Marketing & Acquisition
Credit invisibles often want access to credit, but are not easily scored via tradition credit models, and thus fall through the cracks. So how can lenders grow this population?
Experian’s 2016 Digital Marketer Report reveals digital marketing trends and the key issues impacting marketers today.
The numbers are staggering: more than $1.2 trillion in outstanding student loan debt, 40 million borrowers, and an average balance of $29,000. In fact, a recent Experian study revealed consumer debt is decreasing in every major consumer lending category with the exception of student loans. Student loans have increased by 84 percent since the recession (from 2008 to 2014) and surpassed home equity loans, home-equity lines of credit (HELOC), credit card debt and automotive debt. While the student loan issue has been looming for years, the magnitude is now taking center stage with each 2016 presidential candidate weighing in on solutions. In an effort to provide deeper insights into the student debt universe, Experian’s Kelley Motley and Holly Deason will share a new analysis at Vision 2016 in a session titled, Get educated – a study in the student lending marketplace. They will be joined by Gordon Cameron, executive vice president of PNC. Among the findings they will share include a snapshot of consumers with student loans from three time periods – Pre-recession (December 2007), Recession (December 2009) and Post-Recession/Current (December 2015). At each of these time periods, they will reveal trends around outstanding debt, delinquencies, originations, and also a compare how consumers with student loans rank when it comes to Vantage Score distribution. Finally, their data will explore opportunities for consolidation, showing segments that might be best suited for receiving offers from financial institutions based on Vantage Score, debt and total number of trades. Click here to learn more about Vision 2016 and the session on student loans.
Below are some key strategies that will help financial institutions build and continue banking to millennials.
April is Financial Literacy Month, a special window of time dedicated to educating Americans about money management. But as stats and studies reveal, financial education is always needed.
Who sports higher scores, less debt and more on-time payments? According to Experian’s latest analysis, women take the credit title.
Bankcard origination volumes reached $97.5 billion in Q4 2015, the highest level on record since Q3 2008 and an increase of 22% over the same quarter in 2014. The 60–89-days-past-due bankcard delinquency rate came in at .53% for Q4 2015 — significantly lower than the 1.22% delinquency rate back in Q3 2008. The increase in bankcard originations combined with lower delinquencies points to a positive credit environment. Lenders should stay abreast of the latest bankcard trends in order to adjust lending strategies and capitalize on areas of opportunity. >> Key steps to designing a profitable bankcard campaign
Large number of HELOC loans will soon be entering their HELOC end of draw period, giving lenders an opportunity for new finance options
For marketers, the start of a new year is an opportunity to look ahead.
What will 2016 hold for our market and the economy in terms of demand deposit accounts
As millennials continue to experience challenges in obtaining credit, Experian’s latest research finds that this population is very receptive to nonbank lenders for the ease, speed and accessibility they provide.
The world of online marketplace lending has grown tremendously over the past several years. Still, for as much hype as it has received, it’s important to note the sector represents only 1.1 percent of unsecured loans and 2.5 percent of small business loans in the United States. While the industry is still in its infancy, it's expected to grow at an annual rate of 47 percent in the U.S by 2020, according to Morgan Stanley. And as it transitions from its “start-up” phase into “adolescence,” many expect it will become a high-growth, mature and stable market, bringing great benefit to consumers of financial services. So what does the future hold for online marketplace lenders? Who better to weigh in than those in the space, going through the evolution, seeing challenges first-hand and keeping a pulse on where they need to invest in order to survive. This video features a diverse group of leaders in the online marketplace lending industry. // Peter Renton, Founder, Lend Academy Scott Sanborn, COO, Lending Club Sam Hodges, Co-founder, Funding Circle USA Andrew Smith, Partner, Covington & Burling Joseph DePaulo, CEO, College Ave. Kathryn Ebner, VP, Credibly Without stealing all of their thunder, a few key themes emerged for 2016. Online marketplace lenders will look to expand their product offerings into all credit verticals – personal loans, auto, student, small business and beyond. Expect competition to continue to heat up. Large institutional investors will increasingly back and test the space. Some players will partner with large banks. Many will explore scoring with the use of alternative data. Innovations to come in customer service and product expansion. Bottom line, alternative finance doesn’t seem so “alternative” anymore. As such, competition will heat up, and regulators will continue to keep an eye on business practices, processes and what it all means for consumers. To learn more about online marketplace lending, visit https://www.experian.com/business-services/landing/marketplace-lending.html
Millennials, now the largest generation in the United States, are taking longer to establish credit than earlier generations of young people.
The numbers are staggering: more than $1.2 trillion in outstanding student loan debt, 40 million borrowers, and an average balance of $29,000. With Millennials exiting college and buried in debt, it’s no surprise they are postponing marriage, having babies, home purchases and other major life events. While the student loan issue has been looming for years, the magnitude is now taking center stage. All of the 2016 presidential contenders have an opinion, and many are starting to propose solutions – some going as far as to call for “debt-free college.” The issue has also caught the eye of the Consumer Financial Protection Bureau (CFPB). In its 2014 report, the CFPB stated one in four recent college graduates is either unemployed or underemployed. They also stated when faced with the inability to repay their debt, students lack payment options and are unclear as to how to resolve their debt. There is a bright spot. Experian reported new findings stating that among adults 18 to 34 years of age, the average credit score of those who had at least one open student loan account was 640, 20 points higher than others in their age group. So, if paid in a timely manner, student loans can help younger people establish a decent credit history before they go on to buy things like homes and cars. Still, education is key. Today, only 24 U.S. states require some form of financial literacy to be included in their high school course work, with only four states (Utah, Montana, Tennessee and Virginia) devoting a full semester to a personal finance course. Education is needed before students start diving into the student loan scene, and also after they graduate, to ensure they understand their repayment options and obligations. The CFPB is calling on all parties (universities, colleges, private lenders, advocates, policy makers and even family members) to get involved. Providing financial education, financial literacy, repayment options, deferral methods and income calculators are all needed to tackle this growing problem. The Great Recession and slow recovery brought home the importance of a college degree in today’s economy for many Americans. Bachelor’s degree recipients fared much better than their counterparts who only finished high school. The question becomes how to fund it, and make sure students who rely on loans understand the finances attached to this milestone investment. Learn more about Experian’s student debt trends and credit education in The Increasing Need for Consumer Credit Education: A Review of Student Debt.
Last December, American Banker named online marketplace lending its innovation of the year as a result of the “industry’s rapid growth and evolution.” Meanwhile, in 2015, millennials scored headlines in nearly every publication imaginable – industries, politicians and academics all trying to understand and articulate how the now largest-living generation will influence how we work, live and lead. So perhaps it’s no surprise the two hot topics have collided this year. Gen Y is tech-dependent and Internet-enabled. They have increasingly grown to expect the tools and services they use to be available online, including anything and everything in the financial services space. Marketplace lenders are ever-so eager to sweep in and serve. Online and mobile solutions are certainly one thing, but Experian’s latest research reveals this generation is also very receptive to “non-bank” lenders for the ease, speed and accessibility they provide. 47 percent of millennials said they are likely to use alternative finance sources in the near future 57 percent reported they are willing to use alternative companies and services that innovate to meet their needs 13 percent said they’ve already taken out a loan from an alternate or non-bank lender As they come of age, hitting those big milestones – college graduations, marriage, starting families, making home purchases – Gen Y is wading through its financial options. Research and logic suggest millennials will without a doubt have a greater openness toward nontraditional banking, representing a huge market for online marketplace lenders. For the millennial entrepreneurs especially, marketplace lending is proving to be a good fit. “They are on the earlier curve of their small business ownership and entrepreneurial paths,” David Solis, sales performance manager at Bank of America, told CNN Money. “It makes sense they’re going to be pursuing alternative forms of lending.” Affluent millennials are another segment open to alternative financial services. A 2015 LinkedIn study on this specific target stated affluent millennials are particularly likely to envision a cashless, sharing-based economy in the future, where banks no longer serve as their primary financial institutions. Nearly seven out of 10 affluent millennials are likely to consider such offerings outside of the traditional financial services space, compared to just 47 percent of affluent Gen X’ers. The millennial generation may not fully understand all products traditional banks offer, since they rarely set foot in “brick-and-mortar” establishments, but they are a prime market for online investing and lending services. They’re more experimental, more digital, less loyal. In short, they are looking for financial services that are as tech-savvy as they are; those who don’t keep up may get left behind, and online marketplace lenders are certainly positioning themselves to win over this generation. To be most successful in capturing this highly sought-after generation, online marketplace lenders will need to continue to innovate both in terms of differentiating their product offerings and getting more sophisticated in their targeted marketing approach. As the online marketplace continues to expand with more players, heating up with increased competition, segmentation strategies will be key in finding the right borrowers and matching them with the right offer. As we head into 2016, there is no doubt many will continue to monitor the financial services trends emerging. Chances are online marketplace lenders and millennials will likely be attached to many of the headlines. For more information, visit www.experian.com/marketplacelending.