and changing landscape. Stay in the know with our latest insights:

Digital payments have grown rapidly over the last year. Even before the pandemic, people were adopting digital payments. Now, after efforts from governments around the world to enforce social distancing, we've seen huge growth in this type of payment as consumers move away from in-person and contact payments. Juniper Research has released its Online Payment Fraud Report 2021 exploring why the increase in digital payments has created expansive opportunity for new methods of fraud.  

Donna DePasquale, EVP, Global Decisioning Software, talks to Bloomberg Quicktakes about the key findings of the latest Global Decisioning Report. Some key takeaways from the interview: Covid-19 has created an even wider two-lane economy 1 in 3 consumers remain concerned about their finances Lenders need to prepare for a wave of potential delinquencies Around 50% of lenders are investing in model recalibration to deal with the changes caused by the pandemic One third of lenders are creating new credit models We surveyed 9,000 consumers and 2,700 businesses across ten countries worldwide. Download the Global Decisioning Report 2021:

As we enter the beginning of the end of this global crisis, the role of data, analytics, and credit risk decisioning takes on even greater significance than before. Consumers face uneven roads to recovery, with some ready to spend again and others still mired in pandemic-related financial stress. And businesses of all sizes report their operations are recovering but there’s still a way to go. A key difference we saw is that companies that adapted to serve customer needs digitally are faring much better. Our 2021 Global Decisioning eBook, Navigating a new era of credit risk decisioning, looks at how consumers are stabilizing their finances and how businesses are returning to growth. A recent survey among 9,000 consumers and 2,700 businesses across ten countries worldwide reveals the importance of lenders prioritizing digital transformation, and the role of advanced data and analytics in enhancing the customer experience. The pandemic fall-out is impacting everyone differently: 1 in 3 consumers remains concerned about their finances – paying bills and managing credit Whereas high-income households are no longer reducing their discretionary spending Navigating this varied credit landscape requires a deep understanding of customer needs on both ends of the spectrum. However, business confidence in the consumer credit risk management analytics models dropped over the past year from 71 percent to 61 percent. Smaller lenders with revenues ranging from $10M to $49M have seen the sharpest decline from 72 percent to 57 percent in the past six months. Adapting data and analytics to a rapidly changing customer base: Almost 50% of businesses surveyed said their dedicate more resources to enhance analytics One-third of businesses are planning to re-build their models from scratch Recalibrating credit models is one thing, but lenders also need to rethink their data sources to better understand current customer profiles. The data inputs generated by the pandemic have impacted credit risk models and machine learning applications in unexpected ways. For example, widespread payment holidays and government stimulus programs may be masking customers’ true financial circumstances. According to Recovery Insights, a separate study published by Experian North America: Delinquency prior to the pandemic is a strong indicator of future risk. Accounts exiting an accommodation period are 2x more likely to become delinquent than are accounts that never received an accommodation. Payment on debt during accommodation indicated a reduced risk for subsequent delinquency. Amidst the pandemic lockdown, consumers turned online to manage finances and connect with lenders – including older consumers.  And while the pandemic pushed consumers online out of necessity, now that they’re there – it’s become a preference – as overall digital gains are holding above pre-pandemic levels. Lenders have a new digital imperative to meet consumers’ evolving needs for continued digital engagement. Consumer expectations of digital experiences 55% of consumers have higher expectations of their digital experience since Covid-19 began 43% of consumers surveyed age 70+ reported digital banking throughout the pandemic 14% of consumers surveyed age 60-69 applied for a new loan or card online The importance of a digital-first approach has revealed itself and many companies have put a digital customer journey in place since Covid-19 began. The future, however, is more than providing online services. It’s about knowing your customers well enough to anticipate their credit needs and using tools to automate the process and reduce risk. Adapt or lose customers 9 in 10 businesses have a digital customer journey in place 1 in 4 consumers have taken their business elsewhere because a company didn’t adapt to their digital needs Online customer experience and credit risk management are more connected than ever before. And, businesses need technology that supports the entire customer journey, from onboarding to customer management to collections. Five digital investments businesses are prioritizing the new era of credit risk management: Implement new machine learning models for customer decisions Increase digital acquisitions and engagement Understand their customer base (affordability, value, behavior) Automate customer decisions Increase value of existing customers Access the report here to get more consumer trends and find out what the future of decisioning means for businesses looking to return to growth. Stay in the know with our latest insights:

Did you miss these May business headlines? We’ve compiled the top global news stories that you need to stay in-the-know on the latest hot topics and insights from our experts. APAC businesses focus more on revenue generation than fraud prevention Disruptive Asia looks at the latest Experian research uncovering how businesses across the Asia Pacific (APAC) region are deprioritizing security and fraud prevention. The survey found that nearly one-third favor an emphasis on revenue generation, an approach that could increase the risk of an already vulnerable digital ecosystem for consumers across the region. How sophisticated security methods can help in the battle against online fraud The National Cyber Security Centre (NCSC) has removed more scams in the last 12-months than in the previous three years combined. Finextra looks at how consumer insights from Experian's latest research uncover priorities around online security. Experian, Temenos Offer Instant Prescreen, Credit Solutions Pymnts.com reports that Experian and major banking software player Temenos have integrated their offerings to create a seamless way for lenders to extend credit. The arrangement relies on what Experian calls a “prequalification” process. eSPEAKS with Chris Preimesberger and David Britton eWeeks, Chris Preimesberger interviews David Britton, the VP of Industry Solutions at Experian. They discuss the new Experian report and study, the future of biometrics, and security trends. Experian Showcases Innovation Using Artificial Intelligence AIthority covers Experian’s best-in-class digital credit risk decisioning solutions have garnered industry-wide recognition, winning two recent awards focused on application excellence in artificial intelligence. Stay in the know with our latest insights:

In a recent interview, I had the opportunity to talk to Chris Preimesberger of eWeek about the latest Global Identity and Fraud Report. We discussed some of the business challenges executives face in the increasingly complex space around fraud mitigation while reflecting on how and why the pandemic has shifted the fraud landscape. Market movement – more of us were online than ever before With so many of us at home during the pandemic, access to digital services and the purchasing of goods online increased dramatically. According to our research, businesses responded by investing in supporting services to accommodate the increase in traffic. We saw a lot of action from businesses around how to improve the customer experience while getting a better understanding of who the customers are and how to get their online problems resolved. Our January research wave showed that with all this investment into customer experience and enablement, there were some key areas of investment. Analytics – the use of automation and AI to help make smoother, better decisions for customers – ranked highly in business priorities, but this approach does not exist in isolation. Businesses are also doubling down on support staff to ensure that consumers have a way, if there’s an anomaly in the process, to be able to respond. Whether that’s password resets or call centre staffing, there’s a desire and there’s an intention by businesses to increase staff on digital support. A shifting sense of recognition We also surveyed consumers on their preference for passwords versus other security methods. Security remains the top consideration for consumers when online, above others such as convenience, but interestingly, for the first time in four years password protection did not appear in the top three preferred security methods, favoring instead a more friction-less approach to authentication. This shift in consumer attitudes towards what we call invisible security paves the way for businesses to start to adopt more sophisticated or nuanced approaches to authentication and security. They can start to leverage behavioral analytics or device intelligence recognition without intruding on the user experience. Normalizing biometrics and the importance of a layered approach Customer attitudes around traditional biometrics are very positive – it’s one of the top-rated preferred security methods thanks to the providers that have popularised it through the mobile devices we all use every day. However, the challenge with pure biometrics is always at the point of enrolment – how do you ensure that the right person is assigning their biometric to a device? This is why a layered approach to security that incorporates traditional identity verification or authentication processes along with more advanced technical elements like behavioral analytics, device intelligence, network access, and transactional context is so important. For example, “Is this device associated with David’s account? Is this actually David or a bot? How does David hold his phone?” This includes layers of security that are considered privacy-safe, and may not even require traditional identity data but have anonymous attributes that can be associated with how someone interacts. This will be pivotal in allowing businesses to enable a more comprehensive, pliable, and flexible approach to security rather than relying on rigid but easily broken mechanisms that we’ve been using for a long time. Why the types of fraud will change as the world seeks normality Over the last year, fraudsters focused their energies on stimulus funding and many other forms of low-hanging fruit that they could easily go after, pulling back from their activities in traditional financial services or e-commerce. As the pandemic eases off in many parts of the world, fraudsters are likely to increase their activity in these areas once again as stimulus programs close down, and as consumers increase their spending. Fortunately, we found that more than half of businesses will continue to invest in fraud prevention solutions over the coming year. Fraud trends to watch in 2021 As we look at the direction in which fraud is moving, we know there is an increase in several types of fraud as we navigate what is becoming the post-pandemic world of 2021. Account takeover fraud is set to be on the rise again this year. This is when stolen credentials are used to gain access to systems. Account origination or new account opening fraud will also be on the increase, where fraudsters use stolen identities to create brand new accounts, including a rise in synthetic identity fraud. Card not present online transactions is something we will see in huge volumes given the explosion of online traffic over the last year, which will undoubtedly include an increased volume of fraudulent transactions. Stay in the know with our latest insights:

Experian has been named a technology leader in Quadrant's 2023 SPARK Matrix: Digital Decisioning Platforms Experian ranked second overall in the latest Juniper Online Payment Fraud Market report, just behind LexisNexis Risk Soultuons and ahead of FICO and TransUnion Experian has been named an Overall Leader by KuppingerCole in its latest Fraud Reduction Intelligence Platform evaluation Ascend Intelligence Services suite of analytics solutions has been named Best Consumer Lending Product in the sixth annual FinTech Breakthrough Awards 2022 Sure Profile wins Platinum for Fraud & Security Innovation of the year at the Future Digital Awards 2021 CrossCore wins Platinum for Fraud Detection & Prevention Platform of the year at the Future Digital Awards 2021 Ascend Intelligence Services wins Gold for AI Platform of the year at the Future Digital Awards 2021 Ranked #11 on the IDC 2021 FinTech Top 100 2021 CIO 100 Awards: Recognized Atlas Credit for their use of the Experian Ascend Intelligence Platform 2021 Winner of the Artificial Intelligence AI Excellence Award 2021 Winner for Best Data Analytics Offering at the Global Retail Banking Innovation Awards 2020 Gold Winner of the Team-Department of the Year category for Decision Analytics at Info Security PG’s Global Excellence Awards 2020 Winner in the ‘Organization’ category for Decision Analytics at Big Innovation Awards Shortlisted for Innovative Product of the Year in 2019 CyberSecurity Awards Named in Forbes 2018 as one of the World’s Most Innovative Companies for 5 Consecutive Years Recognized as an Innovator in the 2017 Fraud Detection and Prevention market Experian CrossCore wins the Javelin Strategy Best Overall Identity Proofing Platform award Top Vendor in the 2017 Online Fraud Detection and Prevention Leaderboard 2017 Gold Winner for Product Management Department/Team of the Year ‘Best Credit Reference & Information Solution’ in 2017 Credit & Collections Technology Awards 2017 Finalist for People’s Choice Award at the MRC Technology Awards 2017 Finalist in the Big Innovation Awards 2017 Winner for Product Innovation in The World Business Awards 2017 Gold Winner for Security Product Management/Development Team of the Year at InfoSecurity Business Awards 2017 Gold Winner for New Products and Services at InfoSecurity Business Awards 2017 Bronze Winner for New Product or Service of the Year Banking CIO Outlook Top 10 Security Solution Providers 2016

The pandemic has enabled something close to a digital revolution, but how can businesses keep up with shifting consumer behaviors while ensuring fraud prevention is top of mind? Our latest Global Identity and Fraud Report takes a look at key consumer trends online and how businesses are responding.

In a recent DataTalk interview, I had the chance to reflect on and discuss how we define digital identity these days. The big digital shift we have been immersed in since the coronavirus pandemic started has certainly changed the way we create, relate to, and protect our identities online. One of the most interesting aspects of this change is that the majority of people don't think about how they're being represented online; there's a lot of information that represents us that we don't typically take ownership over. We don't tend to think about that, but it's absolutely vital to the whole process. In this regard, this year’s Global Identity & Fraud Report shows that 8 in 10 businesses now have a customer recognition strategy in place, up 26% since the start of the pandemic. Many companies also developed digital strategies as they strove to improve their online experience and provide security and fraud prevention measures when customers needed it most. That certainly marks an inflection point, as for 55% of consumers globally, security is the most important element of their online experiences. Covid-19 has changed the definition of digital identity The covid-19 pandemic has impacted the way people rely on technology for their day-to-day interactions, from shopping to banking to digital identification. It’s particularly interesting seeing how for people that weren't really engaged online before, that weren't big believers in the whole idea of buying goods and services online, the risk of walking into a store during the pandemic outweighed their fears of shopping online. That translated into about 20% of the population moving their shopping online in the last twelve months, per Experian’s 2021 Global Identity & Fraud Report. Looking ahead, the expectation is that 46% of consumers worldwide purchase and do more things online, even when physical stores and venues are safe to go back in again, meaning that people’s digital footprint is growing faster than ever. In this context, we could define digital identity as how we represent ourselves in a digital environment and how do people recognize us. For example, in the same way that years ago a good way to identify someone was looking up that person’s address and phone number, as landlines become a thing of the past, it’s possible to validate someone’s identity online using data gathered from mobile phones. The majority of people wouldn’t share those with anyone else, so their mobile phone becomes a really strong representation of their identity in the digital world. Today, opening our mobile phones with our thumbprint or via facial recognition feels very normal (that’s already part of our digital identity). Something similar happens with voice biometrics, IP addresses and device information, sources for identity data that are gaining prevalence in the digital-first world. All this identity data that is generated in the background starts to add up and creates uniqueness, helping people get recognized digitally. Related Content The race to Digital Identification, a DataTalk with Eric Haller What is digital identity and why should we care  What are consumers the most concerned about when it comes to digital iterations

There's been lots of discussion about what a return to normal will look like as we transition out of the global pandemic—and much remains up the air. However, our recent consumer and business surveys paint a picture that merits the attention of financial service and credit companies. The big takeaway: The Covid-19 crisis has bifurcated consumers, created extremes on both sides. On the one hand, many individuals coming out of the pandemic have more cash than they had going in. The crisis didn't impact their income, and instead, they've spent the year spending less than they usually would due to work-from-home mandates and local lock-downs. Our consumer survey from January 2021 shows that financial challenges have eased for younger consumers and higher-income households. Yet, at the same time, there's also a contingent of consumers who continue to struggle. One in three of our survey respondents reported that they still have financial concerns and a similar percentage are worried about their employment. We anticipate that the demand for support, service, and credit will be high from each side. So how can companies respond to the heightened need for credit products while continuing to service consumers who may need support? This is where digital solutions make all the difference. By employing digital onboarding and decision automation tools, you can rapidly increase your capabilities while also improving the online customer experience for all. A return to spending The U.K. provides a glimpse of what a staggered return to normalcy may look like. When shops and restaurants re-opened for business in mid-April, lines of people streamed out the doors and flooded the streets. With the country's re-opening culminating in June, many consumers will be looking to resume spending on items and projects that they've neglected since the pandemic's start. For example, our survey data reveals that consumers are becoming less cautious with their finances in general. Fewer people report that they're cutting back on discretionary spending and there's a decline in consumers putting money toward emergency funds and drawing funds from savings accounts. These consumers may be gearing up to spend more. And companies that can anticipate their needs and meet them proactively will be positioned to win and keep their business. Solutions for pent-up demand Many businesses are already preparing for this new wave of demand. Consider that eight out of 10 businesses report that they're turning to cloud-based decisioning applications to improve the customer journey. In doing so, companies are giving themselves much-needed flexibility right when it's needed most. They can dial up their online capabilities based on demand and then dial down if it drops. At the same time, these automated solutions enable companies to deploy their staff to customers who do require personal attention. It's a divide-and-conquer model that keeps the customer at the center. In addition to utilizing the cloud, more than 40% of companies say they leverage AI to improve the customer experience. The AI component enables companies to provide personalized options for consumers and create customer journeys that are far more relevant. The timing for such personalization couldn't be better. In our research, a growing percentage of consumers indicate they're willing to share more personal data about themselves in exchange for improved experiences and added value. Building solutions that work—for everyone The pending volume creates a significant growth opportunity and highlights why digital solutions are a must. Companies that provide the best digital service to customers will garner their trust, loyalty, and even referrals. This yields more demand, increasing the need for scalable, cloud-based onboarding and decisioning even more. Amid this activity, you'll want to focus on getting the most from your digital tools. To do so, consider: Leveraging data for improved credit outcomes Evaluate your end-to-end customer journey, looking for ways to utilize data and increase personalization at every juncture. You'll improve the customer experience and provide more relevant offers. The right data also provides a holistic picture of customer credit risk and ensures you're not creating problems for the future. Utilizing low-code solutions so employees can dive in Digital onboarding and decision automation can be game-changing for the customer experience. But if it's hard for employees to use, then that effectiveness takes a hit. Look for solutions that your employees can use off the shelf. The ability to generate customizable reports and execute on ideas and strategies without involving IT at every turn is essential. Recognizing limitations and potential bias Evaluate your analytics models and look for areas of limitation or potential bias. You want to ensure that you're providing access to credit to all eligible customers and not inadvertently excluding specific demographics. Building capabilities that put you ahead of the market The pandemic provided many lessons—and the value of anticipating demand or potential problems was one of the most important. The crisis is waning, but the financial consequences will continue to reverberate, especially as various government aid programs come to an end. Focus on improving your analytics so that they can better describe what's happening now and predict pending changes in demand and shifts in your portfolio. By and large, consumers are moving forward after a challenging year. Prioritize your digital solutions to make sure you can meet their needs regardless of what the future holds. Stay in the know with our latest insights:

The pandemic has enabled something close to a digital revolution, but how can businesses keep up with shifting consumer behaviors while ensuring fraud prevention is top of mind? Our latest Global Identity and Fraud Report takes a look at key consumer trends online and how businesses are responding.