With the rapid growth in the number of online marketplace lenders , and projections the field will continue to grow in 2016, winning the race to greater revenue and profitability is key to survival. In 2014, online marketplace lenders issued loans totaling around $12 billion in the United States. In a recent report, Morgan Stanley said it expects the U.S. number to grow to $122 billion by 2020, and the global number will surpass $280 billion in the same time period. Investors fear growth in acquisition costs will erode profitability as more online marketplace lenders enter the market. And as portfolios grow, there will be a need for greater sophistication as it pertains to managing accounts. Online marketplace lenders use a variety of different models to generate revenue including charging interest, loan origination and other service fees. However, regardless of the model, there are typically three key levers all should monitor in order to increase their odds for a profitable and sustainable future. 1. Cost per Account (CPA) CPA is more than a simple calculation spreading marketing cost across new account volume. Rather, it is a methodical evaluation of individual drivers such as channel lead cost, success rates, identity verification and cost of marketing collateral. When measured and evaluated at the granular lever, it is possible to make the most informed strategic decisions possible. Marketplace lenders will have to go much deeper than simply evaluating lead costs, clicks, completed and accepted applications, and funding/activation including whether customers take the loan proceeds or use a revolving product. Don’t forget ID verification and the costs associated with risk mitigation and determining if the low-risk customers are deciding to apply elsewhere. In addition, take into account marketing costs including collateral and channel strategies including any broadcast media, direct mail, web and social media expenses. Evaluate results across various product types – and don’t forget to take into account web content and layout, which can impact all metrics. 2. First Pay Default (FPD) FPD is not a long-term loan performance measure, but it is a strong indicator of lead source and vintage quality. It will most closely correlate to long-term loan performance in short-term loans and non-prime asset classes. It is also a strong indicator of fraud. The high value of online loans, combined with the difficulty of verifying online applicants, is making online lenders a prime target for fraud, so it is essential to closely monitor FPD. Online lenders’ largest single cost category is losses from unpaid loans with fraud serving as a primary driver of that number. It is important to evaluate FPD using many of the same segments as CPA. Online lenders must ask themselves the tough questions. Is a low-cost lead source worthwhile? Did operational enhancements really improve the customer experience and credit quality? 3. Servicing Online account servicing is generally the least costly means of servicing customers, an obvious advantage for online marketplace lenders. However, a variety of factors must be considered when determining the servicing channels to use. These include avoidance of customer backlash and regulatory scrutiny, servicing channel effectiveness in providing feedback regarding product design and administration, servicing policies and marketing collateral. Already, we know the legal and regulatory landscape will evolve as policy makers assess the role of marketplace lending in the financial system, while a recent federal appeals court ruling increases the risk that courts could deem some loans void or unenforceable, or lower the interest rates on them. An effective customer complaint escalation policy and process must also be created and allow for situations when the customer is not “right.” Voice of the customer (VOC) surveys are an effective method of learning from the customer and making all levels of staff know the customer better, leading to more effective marketing and account servicing. Lastly, online lenders can’t ignore social media. They should be prepared for customers, especially millennials, to use it as a means to loudly complain when dissatisfied. But also remember that the same media can be an excellent medium for two-way engagement and result in creating raving fans. A Final Consideration As online marketplace lenders continue to come of age, they are likely to find themselves facing increased competition from incumbent consumer lenders, so optimizing for profitability will be essential. Assessing these three key areas regularly will help in that quest and establish their business for a sustainable future. For more information, visit www.experian.com/marketplacelending.

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

Thanks to a recent announcement from the Internal Revenue Service, identity theft protection will now be considered a non-taxable benefit.

The new year has started, the champagne bottles recycled. Bye-bye holidays, hello tax season. In fact, many individuals who are expecting tax refunds are filing early to capture those refunds as soon as possible. After all, a refund equates to so many possibilities – paying down debt, starting a much-needed home improvement project or perhaps trading up for a new vehicle. So what does that mean for lenders?  As consumers pocket tax refunds, the likelihood of their ability to make payments increases. By the end of February 2014, more than 48 million tax refunds had been issued according to the IRS – an increase of 5.6 percent compared to the same time the previous year. As of Feb. 28, the average refund in 2014 was $3,034, up 3 percent compared to the average refund amount for the same time in 2013. To capitalize on this time period, introducing collection triggers can assist lenders with how to manage and collect within their portfolios. Aggressively paying down a bankcard, doubling down on a mortgage payment or wiping out a HELOC signal to the lender a change in positive behavior, but without a trigger attached, it can be hard to pinpoint which customers are shifting from their status quo payments. Experian actually offers around 100 collection triggers, but lenders do not need all to seek out the predictive insights they require. A “top 20” list has been created, featuring the highest percentages in lift rates, and population hit rates. Experian has done extensive analysis to determine the top-performing collection triggers. Among the top 15 to 20 triggers, the trigger hit rate ranged from 2 to 8 percent on an average client’s total portfolio, taking into consideration liquidation rates, average percent of payment lifts, lift in liquidation rates over the baseline liquidation, percent of overall portfolio that triggered, percent of overall portfolio that triggered only on the top-selected triggers, and percent of volume by trigger on the total customers that had a trigger hit. With that said, it is essential to implement the right strategy that includes a good mixture of the top-performing triggers. The key is diversifying and balancing trigger selection and setting triggers up during opportune times. Tax season is one of those times. Some of the top-ranked triggers include: Closed-Zero Balance Triggers: This is when a consumer’s account is reported as closed after being delinquent for a certain number of days. Specifically, the closed-zero balance trigger after being delinquent for 120 days has the highest percent of payment lift over an average payment that you would receive from a customer (at a 710 percent lift rate). These triggers are good indicators the consumer is showing positive improvement, thus having a higher likelihood for collections. Paid Triggers: This is when a consumer’s account is reported as paid after being delinquent, in collections, etc. Five of the top 20 triggers are paid triggers. These triggers have good coverage and a good balance between high lift rates (100 percent to 500 percent) and percent of the triggered population. These triggers are also good indicators the consumer is showing positive improvement, thus having a higher likelihood for collections. Inquiry Triggers: This is when a consumer is applying for an auto loan, mortgage loan, etc. The lift rates for these triggers are lowest within the Top 20, but on the other hand, these triggers have the highest hit rates (up to a 33 percent hit rate). These triggers are good indicators consumers are seeking to open additional lines of credit. Home Equity Loan Triggers: These triggers indicate the credit available on a consumer’s home equity loan. They are specifically enticing to collectors due to the fact that home equity lines of credit are usually larger than your average credit on your bank card. The larger the line of credit, the more you are able to potentially collect. To learn more about collection triggers, visit https://www.experian.com/consumer-information/debt-collection.html

What is the true fraud cost? We must be vigilant and keep our acceptable fraud rate at zero

Consumer credit card debt reached $650 billion in Q3 2015 — the highest level since Q4 2009.

As thought leaders in every industry make predictions for what 2016 will bring, I’m guessing there will be a few constants. New couples will marry. Some couples, sadly, will divorce. Young and old will move – some into first homes – others downsizing or making moves cross-country for work. And waves of individuals will clamor to the latest devices – a new iPhone7, perhaps. The Apple rumors are already flying. Yes, no big surprises, right? But, do you know what all of these very standard life events have in common? These transitions often result in shifts in consumer data, sometimes making people more difficult to track and contact. New last names, new addresses, new phone numbers. Suddenly, the consumer data that companies and lenders have on file are dated, and when it comes time to reach out to these individuals, it’s a challenge to connect. But that is just the beginning. The Federal Communications Commission (FCC) is increasing its efforts to register consumer complaints and taking aggressive actions to stop companies from making unsolicited phone calls. And the penalties are steep. Fines per individual infraction can be anywhere from $500 to $1,500. Companies have been delivered hefty penalties in the thousands, and in some cases millions, of dollars, over the past few years. All have questions and are seeking to understand how they must adjust their policies and call practices. Now those multiple attempts to call and find a consumer can cost you – big time. No more “shotgun” approaches to identifying and using phones. It’s simply too risky. The Telephone Consumer Protection Act (TCPA), enforced by the FCC, has been around since 1991, but regulations have been closely scrutinized over the past year since the FCC announced a new ruling last summer to clarify hot topics. In their July paper, they aim to communicate the definition of an “auto-dialer,” consent-to-call rules, how to address the reassignment of cell phone numbers, and the new requirement for “one call” without liability. In short, the Declaratory Ruling has opened the door to even greater liability under the TCPA, leaving companies who place outbound customer calls at-risk for compliance violations. Some are projecting the TCPA rules will continue to become even more expansive in 2016, so companies must really assess their call strategies and put best practices in place to increase right-party contact rates. Suggestions include: Identify landline and cell phones for TCPA compliance with dialer campaigns Focus on right- and wrong-party contact to improve customer service Score phones or apply cut-off scores based on the confidence of the number or match Scrub often for updated or verified information Establish a process to identify ported phones Determine when and how often you dial cell phones Provide consumers user-friendly mechanisms– such as texting “STOP” or “UNSUBSCRIBE” – to opt-out of receiving TCPA-covered communications. Review the policies and practices of third-party vendors to ensure they are not sending communications violating the TCPA With the huge advancements in mobile technology and the ever-changing digital landscape, it’s challenging to keep up, but regulators are cracking down on violations, and a slew of lawyers are ready to file on behalf of unhappy consumers dialed one-too-many times. Beyond a best-practice review, tools and systems are available to identify the right number for those moving and changing consumers. And I’m sure we can all agree, those life events will continue to happen in 2016. Marriages, divorces, moves, new devices. They’re coming. As a result, it’s necessary to track the resulting changes to consumer data. Only then will you have a shot at avoiding negative customer experiences and fines.

As 2016 approaches, many people have identified their New Year’s resolutions, but the majority fail to stick to these resolutions.  While 45% of people make resolutions, only 8% are successful in achieving their goals. The most common resolution types:* To increase the likelihood of keeping resolutions, experts recommend setting small, attainable goals and regularly tracking progress. *Total is higher than 100% because of multiple resolutions >> New Year's Resolution Statistics

According to PlayNetwork.com, for the first time in two decades Mariah Carey’s “All I Want For Christmas Is You” is no longer the most-played holiday song in retail stores. The list of top songs includes: Rank Artist Title 1 The Shins Wonderful Christmastime 2 Mariah Carey All I Want For Christmas Is You 3 Christina Aguilera Christmas Time 4 Waitresses Christmas Wrapping 5 Jack Johnson Someday At Christmas 6 Kelly Clarkson Underneath the Tree 7 Michael Buble A Holly Jolly Christmas 8 Bing Crosby White Chistmas 9 Train What Christmas Means To Me 10 Ella Fitzgerald Have Yourself A Merry Little Christmas >> Top 20 Songs Heard by Holiday Shoppers

Device payments and the Internet of things has been colliding for a while now and net result could prove to benefit authentication of user identities

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.