Tag: analytics

What is CECL? CECL (Current Expected Credit Loss) is a new credit loss model, to be leveraged by financial institutions, that estimates the expected loss over the life of a loan by using historical information, current conditions and reasonable forecasts. According to AccountingToday, CECL is considered one of the most significant accounting changes in decades to affect entities that borrow and lend money. To comply with CECL by the assigned deadline, financial institutions will need to access much more data than they’re currently using to calculate their reserves under the incurred loss model, Allowance for Loan and Lease Losses (ALLL). How does it impact your business? CECL introduces uncertainty into accounting and growth calculations, as it represents a significant change in the way credit losses are currently estimated. The new standard allows financial institutions to calculate allowances in a variety of ways, including discounted cash flow, loss rates, roll-rates and probability of default analyses. “Large banks with historically good loss performance are projecting increased reserve requirements in the billions of dollars,” says Experian Advisory Services Senior Business Consultant, Gavin Harding. Here are a few changes that you should expect: Larger allowances will be required for most products As allowances will increase, pricing of the products will change to reflect higher capital cost Losses modeling will change, impacting both data collection and modeling methodology There will be a lower return on equity, especially in products with a longer life expectancy How can you prepare? “CECL compliance is a journey, rather than a destination,” says Gavin. “The key is to develop a thoughtful, data-driven approach that is tested and refined over time.” Financial institutions who start preparing for CECL now will ultimately set their organizations up for success. Here are a few ways to begin to assess your readiness: Create a roadmap and initiative prioritization plan Calculate the impact of CECL on your bottom line Run altered scenarios based on new lending policy and credit decision rules Understand the impact CECL will have on your profitability Evaluate current portfolios based on CECL methodology Run different loss methods and compare results Additionally, there is required data to capture, including quarterly or monthly loan-level account performance metrics, multiple year data based on loan product type and historical data for the life of the loan. How much time do you have? Like most accounting standards, CECL has different effective dates based on the type of reporting entity. Public business entities that file financial statements with the Security and Exchange Commission will have to comply by 2020, non-public entity banks must comply by 2022 and non-SEC registered companies have until 2023 to adopt the new standard. How can we help: Complying with CECL may require you to gather, store and calculate more data than before. Experian can help you comply with CECL guidelines including data needs, consulting and loan loss calculation. Experian industry experts will help update your current strategies and establish an appropriate timeline to meet compliance dates. Leveraging our best-in-class industry data, we will help you gain CECL compliance quickly and effectively, understand the impacts to your business and use these findings to improve overall profitability. Learn more

Digital transformation is the new business model, and its powered by data and the insights gleaned from data.

You’ve Got Mail! Probably a lot of it. Birthday cards from Mom, a graduation announcement from your third cousin’s kid whose name you can’t remember and a postcard from your dentist reminding you you’re overdue for a cleaning. Adding to your pile, are the nearly 850 pieces of unsolicited mail Americans receive annually, according to Reader’s Digest. Many of these are pre-approval offers or invitations to apply for credit cards or personal loans. While many of these offers are getting to the right mailbox, they’re hitting a changing consumer at the wrong time. The digital revolution, along with the proliferation and availability of technology, has empowered consumers. They now not only have access to an abundance of choices but also a litany of new tools and channels, which results in them making faster, sometimes subconscious, decisions. Three Months Too Late The need to consistently stay in front of customers and prospects with the right message at the right time has caused a shortening of campaign cycles across industries. However, for some financial institutions, the customer acquisition process can take up to 120 days! While this timeframe is extreme, customer prospecting can still take around 45-60 days for most financial institutions and includes: Bureau processing: Regularly takes 10-15 days depending on the number of data sources and each time they are requested from a bureau. Data aggregation: Typically takes anywhere from 20-30 days. Targeting and selection: Generally, takes two to five days. Processing and campaign deployment: Usually takes anywhere from three days, if the firm handles it internally, or up to 10 days if an outside company handles the mailing. A Better Way That means for many firms, the data their customer acquisition campaigns are based off is at least 60 days old. Often, they are now dealing with a completely different consumer. With new card originations up 20% year-over-year in 2019 alone, it’s likely they’ve moved on, perhaps to one of your competitors. It’s time financial institutions make the move to a more modern form of prospecting and targeting that leverages the power of cloud technology, machine learning and artificial intelligence to accelerate and improve the marketing process. Financial marketing systems of the future will allow for advanced segmentation and targeting, dynamic campaign design and immediate deployment all based on the freshest data (no more than 24-48 hours old). These systems will allow firms to do ongoing analytics and modeling so their campaign testing and learning results can immediately influence next cycle decisions. Your customers are changing, isn’t it time the way you market to them changes as well?

Earlier this month, Experian joined FinovateSpring in San Francisco, CA to demonstrate innovations impacting financial health to over 1,000 attendees. The Finovate conference promotes real-world solutions while highlighting short-form demos and key insights from thought-leaders on digital lending, banking, payments, artificial intelligence and the customer experience. With more than 100 million Americans lacking fair access to credit, it's more important than ever for companies to work to improve the financial health of consumers. In addition to the show's abundance of fintech-centered content, Experian hosted an exclusive, cutting-edge breakout series demonstrating innovations that are positively impacting the financial health of consumers across the nation. Finovate Day One Overview While fintechs, banks, venture capitalist, entrepreneurs and industry analysts ascended on the general conference floor for a fast-paced day of demos, a select subset gathered for a luncheon presented by Experian North America CEO, Craig Boundy, and Group President, Alex Lintner. Attendees were given an in-depth look at new, alternative credit data streams and tools that are helping to increase financial access. Demos included: Experian Boost™: a free, groundbreaking online platform that allows consumers to instantly boost their credit scores by adding telecommunications and utility bill payments to their credit file. More than half a million consumers have leveraged Experian Boost, increasing their score by an average of 13 points. Cumulatively, Experian Boost has helped add more than 2.8 million points to consumers’ credit scores. Ascend Analytical Sandbox™: A first-of-its-kind data and analytics platform that gives companies instant access to more than 17 years of depersonalized credit data on more than 220 million U.S. consumers. It has been the most successful product launch in Experian’s history and recently earned the title of “Best Overall Analytics Platform” at this year’s Fintech Breakthrough Awards. Alternative Credit Data: Comprised of data from alternative credit sources, this data helps lenders make smarter and more informed lending decisions. Additionally, Experian’s Clear Data Platform is next-level credit data that adds supplemental FCRA-compliant credit data to enrich decisions across the entire credit spectrum. This new platform features alternative credit data, rental data, public records, consumer-permissioned data and more Upon conclusion of the luncheon, Alpa Lally, Experian’s Vice President of Data Business at Consumer Information Services, was interviewed for the HousingWire Podcast with Jacob Gaffney, HousingWire Editor in Chief, to discuss how new forms of data streams are helping improve consumers’ access to credit by giving lenders a clearer picture of their creditworthiness and risk. “Alternative credit data is different than traditional credit data and helps us paint a fuller picture of the consumer in terms of their ability to pay, willingness to pay and stability. It helps consumers get better access overall to the credit they deserve so that they can actively participate in the economy,” said Lally. Finovate Day Two Overview On the last day of the conference, expert speakers took to the main stage to analyze the latest fintech trends, opportunities and challenges. Alex Lintner and Sandeep Bhandari, Chief Strategy Officer and Chief Risk Officer at Affirm, participated in a fireside chat titled “Improving the Financial Health of America’s 100 Million Credit Underserved Consumers.” Moderated by David Penn, Finovate Analyst, the session explored the latest innovations, trends and technologies – from machine learning to alternative data – that are making a difference in positively impacting the financial health of Americans and expanding financial opportunities for underserved consumers. The panel discussed the efforts made to put financial health at the center of their business and the impact it’s had on their organizations. Following the fireside chat, Experian hosted a second lunch briefing, presented by Vijay Mehta, Chief Innovation Officer, and Greg Wright, EVP Chief Product Officer. The lunch included exclusive table discussions and open conversations to help attendees leave with a better understanding of the importance of prioritizing financial health to build trust, reach new customers and ultimately grow their business. "We are actively seeking out unresolved problems and creating products and technologies that will help transform the way businesses operate and consumers thrive in our society. But we know we can't do it alone," Experian North American CEO, Craig Boundy said in a recent blog post on Experian's fintech partnerships and Finovate participation. "That's why over the last year, we have built out an entire time of account executives and other support staff that are fully dedicated to developing and supporting partnerships with leading fintech companies. We've made significant strides that will help us pave the way for the next generation of lending while improving the financial health of more people around the world." For more information on how Experian is partnering with fintechs, visit experian.com/fintech or read our recent blog article on consumer-permissioned data for an in-depth discussion on Experian BoostTM.

Experian's annual State of Credit Report includes consumer credit data trends and a 10 year look back to when America started to enter the recession.

Day 2 of the annual conference covered topics ranging from alternative credit data and regulatory compliance to marketing analytics and fraud.

Experian wins for a second year in a row at coveted Fintech Breakthrough Award program, which received more than 3,500 nominations from across the globe.

Given the option between offshore and onshore data science resources, how do you decide? Let’s discuss a few things to consider.

An analytics environment can have enterprise-wide impact. Instant access to customer data, actionable analytics and intelligence tools drive the most value.

Gavin Harding, Senior Business Consultant, continues in this Q&A with insight that spans across all lenders and their use of alternative data.

In banking, as in baseball, data and analytics are key to making informed, data-driven decisions for your team and your business.

Any analytical environment is only as good as the data you put into it. Check these four key features when choosing the right one for your organization.

There are a lot of people talking about big data who are not fully leveraging the value of their data. How do you use data to innovate and stay competitive?

At their heart, car dealers have always been marketers. It's part of learning the trade and understanding the business to gain natural insight into modern marketing and advertising practices. One could even argue that the experience gained through knowledge passed down, trial and error, and exposure to the automotive game itself can yield better strategies than a marketing degree. With all that said, it's still important to have the right data to guide the decisions as well as the tools necessary to decipher the data. Although we have a vast amount of information at our fingertips, it's very possible to truly build on "actionable data" and allow it to define the parameters for a dealership's marketing strategy. One of the most important things to consider when you're building and enhancing your strategies is that the data allows for decision making on the macro and micro levels. We see trend reports, analytics, and test cases that can influence decisions on both sides of the spectrum. Making decisions on the macro level means wholesale changes or additions. For example, the overall effectiveness of a particular classified advertising website can be broken down to determine whether or not it's making the right type of impact. Dealers have so many options today to advertise both online and offline, so making sure that any particular venue is effective is key to success. On the micro level, decisions can be made about how to position the dealership within the individual venues. You may be a big believer in search pay-per-click advertising, for example, and data can help to guide you or your vendor partners to position the dealership properly on search. Knowing which messages about individual cars are effective can be a guide. Then, understanding what zip codes have the highest opportunity level for the individual model can mold your PPC spend, while demographic data can drive effective messaging and help you optimize campaign creative and landing pages. Having access to the data is only the first step. Looking at the data appropriately is an important second step that many dealers are missing. Putting it all together into a decision-driving model is the step that almost every dealer should embrace to allow them to make the best decisions, macro or micro.

  The auto industry has been riding a wave of prosperity for the past seven years, bouncing back nicely from the 2008 market collapse. But, it looks like rising sales of the past 10 years, are, well...a thing of the past. According to Alix Partners, 2016 sales of 17.5 million units might be the high-water sales mark, at least through 2022. Alix Partners says the next five years sales will range between 15.6 million to 16.8 million annually. Suddenly, it will be challenging for dealers to stay in strong growth mode. How can dealers best react to the tightening market? The Experian white paper “Data Tools Evolve to Give Dealers an Edge in a Tight Sales Market” takes a look at how new and improved data and analytic tools can provide deeper insights to help automotive retailers unlock sales. The paper reviews current market sales statistics, historical sales trends and how dealers reacted during similar market conditions in the past. In addition, the paper provides a look at the challenges faced by automotive retailers, in terms of shrinking gross profit, higher advertising expenses and increased competition. Automotive retailers also will find information on the importance of customer conquesting and a look at technology tools to help provide a deeper understanding and actionable intelligence about local markets. Data and analytics are no longer the private purview of large mega-dealers. The Experian white paper outlines today’s data tools that can be implemented quickly and cost effectively by dealers of any size. To learn more about these trends, download the paper here: https://www.experian.com/automotive/dealerwhitepaper.html