Public Sector

In just a few short hours, Vision attendees immersed themselves into the depths of the economy, risk models, specialty finance data, credit invisibles, student loan data, online marketplace lending and more. The morning kicked off with one of the most respected and trusted macroeconomists in the U.S., Diane Swonk. With a rap sheet filled with advising central banks and multinational companies, Swonk treated a packed house to a look back on what has transpired in the U.S. economy since the Great Recession, as well as launching into current state and speculating on the months ahead. She described the past decade not as “lost, but rather lagging.” She went onto to say this past year was transitional, and while markets slowed slightly during the months leading up the U.S. presidential election, good things are happening: We’ve finally broken out of the 2% wage rut Recruiting on college campuses has picked up The labor force is growing Debt-to-income levels have returned to where they were prerecession and Investment is coming back. “I believe we’ll see growth over 2% this year,” said Swonk. Still, change is underway. She commented on how the way U.S. consumer spending is changing, and of course we’re seeing a restructuring in the retail space. While JC Penney announces store closings, you simultaneously see Amazon moving from “click to brick,” dabbling in the opening of some actual storefronts. Globally, she said the economy is the strongest it has been in eight years. She closed by noting there is a great deal of political change and unrest in the world today, but says, “Never underestimate our abilities when we tap our human capital.” -- More than 100 attendees filled a room to hear about the current trends and the future of online lending with featured guests from Oliver Wyman, Marlette Funding and Lending USA. While speakers commented on the “hiccup” in the space last year with some layoffs and mergers, volume has continued to double every year for the past several years with roughly $40 billion in cumulative originations today. Panelists discussed the use of alternative data to decision, channel bias, the importance of partnerships and how the market will see fewer and fewer players offering just one product specialty. “It is expensive to acquire customers, so you don’t just want to have one product to sell, but rather a range,” said Sharat Shankar of Lending USA. -- The numbers in the student lending universe are astounding. In a session focused on the U.S. student loan market, new Experian data reveals there is $1.49 billion in total student loan outstandings. In fact, total outstandings have grown 21% over the past four years, while the number of trades have only grown 4%. Costs are skyrocketing. The average balance per trade has grown 17% over the past four years. “We don’t ration education in this country,” said Joe DePaulo of College Ave. Student Loans. “We give everyone access to liquidity when it comes to federal student loans – and it’s not like that in other countries.” While DePaulo notes the access is great, offering many students the opportunity to obtain higher education, he says the problem is with disclosures. Guardians are often the individuals filling out the FAFSA, but the students inherit the loans. Students, he says, rarely understand how much their monthly payment will ultimately be after graduation. For every $10,000 in student loans, he says that will generally equate to a $100 monthly payment. -- Tomorrow, Vision attendees will be treated to more breakout sessions and a concluding keynote with legendary quarterback Tom Brady.

So many insights and learnings to report after the first full day of 2017 Vision sessions. From the musings shared by tech engineer and pioneer Steve Wozniak, to a panel of technology thought leaders, to countless breakout sessions on a wide array of business topics … here’s a look at our top 10 from the day. A mortgage process for the digital age. At last. In his opening remarks, Experian President of Credit Services Alex Lintner asked the audience to imagine a world when applying for a mortgage simply required a few clicks or swipes. Instead of being sent home to collect a hundred pieces of paper to verify employment, income and assets, a consumer could click on a link and provide a few credentials to verify everything digitally. Finally, lenders can make this a reality, and soon it will be the only way consumers expect to go through the mortgage process. The global and U.S. economies are stable. In fact, they are strong. As Experian Vice President of Analytics Michele Raneri notes, “the fundamentals and technicals look really solid across the countries.” While many were worried a year ago that Brexit would turn the economy upside down, it appears everything is good. Consumer confidence is high. The Dow Jones Index is high. The U.S. unemployment rate is at 4.7%. Home prices are up year-over-year. While there has been a great deal of change in the world – politically and beyond – the economy is holding strong. The rise of the micropreneur. This term is not officially in the dictionary … but it will be. What is it? A micropreneur is a business with 0 to 4 employees bringing in no more than $200k in annual revenue. But the real story is that numbers show microbusiness are improving on many fronts when it comes to contribution to the economy and overall performance compared to other small businesses. Keep an eye on these budding business people. Fraud is running fierce. Synthetic identity losses are estimated in the hundreds of millions annually, with 50% year-over year growth. Criminals are now trying to use credit cleaners to get tradelines removed from used Synthetic IDs. Oh, and it is essential for businesses to ready themselves for “Dark Web” threats. Experts advise to harden your defenses (and play offense) to keep pace with the criminal underground. As soon as you think you’ve protected everything, the criminals will find a gap. The cloud is cool and so are APIs. A panel of thought leaders took to the main stage to discuss the latest trends in tech. Experian Global CIO Barry Libenson said, “The cloud has changed the way we deliver services to our customers and clients, making it seamless and elastic.” Combine that with API, and the goal is to ultimately make all Experian data available to its customers. Experian President of Decision Analytics Steve Platt added, “We are enabling you to tap into what you need, when you need it.” No need to “rip and replace” all your tech. Expect more regulation – and less. A panel of regulatory experts addressed the fast-changing regulatory environment. With the new Trump administration settling in, and calls for change to Dodd-Frank and the Consumer Financial Protection Bureau (CFPB), it’s too soon to tell what will unfold in 2017. CFPB Director Richard Cordray may be making a run for governor of Ohio, so he could be transitioning out sooner than the scheduled close of his July 2018 term. The auto market continues to cruise. Experian’s auto expert, Malinda Zabritski, revealed the latest and greatest stats pertaining to the auto market. A few numbers to blow your mind … U.S. passenger cars and light trucks surpassed 17 million units for the second consecutive year Most new vehicle buyers in the U.S. are 45 years of age or older Crossover and sport utility vehicles remain popular, accounting for 40% of the market in 2016 – this is also driving up finance payments since these vehicles are more expensive. There are signs the auto market is beginning to soften, but interest rates are still low, and leasing is hot. Defining alternative data. As more in the industry discuss the need for alternative data to decision, it often gets labeled as something radical. But in reality, alternative data should be simple. Experian Sr. Director of Government Affairs Liz Oesterle defined it as “getting more financial data in the system that is predicted, validated and can be disputed.” #DeathtoPasswords – could it be a reality? It’s no secret we live in a digital world where we are increasingly relying on apps and websites to manage our lives, but let’s throw out some numbers to quantify the shift. In 2013, the average U.S. consumer had 26 online accounts. By 2015, that number increased to 118 online accounts. By 2020, the average person will have 207 online accounts. When you think about this number, and the passwords associated with these accounts, it is clear a change needs to be made to managing our lives online. Experian Vice President David Britton addressed his session, introducing the concept of creating an “ultimate consumer identity profile,” where multi-source data will be brought together to identify someone. It’s coming, and all of us managing dozens of passwords can’t wait. “The Woz.” I guess you needed to be there, but let’s just say he was honest, opinionated and notes that while he loves tech, he loves it even more when it enables us to live in the “human world.” Too much wonderful content to share, but more to come tomorrow …

Good job, check. Shared interests, check. Chemistry, check. He seems like a perfect 10. Both of you enjoy your first date and while getting ready for the second, you dare to imagine that turning into another and another, and possibly happily ever after. Then one decidedly unromantic question comes to mind: What is his credit score? Reviewing a potential partner’s credit score and report is important to many singles who are looking for lasting love. According to Bankrate.com, 42 percent of Millennials said that knowing someone’s credit score would affect their desire to date them, slightly more than 40 percent of Gen Xers and 41 percent of Baby Boomers. They may be on to something. Research shows that knowing someone’s credit history and sense of financial responsibility could save people time – and potential heartache. A UCLA study about money and love shows a very strong link between high credit scores and long-lasting relationships. People with drastically different credit scores may experience more financial stress down the road, placing a burden on a relationship. An Experian report reveals 60 percent of people believe it’s important for their future spouse to have a good credit score, and 25 percent of people from the UCLA study were willing to leave a partner with poor credit before marriage so they aren’t held back. While that three-digit number doesn't tell a person’s whole financial story, it can reveal financial habits that could impact your life. Banks are wary of making loans to borrowers with tarnished scores, typically 660 and below. A low score could quash dreams of buying a home, and result in steep interest rates, up to 29 percent, for credit cards, car financing and other unsecured loans. A mid-range credit score can also hurt an application for an apartment and drive up the cost of mobile phone plans and auto insurance. Eight states have passed laws limiting employers’ ability to use credit checks when assessing job candidates, yet 13 percent of employers surveyed by the Society of Human Resource Management performed credit checks on all job applicants. Talking spending styles and revealing credit scores sooner rather than later in a relationship isn’t necessarily comfortable. But it may help you decide whether you have compatible financial outlooks and practices.

Experian shares five trends and twists coming over the next 12 months, that could push new boundaries and in many cases improve the customer experience as it pertains to the world of credit and finance.

Which part of the country has bragging rights when it comes to sporting the best consumer credit scores? Drum roll please … Honors go to the Midwest. In fact, eight of the 10 cities with the highest consumer credit scores heralded from Minnesota and Wisconsin. Mankato, Minn., earned the highest ranking with an average credit score of 708 and Greenwood, Miss., placed last with an average credit score of 622. Even better news is that the nation’s average credit score is up four points; 669 to 673 from last year and is only six points away from the 2007 average of 679, which is a promising sign as the economy continues to rebound. Experian’s annual study ranks American cities by credit score and reveals which cities are the best and worst at managing their credit, along with a glimpse at how the nation and each generation is faring. “All credit indicators suggest consumers are not as ‘credit stressed’ — credit card balances and average debt are up while utilization rates remained consistent at 30 percent,” said Michele Raneri, vice president of analytics and new business development at Experian. As for the generational victors, the Silents have an average 730, Boomers come in with 700, Gen X with 655 and Gen Y with 634. We’re also starting to see Gen Z emerge for the first time in the credit ranks with an average score of 631. Couple this news with other favorable economic indicators and it appears the country is humming along in a positive direction. The stock market reached record highs post-election. Bankcard originations and balances continue to grow, dominated by the prime borrower. And the housing market is healthy with boomerang borrowers re-emerging. An estimated 2.5 million Americans will see a foreclosure fall of their credit report between June 2016 and June 2017, creating a new pool of potential buyers with improved credit profiles. More than 12 percent who foreclosed back in the Great Recession have already boomeranged to become homeowners again, while 29 percent who experienced a short sale during that same time have also recently taken on a mortgage. “We are seeing the positive effects of economic recovery with the rise in income and low unemployment reflected in how Americans are managing their credit,” said Raneri. Which means all is good in the world of credit. Of course there is always room for improvement, but this year’s 7th annual state of credit reveals there is much to be thankful for in 2016.

Experian announces partnership with U.S. Communities to help state and local public agencies prevent fraud, maximize revenue, strengthen security

In this new Telephone Consumer Protection Act (TCPA) era, calling your customers isn’t a thing of the past. It’s still okay to reach out to your clients by phone, whether to offer a new product or collect on an overdue bill. But strict compliance with TCPA rules is critical for any business that contacts customers by phone. Some of the very best ways you can protect yourself from TCPA exposure is to follow four steps when creating your dialing strategy: Customer consent: It’s important to maintain and update your customers’ contact preferences and consent to call them. Simply having a phone number on an application isn’t sufficient. Companies are required to have written permission, such as “I consent to calling my cell phone when there’s a problem …” Remember, permission may only be granted by the party who subscribes to the cellular service or who regularly uses that cell phone number. Landline or wireless?: Your database should also include the phone type for the telephone numbers you have for your customers. The dialing rules differ depending on the phone type, so it’s critical to know the type of phone you are calling or texting. Verify ownership: Ownership of cell phones should especially be validated to ensure the number hasn’t been reassigned and that the person who gave consent still owns the phone. One call can be made to a reassigned number with no liability, assuming you have no knowledge the number has changed. Repeating the action could lead to fines from $500 to $1,500 per infraction. Scrub Your Database: Have practices in place to remove any confirmed reassigned phone numbers from your database. This will help to improve your right-party contact rate and save you from potential TCPA headaches. No one disagrees that calling cell numbers is a risky business, but it can be done if you set the proper workflow in motion. Click here to learn more about Experian solutions that will help to reduce your TCPA compliance risk.

First annual global fraud report covering the convergence of growth strategies and fraud threats and prevention. 

Definition of first-party versus third-party fraud trends and shared actual case study of a first-party fraud scheme.

Fraud Solutions Made Easy — solving new fraud problems by Adapting Legacy Solutions 

Experian launches industry’s first smart plug-and-play fraud platform allowing companies to connect their solutions, Experian products, and third-party vendors in one place.

James W. Paulsen, Chief Investment Strategist for Wells Capital Management, kicked off the second day of Experian’s Vision 2016, sharing his perspective on the state of the economy and what the future holds for consumers and businesses alike. Paulsen joked this has been “the most successful, disappointing recovery we’ve ever had.” While media and lenders project fear for a coming recession, Paulsen stated it is important to note we are in the 8th year of recovery in the U.S., the third longest in U.S. history, with all signs pointing to this recovery extending for years to come. Based on his indicators – leverage, restored household strength, housing, capital spending and better global growth – there is still capacity to grow. He places recession risk at 20 to 25 percent – and only quotes those numbers due the length of the recovery thus far. “What is the fascination with crisis policies when there is no crisis,” asks Paulsen. “I think we have a good chance of being in the longest recovery in U.S. history.” Other noteworthy topics of the day: Fraud prevention Fraud prevention continues to be a hot topic at this year’s conference. Whether it’s looking at current fraud challenges, such as call-center fraud, or looking to future-proof an organization’s fraud prevention techniques, the need for flexible and innovative strategies is clear. With fraudsters being quick, and regularly ahead of the technology fighting them, the need to easily implement new tools is fundamental for you to protect your businesses and customers. More on Regulatory The Military Lending Act has been enhanced over the past year to strengthen protections for military consumers, and lenders must be ready to meet updated regulations by fall 2016. With 1.46 million active personnel in the U.S., all lenders are working to update processes and documentation associated with how they serve this audience. Alternative Data What is it? How can it be used? And most importantly, can this data predict a consumer’s credit worthiness? Experian is an advocate for getting more entities to report different types of credit data including utility payments, mobile phone data, rental payments and cable payments. Additionally, alternative data can be sourced from prepaid data, liquid assets, full file public records, DDA data, bill payment, check cashing, education data, payroll data and subscription data. Collectively, lenders desire to assess someone’s stability, ability to pay and willingness to repay. If alternative data can answer those questions, it should be considered in order to score more of the U.S. population. Financial Health The Center for Financial Services Innovation revealed insights into the state of American’s financial health. According to a study they conducted, 57 percent of Americans are not financially healthy, which equates to about 138 million people. As they continue to place more metrics around defining financial health, the center has landed on four components: how people plan, spend, save and borrow. And if you think income is a primary factor, think again. One-third of Americans making more than $60k a year are not healthy, while one-third making less than $60k a year are healthy. --- Final Vision 2016 breakouts, as well as a keynote from entertainer Jay Leno, will be delivered on Wednesday.

It’s impossible to capture all of the insights and learnings of 36 breakout sessions and several keynote addresses in one post, but let’s summarize a few of the highlights from the first day of Vision 2016. 1. Who better to speak about the state of our country, specifically some of the threats we are facing than Leon Panetta, former Secretary of Defense and Director of the CIA. While we are at a critical crossroads in the United States, there is room for optimism and his hope that we can be an America in Renaissance. 2. Alex Lintner, Experian President of Consumer Information Services, conveyed how the consumer world has evolved, in large part due to technology: 67 percent of consumers made purchases across multiple channels in the last six months. More than 88M U.S. consumers use their smartphone to do some form of banking. 68 percent of Millennials believe within five years the way we access money will be totally different. 3. Peter Renton of Lend Academy spoke on the future of Online Marketplace Lending, revealing: Banks are recognizing that this industry provides them with a great opportunity and many are partnering with Online Marketplace Lenders to enter the space. Millennials are not the largest consumers in this space today, but they will be in the future. Sustained growth will be key for this industry. The largest platforms have everything they need in place to endure – even through an economic downturn.In other words, Online Marketplace Lenders are here to stay. 4. Tom King, Experian’s Chief Information Security Officer, addressed the crowds on how the world of information security is growing increasingly complex. There are 1.9 million records compromised every day, and sadly that number is expected to rise. What can businesses do?  “We need to make it easier to make the bad guys go somewhere else,” says King. 5. Look at how the housing market has changed from just a few years ago: Inventory continues to be extraordinarily lean. Why? New home building continues to run at recession levels. And, 8.5 percent of homeowners are still underwater on their mortgage, preventing them from placing it on the market. In the world of single-family home originations, 2016 projections show that there will be more purchases, less refinancing and less volume. We may see further growth in HELOC’s. With a dwindling number of mortgages benefiting from refinancing, and with rising interest rates, a HELOC may potentially be the cheapest and easiest way to tap equity. 6. As organizations balance business needs with increasing fraud threats, the important thing to remember is that the customer experience will trump everything else. Top fraud threats in 2015 included: Card Not Present (CNP) First Party Fraud/Synthetic ID Application Fraud Mobile Payment/Deposit Fraud Cross-Channel FraudSo what do the experts believe is essential to fraud prevention in the future? Big Data with smart analytics. 7. The need for Identity Relationship Management can be seen by the dichotomy of “99 percent of companies think having a clear picture of their customers is important for their business; yet only 24 percent actually think they achieve this ideal.” Connecting identities throughout the customer lifecycle is critical to bridging this gap. 8. New technologies continue to bring new challenges to fraud prevention. We’ve seen that post-EMV fraud is moving “upstream” as fraudsters: Apply for new credit cards using stolen ID’s. Provision stolen cards into mobile wallet. Gain access to accounts to make purchases.Then, fraudsters are open to use these new cards everywhere. 9. Several speakers addressed the ever-changing regulatory environment. The Telephone Consumer Protection Act (TCPA) litigation is up 30 percent since the last year. Regulators are increasingly taking notice of Online Marketplace Lenders. It’s critical to consider regulatory requirements when building risk models and implementing business policies. 10. Hispanics and Millennials are a force to be reckoned with, so pay attention: Millennials will be 81 million strong by 2036, and Hispanics are projected to be 133 million strong by 2050. Significant factors for home purchase likelihood for both groups include VantageScore® credit score, age, student debt, credit card debt, auto loans, income, marital status and housing prices. More great insights from Vision coming your way tomorrow!          

Ensuring the quality of reported consumer credit data is a top priority for regulators, credit bureaus and consumers, and has increasingly become a frequent headline in press outlets when consumers find their data is not accurate. Think of any big financial milestone moment – securing a mortgage loan, auto loan, student loan, obtaining low-interest rate interest credit cards or even getting a job. These important transactions can all be derailed with an unfavorable and inaccurate credit report, causing consumers to hit social media, the press and regulatory entities to vent it out. Add in the laws and increased scrutiny from the Consumer Financial Protection Bureau (CFPB), and Federal Trade Commission (FTC) and it is clear data furnishers are seeking ways to manage their data in more effective ways. At Vision 2016, I am hosting a session, Achievements in data reporting accuracy – maximizing data quality across your organization, with several panel guests willing to share their journeys and learnings attached to the topic of data accuracy. Our diverse panel features leaders from varying industries: Jodi Cook, DriveTime Alissa Hess, USAA Bank Tom Danchik, Citi Julie Moroschan, Experian Each will speak to how they’ve overcome challenges to introduce a data quality program into their respective organizations, as well as best practices around assessing, monitoring and correcting credit reporting issues. One speaker will even touch on the challenging topic of securing funding for a data quality program, considering budgets are most often allocated to strategies, products and marketing directly tied to driving revenue. All lenders are advised to maintain a full 360-degree view of data reporting, from raw data submissions to the consumer credit profile. Better data input equals fewer inaccuracies, and an overarching data integrity program, can deliver  a comprehensive view that satisfies regulators, improves the customer experience and provides better insight for internal decision making. To learn more about implementing a data quality plan for your organization, check out Vision 2016.

Surveillance and fraud staging are the seemingly benign and often-transparent account activities that fraudsters undertake after an account has been compromised but before that compromise has been detected or money is moved.