Data & Analytics

Article written by Alex Lintner, Experian's Group President of Consumer Information Services and Sandy Anderson, Experian's Senior Vice President of Client and Sales Operations Many consumers are facing financial stress due to unemployment and other hardships related to the COVID-19 pandemic. Not surprisingly, data scientists at Experian are looking into how consumers’ credit scores may be impacted during the COVID-19 national emergency period as financial institutions and credit bureaus follow guidance from financial regulators and law established in Section 4021 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). In a nutshell, Experian finds that if consumers contact their lenders and are granted an accommodation, such as a payment holiday or forbearance, and lenders report the accommodation accordingly, consumer scores will not be materially affected negatively. It’s not just Experian’s findings, but also those of the major credit scoring companies, FICO® and VantageScore®. FICO has reported that if a lender provides an accommodation and payments are reported on time consistent with the CARES Act, consumers will not be negatively impacted by late payments related to COVID-19. VantageScore® has also addressed this issue and stated that its models are designed to mitigate the impact of missed payments from COVID-19. At the same time, if as predicted, lenders tighten underwriting standards following 11 consecutive years of economic growth, access to credit for some consumers may be curtailed notwithstanding their score because their ability to repay the loan may be diminished. Regulatory guidance and law provide a robust response Recently, the Federal Reserve, along with the federal and state banking regulators, issued a statement encouraging mortgage servicers to work with struggling homeowners affected by the COVID-19 national emergency by allowing borrowers to defer mortgage payments up to 180-days or longer. The Federal Deposit Insurance Corporation stated that financial institutions should “take prudent steps to assist customers and communities affected by COVID-19.” The Office of the Comptroller of the Currency, which regulates nationally chartered banks, encouraged banks to offer consumers payment accommodations to avoid delinquencies and negative credit bureau reporting. This regulatory guidance was backed by Congress in passing the CARES Act, which requires any payment accommodations to be reported to a credit bureau as “current.” The Consumer Financial Protection Bureau, which has oversight of all financial service providers, reinforced the regulatory obligation in the CARES Act. In a statement, the Bureau said “the continuation of reporting such accurate payment information produces substantial benefits for consumers, users of consumer reports and the economy as a whole.” Moreover, the consumer reporting industry has a history of successful coordination during emergency circumstances, like COVID-19, and we’ve provided the support necessary for lenders to report accurately and consistent with regulatory guidance. For example, when a consumer faces hardship, a lender can add a code that indicates a customer or borrower has been “affected by natural or declared disaster.” If a lender uses this or a similar code, a notification about the disaster or other event will appear in the credit report with the trade line for the customer’s account and will remain on the trade line until the lender removes it. As a result, the presence of the code will not negatively impact the consumer credit score. However, other factors may impact a consumer’s score, such as an increase in a consumer’s utilization of their credit lines, which is a likely scenario during a period of financial stress. Suppression or Deletion of late payments will hurt, not help, credit scores In response to the nationwide impact of COVID-19, some lawmakers have suggested that lenders should not report missed payments or that credit bureaus should delete them. The presumption is that these actions would hold consumers harmless during the crisis caused by this pandemic. However, these good intentions end up having a detrimental impact on the whole credit ecosystem as consumer credit information is no longer accurately reflecting consumers’ specific situation. This makes it difficult for lenders to assess risk and for consumers to obtain appropriately priced credit. Ultimately, the best way to help is a consumer-specific solution, meaning one in which a lender reaches an accommodation with each affected individual, and accurately reflects that person’s unique situation when reporting to credit bureaus. When a consumer misses a payment, the information doesn’t end up on a credit report immediately. Most payments are monthly, so a consumer’s payment history with a financial institution is updated on a similar timeline. If, for example, a lender was required to suppress reporting for three months during the COVID-19 national emergency, the result would be no data flowing onto a credit report for three months. A credit report would therefore show monthly payments and then three months of no updates. The same would be true if a credit reporting agency were required to suppress or delete payment information. The lack of data, due to suppression or deletion, means that lenders would be blinded when making credit decisions, for example to increase a credit limit to an existing customer or to grant a new line of credit to a prospective customer. When faced with a blind spot, and unable to assess the real risk of a consumer’s credit history, the prudential tendency would be to raise the cost of credit, or to decrease the availability of credit, to cover the risk that cannot be measured. This could effectively end granting of credit to new customers, further stifling economic recovery and consumer financial health at a time when it’s needed most. Beyond the direct impact on consumers, suppression or deletion of credit information could directly affect the safety and soundness of the nation’s consumer and small business lending system. With missing data, lenders and their regulators would be flying blind as to the accurate information about a consumer’s risk and could result in unknowingly holding loan portfolios with heightened risk for loss. Too many unexpected losses threaten the balance of the financial system and could further seize credit markets. Experian is committed to helping consumers manage their credit and working with lenders on how best to report consumer-specific solutions. To learn more about what consumers can do to manage credit during the COVID-19 national emergency, we’ve provided resources on our website. For individuals looking to explore options their lenders may offer, we’ve included links to many of the companies and update them continuously. With good public policy and consumer-specific solutions, consumers can continue to build credit and help our economy grow.  

In today’s rapidly changing economic environment, the looming question of how to reduce portfolio volatility while still meeting consumers' needs is on every lender’s mind. So, how can you better asses risk for unbanked consumers and prime borrowers? Look no further than alternative credit data. In the face of severe financial stress, when borrowers are increasingly being shut out of traditional credit offerings, the adoption of alternative credit data allows lenders to more closely evaluate consumer’s creditworthiness and reduce their credit risk exposure without unnecessarily impacting insensitive or more “resilient” consumers. What is alternative credit data? Millions of consumers lack credit history or have difficulty obtaining credit from mainstream financial institutions. To ease access to credit for “invisible” and subprime consumers, financial institutions have sought ways to both extend and improve the methods by which they evaluate borrowers’ risk. This initiative to effectively score more consumers has involved the use of alternative credit data.1 Alternative credit data is FCRA-regulated data that is typically not included in a traditional credit report and helps lenders paint a fuller picture of a consumer, so borrowers can get better access to the financial services they need and deserve. How can it help during a downturn? The economic environment impacts consumers’ financial behavior. And with more than 100 million consumers already restricted by the traditional scoring methods used today, lenders need to look beyond traditional credit information to make more informed decisions. By pulling in alternative credit data, such as consumer-permissioned data, rental payments and full-file public records, lenders can gain a holistic view of current and future customers. These insights help them expand their credit universe, identify potential fraud and determine an applicant’s ability to pay all while mitigating risk. Plus, many consumers are happy to share additional financial information. According to Experian research, 58% say that having the ability to contribute positive payment history to their credit files makes them feel more empowered. Likewise, many lenders are already expanding their sources for insights, with 65% using information beyond traditional credit report data in their current lending processes to make better decisions. By better assessing risk at the onset of the loan decisioning process, lenders can minimize credit losses while driving greater access to credit for consumers. Learn more 1When we refer to “Alternative Credit Data,” this refers to the use of alternative data and its appropriate use in consumer credit lending decisions, as regulated by the Fair Credit Reporting Act. Hence, the term “Expanded FCRA Data” may also apply in this instance and both can be used interchangeably.

Originally posted by Experian Global News blog At Experian, we have an unwavering commitment to helping consumers and clients manage through this unprecedented period. We are actively working with consumers, lenders, lawmakers and regulators to help mitigate the potential impact on credit scores during times of financial hardship. In response to the urgent and rapid changes associated with COVID-19, we are accelerating and enhancing our financial education programming to help consumers maintain good credit and gain access to the financial services they need. This is in addition to processes and tools the industry has in place to help lenders accommodate situations where consumers are affected by circumstances beyond their control. These processes will be extended to those experiencing financial hardship as a result of COVID-19. As the Consumer’s Credit Bureau, our commitment at Experian is to inform, guide and protect our consumers and customers during uncertain times. With expected delays in bill payments, unprecedented layoffs, hiring freezes and related hardships, we are here to help consumers in understanding how the credit reporting system and personal finance overall will move forward in this landscape. One way we’re doing this is inviting everyone to join our special eight-week series of #CreditChat conversations surrounding COVID-19 on Wednesdays at 3 p.m. ET on Twitter. Our weekly #CreditChat program started in 2012 to help the community learn about credit and important personal finance topics (e.g. saving money, paying down debt, improving credit scores). The next several #CreditChats will be dedicated to discussing ways to manage finances and credit during the pandemic. Topics of these #CreditChats will include methods and strategies for bill repayment, paying down debt, emergency financial assistance and preparing for retirement during COVID-19. “As the consumer’s credit bureau, we are committed to working with consumers, lenders and the financial community during and following the impacts of COVID-19,” says Craig Boundy, Chief Executive Officer of Experian North America. “As part of our nation’s new reality, we are planning for options to help mitigate the potential impact on credit scores due to financial hardships seen nationwide. Our #CreditChat series and supporting resources serve as one of several informational touchpoints with consumers moving forward.” Being fully committed to helping consumers and lenders during this unprecedented period, we’ve created a dedicated blog page, “COVID-19 and Your Credit Report,” with ongoing and updated information on how COVID-19 may impact consumers’ creditworthiness and – ultimately – what people should do to preserve it. The blog will be updated with relevant news as we announce new solutions and tactics. Additionally, our “Ask Experian” blog invites consumers to explore immediate and evolving resources on our COVID-19 Updates page. In addition to this guidance, and with consumer confidence in the economy expected to decline, we will be listening closely to the expert voices in our Consumer Council, a group of leaders from organizations committed to helping consumers on their financial journey. We established a Consumer Council in 2009 to strengthen our relationships and to initiate a dialogue among Experian and consumer advocacy groups, industry experts, academics and other key stakeholders. This is in addition to ongoing collaboration with our regulators. Additionally, our Experian Education Ambassador program enables hundreds of employee volunteers to serve as ambassadors sharing helpful information with consumers, community groups and others. The goal is to help the communities we serve across North America, providing the knowledge consumers need to better manage their credit, protect themselves from fraud and identity theft and lead more successful, financially healthy lives. COVID-19 has impacted all industries and individuals from all walks of life. We want our community to know we are right there with you. Learn more about our weekly #CreditChat and upcoming schedule here. Learn more

There are more than 100 million people in the United States who don’t have a fair chance at access to credit. These people are forced to rely on high-interest credit cards and loans for things most of us take for granted, like financing a family car or getting an apartment. At Experian, we have a fundamental mission to be a champion for the consumer. Our commitment to increasing financial inclusion and helping consumers gain access to the financial services they need is one of the reasons we have been selected as a Fintech Breakthrough Award winner for the third consecutive year. The Fintech Breakthrough Awards is the premier awards program founded to recognize the fintech innovators, leaders and visionaries from around the world. The 2020 Fintech Breakthrough Award program attracted more than 3,750 nominations from across the globe. Last year, Experian took home the award for Best Overall Analytics Platform for our Ascend Analytical Sandbox™, a first-to-market analytics environment that promised to move companies beyond just business intelligence and data visualization to data insights and answers they could use. The year prior, Experian won the Consumer Lending Innovation Award for our Text for Credit™ solution, a powerful tool for providing consumers the convenience to securely bypass the standard-length ‘pen & paper’ or keystroke intensive credit application process while helping lenders make smart, fraud protected lending decisions. This year, we are excited to announce that Experian has been selected once again as a winner in the Consumer Lending Innovation category for Experian Boost™. Experian Boost – with direct, active consumer consent – scans eligible accounts for ‘boostable’ positive payment data (e.g., utility and telecom payments) and provides the means for consumers to add that data to their Experian credit reports. Now, for the very first time, millions of consumers benefit from payments they’ve been making for years but were never reflected on their credit reports. Since launching in March 2019, cumulatively, more than 18 million points have been added to FICO® Scores via Experian Boost. Two-thirds of consumers who completed the Experian Boost process increased their FICO Score and among these, the average score increase has been more than 13 points, and 12% have moved up in credit score category. “Like many fintechs, our goal is to help more consumers gain access to the financial services they need,” said Alex Lintner, Group President of Experian Consumer Information Services. “Experian Boost is an example of our mission brought to life. It is the first and only service to truly put consumers in control of their credit. We’re proud of this recognition from Fintech Breakthrough and the momentum we’ve seen with Experian Boost to date.” Contributing consumer payment history to an Experian credit file allows fintech lenders to make more informed decisions when examining prospective borrowers. Only positive payment histories are aggregated through the platform and consumers can remove the new data at any time. There is no limit to how many times one can use Experian Boost to contribute new data. For more information, visit Experian.com/Boost.  

While many companies are interested in implementing technology with advanced analytic capabilities, the concepts behind the technology can often be hard to understand. Demystifying the terminology around artificial intelligence and machine learning is one of the first steps for successful implementation. Discover what they mean for your financial institution in our new infographic: Learn more

Security. Convenience. Personalization. Finding the balance between these three priorities is key to creating a safe and low-friction customer experience. We surveyed more than 6,500 consumers and 650 businesses worldwide about these priorities for our 2020 Global Identity and Fraud Report: Most business are focusing on personalization, specifically in relation to upselling and cross-selling. This is frustrating customers who are looking for increases in both security and convenience. It’s possible to have all three. Read Full Report

Update: After closely monitoring updates from the WHO, CDC, and other relevant sources related to COVID-19, we have decided to cancel our 2020 Vision Conference. If you had the chance to experience tomorrow, today, would you take it? What if it meant you could get a glimpse into the future technology and trends that would take your organization to the next level? If you’re looking for a competitive edge – this is it. For more than 38 years, Experian’s premier conference has connected business leaders to data-driven ideas and solutions, fueling them to target new markets, grow existing customer bases, improve response rates, reduce fraud and increase profits. What’s in it for you? Everything to gain and nothing to lose. Are you a marketer? These sessions were made to drive your conversion rates to new heights: Know your customers via omnichannel marketing: Your customers are everywhere, but can you reach them? Learn how to drive business-expansion strategy, brand affinity and customer engagement across multiple channels. Plus, gain insight into connecting with customers via one-to-one messaging. By invitation only, the future of ITA marketing: An evolving landscape means marketers face new challenges in effectively targeting consumers while staying compliant. In this session, we’ll explore how you can leverage fair lending-friendly marketing data for targeting, analysis and measurement. Want the latest in technology trends? Dive into discussions to transform your customer experience: Credit in the age of technology transformation: Machine learning and artificial intelligence are the current darlings of big data, but the platform that drives the success of any big data endeavor is crucial. This session will dive into what happens behind the curtain. Put away your plastic – next-generation identity: An industry panel of experts discusses the newest digital identity and authentication capabilities – those in use today and also exciting solutions on the horizon. How about for the self-proclaimed data geeks? Analyze these: Alternative data: Listen in on an in-depth conversation about creative and impactful examples of using emerging data assets, such as alternative and consumer-permissioned data, for improved consumer inclusion, risk assessment and verification services. The next wave in open data: Experian will share their views on the potential of advanced data and models and how they benefit the global value chain – from consumer scores to business opportunities – regardless of local regulations. And the risk masters? Join us as we kick fraud to the curb: Understanding and tackling synthetic ID fraud: Synthetic IDs present a serious challenge for our entire industry. This expert panel will explore the current landscape – what’s working and what’s not, the expected impact of the next generation SSA eCBSV service, and best practice prevention methods. You are your ID – the new reality of biometrics: Consumers are becoming increasingly comfortable with biometrics. Just as CLEAR has transformed how we use our biometric identity to move through airports, sports venues and more, financial transactions can also be made friction-free. The point is, there’s something for everyone at Vision 2020. It’s not just another conference. Trade in stuffy tradeshow halls and another tri-fold brochure for the insights and connections you need to take your career and organization to the next level. Like technology itself, Vision 2020 promises to connect us, unify us and enable us all to create a better tomorrow. Join us for unique networking opportunities, one-on-one conversations with subject-matter experts and more than 50 breakout sessions with the industry’s most sought-after thought leaders.    

For financial marketers, long gone are the days of branded coffee mugs, teddy bears and the occasional print ad. Financial marketers are charged with customizing messaging and offerings at a customer level, increasing conversion rates, and moving beyond digital while keeping an eye on traditional channels. Additionally, financial marketing teams are having to do it all with less; according to CMO Survey, marketing budgets have remained stagnant for the last 6 years. Accordingly, competing in today’s world requires transforming your organization to address rapidly increasing complexity while containing costs.  Here are four tactics leading-edge firms are using to respond to changes in the market and better serve customers. More data, fewer problems Financial institutions ingest a mind-boggling variety of data, transaction details, transaction history, credit scores, customer preferences, etc. It can be difficult to know where to start or what to do with what is often terabytes of data. But the savviest teams are mining their unique data, along with bureau data, and other alternative and third-party data for rich decision making that drives differentiation. Getting analytical In financial institutions, advanced analytics has traditionally lived with lenders, underwriters, risk and fraud, departments, etc. But marketers too can find the value in the volume, velocity and variety of new data sources available to financial institutions. Using advanced analytics allows the most forward-thinking financial marketers to better target customers, personalize experiences, respond in near-real-time or even predict actions, and measure the impact of marketing investments. Customized quality time with customers Thanks to the likes of Google and Amazon, consumers have become accustomed to individualized interactions with firms they utilize. And this desire is just as present when it comes to their financial institution. But banks, credit unions and fintechs have been historically slow to respond. According to a recent Capgemini study, 70% of US consumers feel like their financial institution doesn’t understand their needs. The most dynamic financial marketing teams tailor quality experiences that increase consumer engagement and long-term relationships. All the channels, all the time The financial marketer’s job doesn’t stop at creating bespoke experiences for customers. Firms are also having to leverage an omnichannel approach to reach these clients, across an ever-growing number of channels and touchpoints. If that wasn’t enough, campaign cycles are shortening to match consumers changing demands and need for instant gratification—again, thanks Amazon. But the best teams determine which media or interaction resonates most effectively with clients, whether face-to-face, via an app, chatbot, or social media and have conversations across all of them seamlessly. It’s clear, financial firms must transform their approach to address increasing market complexity without increasing costs. Financial marketers are saddled with stagnant marketing budgets, proliferating media channels and shorter campaign cycles, with an expectation to continue delivering results. It’s a very tall order, especially if your financial institution is not leveraging data, analytics and insights as the differentiators they could be. CMOs and their marketing teams must invest in new technologies, strategies and data sources that best reflect the expectations of their customers. How is your bank or credit union responding to these financial marketing challenges? Watch our 2020 Credit Marketing Trends On-Demand Webinar  

Do you have 20/20 vision when it comes to the readiness of your organization? How financially healthy are your customers today? They are likely facing some challenges and difficult choices. Based on a study by the Center for Financial Services Innovation (CFSI), almost half of the US adult population - that’s 112.5 million - say they do not have enough savings to cover at least three months of living expenses. With debt rising and a possible recession on the horizon, it’s crucial to have a solid strategy in place for your organization. Here are three easy steps to help you prepare: Anticipate the recession before it arrives Gathering a complete view of your customers can be difficult if you have multiple systems, which can result in subjective, costly and inefficient processes. If you don’t have a full picture of your customers, it’s hard to understand their risk, behavior and ability to pay and to determine the most effective treatment decisions. Having the right data is only the first step. Using analytics to make sense of the data helps you better understand your customers at an individual level, which will increase recovery rates and improve the customer experience. Analytics can provide early-warning indicators that identify customers most likely to miss payments, predict future behavior, and deliver the best treatment option based on a customer’s specific situation or behavior. With a deeper understanding of at-risk customers, you can apply more targeted interventions that are specific to each customer, so you can be confident your collections process is individualized, efficient and fair. The result? A cost-effective, compliant process focused on retaining valuable customers and reducing losses.   What to look for: ✔ Know when customers are experiencing negative credit events ✔ View consumer credit trends that may not yet be visible on your own account base ✔ Watch for payment stress – understand the actual payment consumers are making. Is it changing? ✔ See individual trends and take action – are your customers sliding down to a lower score band? ✔ Understand how your client-base is performing within your own portfolio and with other organizations   Take immediate and impactful actions around risk mitigation and staffing Every interaction with consumers needs optimizing, from target marketing through to collections and recovery. Organizations that proactively modernize their business to scale and increase effectiveness before the next economic downturn may avoid struggling to address rising delinquencies when the economy corrects itself. This may improve portfolio performance and collection capabilities — significantly increasing recoveries, containing costs and sustaining returns. Identify underperforming products and inefficient processes by staff. Consider reassessing the data used and the manual processes required for making decisions. Optimize product pricing and areas where organizations or staff could automate the decision processes.   Areas to focus: ✔ Identity theft protection and account takeover awareness ✔ Improve underwriting strategy and automation ✔ Maximize profitability — drive spend, optimize approvals, line assignment and pricing ✔ Evaluate collection risk strategies and operational efficiencies   Design and deploy a strategy to be organizationally and technologically ready for change Communication is key in debt recovery. Failing to contact customers via their preferred channel can cause frustration and reduce the likelihood of recovery. Your customers are looking for a convenient and discreet way to negotiate or repay debt, and if you aren’t providing one, you’re incurring higher collections costs and lower recovery rates. With developments in the digital world, consumer interactions have changed. Most people prefer to communicate via mobile or online, with little to no human interaction. Behavioral analytics help to automate and decide the next best action, so you contact the right customer at the right time through the right channel. In addition, offering a convenient, discreet way to negotiate or repay debt can result in customers who are more engaged and more likely to pay. Online and self-service portals along with AI-powered chatbots use the latest technology to provide a safe and customer-centric experience, creating less time-consuming interactions and higher customer satisfaction. Your digital collections process is more convenient and less stressful for consumers and more profitable and compliant for you. Visualize the future... ✔ Superior customer service is embraced at the end of the customer life cycle as it is in the beginning ✔ Leverage data, analytics, software, and industry expertise to drive an automated collections process with fewer manual interventions ✔ Meet the growing expectation for digital consumer self-service by providing the ability to proactively negotiate and manage debt through preferred contact channels ✔ When economy and market conditions change for the worst, have the right data, analytics, software in place and be prepared to implement relevant collections strategies to remain competitive in the market   Don’t wait until the next recession hits. Our collaborative approach to problem solving ensures you have the right solution in place to solve your most complex problems and are ready for market changes. The combination of our data, analytics, fraud tools, decisioning software and consulting services will help you proactively manage your portfolio to minimize the flow of accounts into collections and modernize your collections and recovery processes. Learn More

It may be a new decade of disruption, but one thing remains constant – the consumer is king. As such, customer experience (and continually evolving digital transformations necessary to keep up), digital expansion and all things identity will also reign supreme as we enter this new set of Roaring 20s. Here are seven of the top trends to keep tabs of through 2020 and beyond. 1. Data that does more – 100 million borrowers and counting Traditional, alternative, public record, consumer-permissioned, small business, big business, big, bigger, best – data has a lot of adjectives preceding it. But no matter how we define, categorize and collate data, the truth is there’s a lot of it that’s untapped, which is keeping financial institutions from operating at their max efficiency levels. Looking for ways to be bigger and bolder? Start with data to engage your credit-worthy consumer universe and beyond. Across the entire lending lifecycle, data offers endless opportunities – from prospecting and acquisitions to fraud and risk management. It fuels any technology solution you have or may want to implement over the coming year. Additionally, Experian is doing their part to create a more holistic picture of consumer creditworthiness with the launch of Experian LiftTM in November. The new suite of credit score products combines exclusive traditional credit, alternative credit and trended data assets, intended to help credit invisible and thin-file consumers gain access to fair and affordable credit. "We're committed to improving financial access while helping lenders make more informed decisions. Experian Lift is our latest example of this commitment brought to life,” said Greg Wright, Executive Vice President and Chief Product Officer for Experian Consumer Information Services. “Through Experian Boost, we're empowering consumers to play an active role in building their credit histories. And, with Experian Lift, we're empowering lenders to identify consumers who may otherwise be excluded from the traditional credit ecosystem,” he said. 2. Identity boom for the next generation Increasingly digital lifestyles have put personalization and frictionless transactions on hyperdrive. They are the expectation, not a nice-to-have. Having customer intelligence will become a necessary survival strategy for those in the market wanting to compete. Identity is not just for marketing purposes; it must be leveraged across the lending lifecycle and every customer interaction. Fragmented customer identities are more than flawed for decisioning purposes, which could potentially lead to losses. And, of course, the conversation around identity would be incomplete without a nod to privacy and security considerations. With the roll-out of the California Consumer Privacy Act (CCPA) earlier this month, we will wait to see if the other states follow suit. Regardless, consumers will continue to demand security and trust. 3. All about artificial intelligence and machine learning We get it – we all want the fastest, smartest, most efficient processes on limited – and/or shrinking – budgets. But implementing advanced analytics for your financial institution doesn’t have to break the bank. And, when it comes to delivering services and messaging to customers the way they want it, how to do that means digital transformation – specifically, leveraging big data and actionable analytics to evaluate risk, uncover industry intel and improve decisioning. One thing’s for certain, financial institutions looking to compete, gain traction and pull away from the competition in this next decade will need to do so by leveraging a future-facing partner’s expertise, platforms and data. AI and machine learning model development will go into hyperdrive to add accuracy, efficiency, and all-out speed. Real-time transactional processing is where it’s at. 4. Customer experience drives decisioning and everything Faster, better, more frictionless. 2020 and the decade will be all about making better decisions faster, catering to the continually quickening pace of consumer attention and need. Platforms and computing language aside, how do you increase processing speed at the same time as increasing risk mitigation? Implementing decisioning environments that cater to consumer preferences, coupled with best-in-class data are the first two steps to making this happen. This can facilitate instant decisioning within financial institutions. Looking beyond digital transformation, the next frontier is digital expansion. Open platforms enable financial institutions to readily add solutions from numerous providers so that they can connect, access and orchestrate decisions across multiple systems. Flexible APIs, single integrations and better strategy and design build the foundation of the framework to be implemented to enhance and elevate customer experience as it’s known today. 5. Credit marketing that keeps up with the digital, instant-gratification age Know your customer may be a common acronym for the financial services industry, but it should also be a baseline for determining whether to send a specific message to clients and prospects. From the basics, like prescreen, to omni-channel marketing campaigns, financial institutions need to leverage the communication channels that consumers prefer. From point of sale to mobile – there are endless possibilities to fit into your consumers’ credit journey. Marketing is clearly not a one-and-done tactic, and therefore multi-channel prequalification offers and other strategies will light the path for acquisitions and cross-sell/up-sell opportunities to come. By developing insights from customer data, financial institutions have a clear line of sight into determining optimal strategies for customer acquisition and increasing customer lifetime value. And, at the pinnacle, the modern customer acquisition engine will continue to help financial institutions best build, test and optimize their customer channel targeting strategies faster than ever before. From segmentation to deployment, and the right data across it all, today and tomorrow’s technology can solve many of financial organizations’ age-old customer acquisition challenges. 6. Three Rs: Recession, regulatory and residents of the White House Last March, the yield curve inverted for the first time since 2007. Though the timing of the next economic correction is debated, messaging is consistent around making a plan of action now. Whether it’s arming your collections department, building new systems, updating existing systems, or adjusting rules and strategy, there are gaps every organization needs to fill. By leveraging the stability of the economy now, financial institutions can put strategies in place to maximize profitability, manage risk, reduce bad debt/charge-offs, and ensure regulatory compliance among their list of to-do’s, ultimately resulting in a more efficient, better-performing program. Also, as we near the election later this year, the regulatory landscape will likely change more than the usual amount. Additionally, we will witness the first accounts of what CECL looks like for SEC-filing financial institutions (and if that will suggest anything for how non-SEC-filing institutions may fare as their deadline inches closer), as well as see the initial implications of the CCPA roll out and whether it will pave a path for other states to follow. As system sophistication continues to evolve, so do the risks (like security breaches) and new regulatory standards (like GDPR and CCPA) which provide reasons for organizations to transform. 7. Focus on fraud (in all forms) With evolving technology, comes evolved fraudsters. Whether it’s loyalty and rewards programs, account openings, breaches, there are so many angles and entry points. Synthetic identity fraud is the fastest-growing type of financial crime in the United States. The cost to businesses is estimated to grow to $1.2 billion by 2020, according to the Aite Group. To ensure the best protection for your business and your customers, a layered, risk-based approach to fraud management provides the highest levels of confidence in the industry. Balance is key – while being compliant with regulatory requirements and conscious of user experience, ensuring consumers’ peace of mind is priority one. Not a new trend, but recognizing fraud and recognizing good consumers will save continue to save financial institutions money and reputational harm, driving significant improvement in key performance indicators. Using the right data (and aggregating multiple data sets) and digital device intelligence tools is the one-two punch to protect your bottom line. For all your needs in 2020 and throughout the next decade, Experian has you covered. Learn more

According to Experian’s Q3 2019 State of the Automotive Finance Market report, used vehicle financing increased across all credit tiers.

Electric vehicles have 2.08 percent of total VIO share through September 30, 2019

The challenges facing today’s marketers seem to be mounting and they can feel more pronounced for financial institutions. From customizing messaging and offerings at an individual customer level, increasing conversion rates, moving beyond digital while keeping an eye on traditional channels, and more, financial marketers are having to modernize their approach to customer acquisition. The most forward-thinking financial firms are turning to customer acquisition engines to help them best build, test and optimize their custom channel targeting strategies faster than ever before. But what functionality is right for your company? Here are 5 capabilities you should look for in a modern customer acquisition engine. Advanced Segmentation It’s without question that targeting and segmentation are vital to a successful financial marketing strategy. Make sure you select a tool that allows for advanced segmentation, ensuring the ability to uncover lookalike groups with similar attributes or behaviors and then customize messages or offerings accordingly. With the right customer acquisition engine, you should be able to build filters for targeted segments using a range of data including demographic, past behavior, loyalty or transaction history, offer response and then repurpose these segments across future campaigns. Campaign Design With the right campaign design, your team has the ability to greatly affect customer engagement. The right customer acquisition engine will allow your team to design a specific, optimized customer journey and content for each of the segments you create. When you’re ready to apply your credit criteria to the audience to generate a pre-screen, the best tools will allow you to view the size of your list adjusted in real-time. Make sure to look for an acquisition engine that can do all of this easily with a drag and drop user experience for faster and efficient campaign design. Rapid Deployment Once you finalize your audience for each channel or offer, the clock starts ticking. From bureau processing, data aggregation, targeting and deployment, the data that many firms are currently using for prospecting can be at least 60-days. When searching for a modern customer acquisition engine, make sure you choose a tool that gives you the option to fetch the freshest data (24-48 hours) before you deploy. If you’re sending the campaign to an outside firm to execute, timing is even more important. You’ll also want a system that can encrypt and decrypt lists to send to preferred partners to execute your marketing campaign. Support Whether you have an entire marketing department at your disposal or a lean, start-up style team, you’re going to want the highest level of support when it comes to onboarding, implementation and operational success. The best customer acquisition solution for your company will have a robust onboarding and support model in place to ensure client success. Look for solutions that offer hands-on instruction, flexible online or in-person training and analytical support. The best customer acquisition tool should be able to take your data and get you up and running in less than 30 days. Data, Data and more Data Any customer acquisition engine is only as good as the data you put into it. It should, of course, be able to include your own client data. However, relying exclusively on your own data can lead to incomplete analysis, missed opportunities and reduced impact. When choosing a customer acquisition engine, pick a system that gives your company access to the most local, regional and national credit data, in addition to alternative data and commercial data assets, on top of your own data. The optimum solutions can be fueled by the analytical power of full-file, archived tradeline data, along with attributes and models for the most robust results. Be sure your data partner has accounted for opt-outs, excludes data precluded by legal or regulatory restrictions and also anonymizes data files when linking your customer data. Data accuracy is also imperative here. Choose a marketing and technology partner who is constantly monitoring and correcting discrepancies in customer files across all bureaus. The best partners will have data accuracy rates at or above 99.9%.

As consumers prepare for the next decade, we look at how we’re rounding out this year. The results? The average American credit score is 682, an eight-year high. Experian released the 10th annual state of credit report, which provides a comprehensive look at the credit performance of consumers across America by highlighting consumer credit scores and borrowing behaviors. And while the data is spliced to show men vs. women, as well as provides commentary at the state and generational level, the overarching trend is up. Even with the next anticipated economic correction often top of mind for financial institutions, businesses and consumers alike, 2019 was a year marked by more access, more spending and decreasing delinquencies. Things are looking up. “We are seeing a promising trend in terms of how Americans are managing their credit as we head into a new decade with average credit scores increasing two points since 2018 to 682 – the highest we’ve seen since 2011,” said Shannon Lois, Senior Vice President and Head of EAS, Analytics, Consulting & Operations for Experian Decision Analytics. “Average credit card balances and debt are up year over year, yet utilization rates remain consistent at 30 percent, indicating consumers are using credit as a financial tool and managing their debts responsibly.”   Highlights of Experian’s State of Credit report: 3-year comparison 2017 2018 2019   Average number of credit cards 3.06 3.04 3.07 Average credit card balances $6,354 $6,506 $6,629 Average number of retail credit cards 2.48 2.59 2.51 Average retail credit card balances $1,841 $1,901 $1,942 Average VantageScore® credit score[1, 2] 675 680 682 Average revolving utilization 30% 30% 30% Average nonmortgage debt[3] $24,706 $25,104 $25,386 Average mortgage debt $201,811 $208,180 $231,599 Average 30 days past due delinquency rates 4.0% 3.9% 3.9% Average 60 days past due delinquency rates 1.9% 1.9% 1.9% Average 90+ days past due delinquency rates 7.3% 6.7% 6.8%   In the scope of the credit score battle of the sexes, women have a four-point lead over men with an average credit score of 686 compared to 682. Their lead is a continued trend since 2017 where they’ve bested their male counterparts. According to the report, while men carry more non-mortgage and mortgage debt than women, women have more credit cards and retail cards (albeit they carry lower balances). Generationally, Generations X, Y and Z tend to carry more debt, including mortgage, non-mortgage, credit card and retail card, than older generations with higher delinquency and utilization rates. Segmented by state and gender, Minnesota had the highest credit scores for both men and women, while Mississippi was the state with the lowest average credit score for females and Louisiana was the lowest average credit score state for males.     As we round out the decade and head full-force into 2020, we can reflect on the changes in the past year alone that are helping consumers improve their financial health. Just to name a few: Experian launched Experian BoostTM in March, allowing millions of consumers to add positive payment history directly to their credit file for an opportunity to instantly increase their credit score. Since then, there has been over 13 million points boosted across America. Experian LiftTM was launched in November, designed to help credit invisible and thin-file consumers gain access to fair and affordable credit. Long-standing commitments to consumer education, including the Ask Experian Blog and volunteer work by Experian’s Education Ambassadors, continue to offer assistance to the community and help consumers better understand their financial actions. From what we can tell, this is just the beginning. “Understanding the factors that influence their overall credit profile can help consumers improve and maintain their financial health,” said Rod Griffin, Experian’s director of consumer education and awareness. “Credit can be used as a financial tool. Through this report, we hope to provide insights that will help consumers make more informed decisions about credit use as we prepare to head into a new decade.” Learn more 1 VantageScore® is a registered trademark of VantageScore Solutions, LLC. 2 VantageScore® credit score range is 300 to 850. 3 Average debt for this study includes all credit cards, auto loans and personal loans/student loans.

It’s December, and if you’re like most credit union leaders, your strategic plan is distributed, and the 2020 budget is approved. Before you know it, you and your team will be off and running to pursue the New Year’s goals. Another thing most of us have in common is a strategic membership growth priority. New members are needed to help us take loan and deposit growth to the next level. Specifically, who are you looking for? It’s surprising how many credit union leaders have a difficult time clarifying their ideal member(s). They usually come up short after they have called out younger borrowers, active checking account users, prime credit, middle income, homeowners, etc. The reality is in today’s competitive market, these general audiences are not definitive enough. Many then go to market with a limited universe that is too generic to be highly effective. Savvy marketers have a much deeper understanding of who they are reaching and why. First, they have clearly defined the ideal member i.e. product profitability, relationship profitability, referrals, how they access the credit union, etc. Second, they use data, analytics and demographic segmenting to refine their search further to reveal the ideal member. They leverage information to understand what drives the potential members decision making. They understand that every potential member does not live the same type of life. They segment markets into groups to understand their shared values and life experiences. These segments include geographic, demographic, financial behavior, and motivation that includes psychographics and social values. Thus, armed with this information, they align the consumer’s needs with the credit union’s products, purpose and strategic goals. This clarity allows them to invest their marketing dollars for the best possible result. Most credit unions would identify “younger borrowers” as a desired member, so we’ve laid out two examples of just how different this member can look. Ambitious Singles – is a demographic segment comprised of younger cutting-edge singles living in mid-scale, metro areas that balance work and leisure lifestyles. Annual Median income $75k - $100K Highly educated First time home buyers Professionals, upwardly mobile Channel preferences for engaging with brands (and their offers) is while watching or streaming TV, listening to their favorite radio apps or while browsing the web on their phones. They are also quite email receptive (but subject lines must be compelling) Families Matter Most – This segment is comprised of young middle-class families in scenic suburbs, leading family focused lives. Annual Median income $75K - $99K Have children 4-6 yrs. old Educated Homeowners Child-related purchases Credit revolver and auto borrowers (larger vehicles) Go online for banking, telecommuting and shopping Both segments represent younger borrowers with similar incomes, but they have different loan needs, lifestyle priorities and preferences for engaging with a marketing offer. These are just two examples of the segmentation data that is available from Experian. The segmentation solution provides a framework to help credit unions identify the optimal customer investment strategy for each member segment. This framework helps the credit union optimize their marketing between differentiating segments. For some segments the investment may be directed toward finding the ideal member. Others may be made to find depositors. While many credit unions don’t have infinite marketing budgets or analytical resources, segmentation help marketers more efficiently and effectively pursue the best member or develop member personas to better resonate with existing members. The feedback we have heard from credit union leaders is that the solution is the best segmentation tool they have seen. Learn more about it here. What your team is up against Today, credit unions face national competitors that are using state-of-the-art data analytics, first-rate technology and in-depth market segmentation to promote very attractive offers to win new members, deposits, checking accounts and loans. Their offers have a look, feel, message and offer that are relevant to the person receiving the offer. Here are a few recent “offer” examples that we have heard of that should give you pause: Fintech companies, like the Lending Club offering auto loan refinances (the offer provides an estimate of refinance interest savings). The ad we saw had an estimated monthly payment of $80. PayPal Cashback Mastercard® – with a $300 early use cash bonus and 3% cash back on purchases. High limit personal loans that take minutes to apply and to be funded. Banks acting alone or in partnership with a fintech to offer online checking accounts with new account opening bonuses ranging from $300-$600. and of course, Quicken® Mortgage promoting low rates and fast and seamless origination. These are just a few recent examples from thousands of offers that are reaching your ideal member. Besides offering great rates, cash back, low fees and seamless service – these offers are guided by robust data analytics and consumer segmentation to reach and engage a well-defined, ideal consumer. Why it matters The 2020 race is on. Hopefully your team has clarity of the member(s) they want to reach, access to robust data analytics, in depth consumer insights, reliable credit resources and marketing tools they will need to compete in the toughest financial market any of us have likely ever seen. If you’re afraid that you can’t afford the right tools when it comes to marketing, consider what the dealer fee is for purchasing an indirect auto loan. What if the 2% or more fee was reallocated to finding organic loan growth with consumers you’re more likely to build a relationship with? Or consider the cost of consistently marketing to the wrong consumer segments with the wrong message, at the wrong time and in the wrong channels. What if you could increase your market engagement rate from 5% to 10%? Perhaps the best strategic question is can you afford NOT to have the best tools that support future membership growth? If you don’t win your ideal member, somebody else will. Learn More About Scott Butterfield, CUDE, CCUE Principal, Your Credit Union Partner Scott Butterfield is a trusted advisor to the leaders of more than 170 credit unions located throughout the United States. A respected veteran of the CU Movement, he understands the challenges and opportunities facing credit unions today. Scott believes that credit unions matter, and that consumers and small businesses need credit unions to now more than ever.