Tag: consumer data

This article was updated on February 13, 2024. Traditional credit data has long been a reliable source for measuring consumers' creditworthiness. While that's not changing, new types of alternative credit data are giving lenders a more complete picture of consumers' financial health. With supplemental data, lenders can better serve a wider variety of consumers and increase financial access and opportunities in their communities. What is alternative credit data? Alternative credit data, also known as expanded FCRA-regulated data, is data that can help you evaluate creditworthiness but isn't included in traditional credit reports.1 To comply with the Fair Credit Reporting Act (FCRA), alternative credit data must be displayable, disputable and correctable. Lenders are increasingly turning to new types and sources of data as the use of alternative credit data becomes the norm in underwriting. Today, lenders commonly use one or more of the following: Alternative financial services data: Alternative financial services (AFS) credit data can include information on consumers' use of small-dollar installment loans, single-payment loans, point-of-sale financing, auto title loans and rent-to-own agreements. Consumer permission data: With a consumer's permission, you can get transactional and account-level data from financial accounts to better assess income, assets and cash flow. The access can also give insight into payment history on non-traditional accounts, such as utilities, cell phone and streaming services. Rental payment history: Property managers, electronic rent payment services and rent collection companies can share information on consumers' rent payment history and lease terms. Full-file public records: Local- and state-level public records can tell you about a consumer's professional and occupational licenses, education, property deeds and address history. Buy Now Pay Later (BNPL) data: BNPL tradeline and account data can show you payment and return histories, along with upcoming scheduled payments. It may become even more important as consumers increasingly use this new type of point-of-sale financing. By gathering more information, you can get a deeper understanding of consumers' creditworthiness and expand your lending universe. From market segmentation to fraud prevention and collections, you can also use alternative credit data throughout the customer lifecycle. READ: 2023 State of Alternative Credit Data Report Challenges in underwriting today While unemployment rates are down, high inflation, rising interest rates and uncertainty about the economy are impacting consumer sentiment and the lending environment.2 Additionally, lenders may need to shift their underwriting approaches as pandemic-related assistance programs and loan accommodations end. Lenders may want to tighten their credit criteria. But, at the same time, consumers are becoming accustomed to streamlined application processes and responses. A slow manual review could lead to losing customers. Alternative credit data can help you more accurately assess consumers' creditworthiness, which may make it easier to identify high-risk applicants and find the hidden gems within medium-risk segments. Layering traditional and alternative credit data with the latest approaches to model building, such as using artificial intelligence, can also help you implement precise and predictive underwriting strategies. Benefits of using alternative data for credit underwriting Using alternative data for credit underwriting — along with custom credit attributes and automation — is the modern approach to a risk-based credit approval strategy. The result can offer: A greater view of consumer creditworthiness: Personal cash flow data and a consumer's history of making (or missing) payments that don't appear on traditional credit reports can give you a better understanding of their financial position. Improve speed and accuracy of credit decisions: The expanded view helps you create a more efficient underwriting process. Automated underwriting tools can incorporate alternative credit data and attributes with meaningful results. One lender, Atlas Credit, worked with Experian to create a custom model that incorporated alternative credit data and nearly doubled its approvals while reducing risk by 15 to 20 percent.3 Increase financial inclusion: There are 28 million American adults who don't have a mainstream credit file and 21 million who aren't scoreable by conventional scoring models.4 With alternative credit data, you may be able to more accurately assess the creditworthiness of adults who would otherwise be deemed thin file or unscorable. Broadening your pool of applications while appropriately managing risk is a measurable success. What Experian builds and offers Experian is continually expanding access to expanded FCRA-regulated data. Our Experian RentBureau and Clarity Services (the leading source of alternative financial credit data) have long given lenders a more complete picture of consumers' financial situation. Experian also helps lenders effectively use these new types of data. You can also incorporate the data into your proprietary marketing, lending and collections strategies. Experian is also using alternative credit data for credit scoring. The Lift Premium™ model can score 96 percent of U.S. adults — compared to the 81 percent that conventional models can score using traditional data.5 The bottom line Lenders have been testing and using alternative credit data for years, but its use in underwriting may become even more important as they need to respond to changing consumer expectations and economic uncertainty. Experian is supporting this innovation by expanding access to alternative data sources and helping lenders understand how to best use and implement alternative credit data in their lending strategies. 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 and can be used interchangeably. 2Experian (2024). State of the Economy Report 3Experian (2020). OneAZ Credit Union [Case Study] 4Oliver Wyman (2022). Financial Inclusion and Access to Credit [White Paper] 5Ibid.

This article was updated on January 26, 2024. Marketers are facing new challenges as third-party cookies crumble, and people use more devices throughout the day. Someone might comparison shop on their laptop in the morning, do more research on a tablet in the afternoon and finally decide to make a purchase on their phone before falling asleep at night. Being able to track these movements and insert yourself where appropriate can be difficult, but it's not impossible. One solution that's becoming increasingly attractive is creating a unified identity for each customer — and matching every piece of data and touchpoint to the single profile. For this to work, you need identity resolution. What is identity resolution? Identity resolution is the ongoing process of linking various identifying elements to create and expand a unique identity. The multi-step process can include: Securely onboarding data into a system Hashing or tokenizing personal information to improve security and privacy Setting aside information that can't be matched to an identity yet Matching or linking identifiers to a known unique identity Verifying that the identities and identifiers are accurate An identity graph (ID graph) is an essential part of identity resolution. It's the proprietary database that can pull in and store data from different sources and link them to a unique identifier — also known as a persistent identification number. Depending on the system and purpose, identity resolution may focus on creating a single identity for a person, household, or business. The information can come from internal sources, including a customer relationship management (CRM) tool, email marketing platforms, event management platforms, social media accounts, point-of-sales systems, and other digital and offline touchpoints. Additionally, third-party data sources, such as credit or demographic data, can contribute to building a more complete identity. And second-party data — information that's shared between brands or companies — can also be helpful. As new digital and offline information is created or found, it's linked to the existing persistent identification number in the ID graph. The process can happen in different ways. The resolution system could accurately match an engagement to a person with deterministic data, such as a hashed email address, assuming they logged in. If the person didn't log in, a probabilistic model may be able to accurately attribute the session to the person's identity based on indicators that it's likely the same person, such as a device ID or behavioral data. A hybrid approach combines deterministic and probabilistic approaches, which could be important for scaling. The goal and end result is often called a holistic, single-unified, or 360-degree view of a customer. READ MORE: Making identities personal Why does identity resolution matter? Identity resolution lets you know with whom you're connecting, which can be important throughout a customer's lifecycle. From marketing to collections, you want to be able to engage the right person on the right channel with the right offer. And that's only possible when you can accurately identify people. Consistent and accurate identity resolution is difficult, though. Experian's 2023 Identity and Fraud Report found that 92% of businesses have a strategy in place for identifying consumers online. But 63% of consumers are either "somewhat confident" or "not very confident" that businesses can accurately recognize them online. What are the benefits of identity resolution? It's a worthy goal to push toward, because you can use identity resolution solutions to: Consolidate your view of customers Companies may have multiple profiles of the same customer — one from an email list, another from their loyalty program and a third from an outdated system. Your customers are also interacting with you in different ways, perhaps logging into an account from their laptop in the morning while visiting your site from a phone at night. Identity resolution lets you connect all these elements to create a single profile. Build targeted and measurable marketing campaigns Once you have a single and consistent view of your customers, you can more accurately segment and target your marketing campaigns. Personalizing messages can increase engagement and effectiveness. And, equally important, knowing to who you don't want to send messages can help you avoid wasting marketing spending. Some identity resolution services can also help you track anonymous visitors and customize your marketing with look-alike models, which can identify people who are likely part of your target audience. You'll also be able to more accurately measure the effectiveness of a campaign. With a single customer view, it's easier to know if and how a targeted social media ad, television spot and emailed coupon worked together to create a sale. Increase customer experiences across brands When implemented throughout an organization, you can also use the single view of a customer to create a consistent experience across brands and business units. Each can benefit from a more holistic understanding of the customer and can contribute to building out customers' profiles.  Seamlessly confirm identities Identity resolution can also create a more frictionless experience for customers who want to create or log into your site, and it can help with detecting fraud and high-risk consumers. But keep data security top of mind. Consumers rank privacy (79%) and security (78%) much higher than login convenience (38%) when considering their online experience. What does an identity resolution solution look like? The need for and type of identity resolution can vary depending on a business' challenges and goals. For instance, large retailers often have a lot of first-party data — so much that it may be overwhelming. For them, an identity resolution solution that can organize internal data while enhancing it with external data points could be a priority. In contrast, a business with infrequent touchpoints might not have as much first-party data and could benefit from a solution that offers as much external information as possible. Some organizations are building their own internal identity resolution services to address these challenges, but many are looking to outside partners for identity resolution. When comparing partners, consider: Flexibility and scalability: Understand which data the solution can onboard and how quickly it can onboard data. Consider whether you'll want to be able to use real-time APIs or batch processing, and the limitations on how much data the provider can process at a time. Additionally, consider whether the ID graph will use persistent IDs that can change as you scale. Matching and analysis: Ask about the solution's approach and success with matching online and offline data and the options to integrate or append second and third-party data. If you want to be able to securely and privately share anonymized identities internally or with partners, make sure that's an option as well. Integration: Research whether the provider can easily integrate your existing services and vendors. Privacy: 73% of consumers say it's a business's responsibility to protect them online. Ask about the provider's experience and approach to storing and anonymizing data. Some solutions also have built-in activation tools. These let you build and launch omni-channel campaigns. They also analyze and report on how well your campaigns are performing. Get started today To learn more about the importance of digital identity and Experian's identity solutions, visit us today. Learn more

Well-designed underwriting strategies are critical to creating more value out of your member relationships and driving growth for your business. But what makes an advanced underwriting strategy? It’s all about the data, analytics, and the people behind it. How a credit union achieved record loan growth Educational Federal Credit Union (EdFed) is a member-owned cooperative dedicated to serving the financial needs of school employees, students, and parents within the education community. After migrating to a new loan origination system, the credit union wanted to design a more profitable underwriting strategy to increase efficiency and grow their business. EdFed partnered with Experian to design an advanced underwriting strategy using our vast data sources, advanced analytics, and recommendations for greater automation. After 30 months of implementing the new loan origination system and underwriting strategies, the credit union increased their loans by 32% and automated approvals by 21%. “The partnership provided by Experian, backed by analytics, makes them the dream resource for our growth as a credit union. It isn’t just the data… it’s the people.” – Michael Aubrey, SVP Lending at Educational Federal Credit Union Learn more about how Experian can help you enhance your underwriting strategy. Learn more

Growing deposits from existing customers and members is an ongoing priority for banks and credit unions. However, it can be challenging to identify the best candidates. Who among our customer base has significant deposit growth potential? Who among our member base has the financial capacity to take advantage of special offers? With an effective deposit growth strategy, you can find the best customers and members to engage.  What does an effective deposit growth strategy look like?  An effective bank and credit union deposit growth strategy is powered by differentiated data and digital engagement. Let’s take a closer look at each element:  Data: A comprehensive measurement of consumers’ income and insights into their banking behaviors can help you identify those with the greatest deposit growth potential. You can then use supplemental data, such as lifestyle and demographic data, to customize deposit offers based on your customers or members’ unique needs.  Digital engagement: To further personalize this experience, consider sending deposit offers through your mobile or online banking platforms when there are triggering events on their account. Not only does this optimize the digital experience, but it also helps boost the chances of your customers or members responding.  Finding the right partner  Experian’s solutions can help your business secure deposits and customer relationships in today’s crowded market, including Banking InsightsTM. Banking Insights provide greater visibility into integrated demand deposit account activity, such as checking and saving account inquiries, to help you better assess consumers’ financial stability. By using these insights to power your banking growth strategies, you can identify those with the financial capacity to bring in more deposits.  Read our e-book to learn about other solutions that can help you boost deposits, strengthen existing relationships, and provide seamless digital experiences. Read e-book

Automation, artificial intelligence and machine learning are at the forefront of the continued digital transformation within the world of collections. And organizations from across industries — including healthcare, financial services and the public sector — are learning how automated debt collection can improve their workflows and strategies. When implemented well, automation can ease pressure from call center agents, which can be especially important when there's a tight labor market and retention is top of mind for every employer. Automated systems can also help improve recovery rates while minimizing the risk of human error and the corresponding liability. These same systems can increase long-term customer satisfaction and lifetime value. Deeper insights into consumers' financial situations and preferences allow you to avoid wasting resources and making contact when consumers are truly unable to pay. Instead, monitoring and following up with their preferred contact method can be a more successful approach — and a better experience for consumers. Three tips for automated debt collection Automation and artificial intelligence (AI) aren't new to collections. You may have heard about or tried automated dialing systems, chatbots, text message services and virtual negotiators. But the following three points can be important to consider as the technology and compliance landscapes change. 1. Good automation depends on good data Whether you're using static automated systems to improve efficiencies or using a machine learning model that will adapt over time, the data you feed into the system needs to be accurate. The data can be internal, from call center agents and your customers, and external sources can help verify and expand on what you know. With your internal systems, consider how you can automate processes to limit human errors. For example, you may be able to auto-fill contact information for customers and agents — saving them time and avoiding typos that can cause issues later. External data sources can be helpful in several ways. You can use third-party data as a complementary resource to help determine the best address, phone number or email address to increase right-party contact (RPC) rates. External sources can also validate your internal data and automatically highlight errors or potentially outdated information, which can be important for maintaining compliance. Robust and frequently updated datasets can make your collection efforts more efficient and effective. An automated system could be notified when a debtor resurfaces or gets a new job, triggering new reminders or requests for payment. And if you're using the right tools, you can automatically route the account to internal or external servicing and prioritize accounts based on the consumer's propensity to pay or the expected recovery amount. LEARN MORE: Advanced analytics involves using sophisticated techniques and tools to analyze complex datasets and extract valuable insights. Learn about the benefits of advanced analytics in delinquent debt collection. 2. Expand consumers' communication options and choices Your automated systems can suggest when and who to contact, but you'll also want them to recommend the best way to contact consumers. An omnichannel strategy and digital-first approach is increasingly the preferred method by consumers, who have become more accustomed to online communications and services. In fact, companies with omnichannel customer engagement strategies retain on average 89% of their customers compared to 33% of retention rates for companies with weak omnichannel strategies. Organizations can benefit by using alternative communication methods, such as push notifications, as part of an AI-driven automated process. These can be unobtrusive reminders that gently nudge customers without bothering them, and send them to self-cure portals. Many consumers may need to review the payment options before committing — perhaps they need to check their account balances or ask friends or family for help. Self-service options through an app or web portal can give them choices, such as a single payment or payment plan, without having to involve a live agent. 3. Maintaining compliance must be a priority Organizations need to be ready to adjust to a rapidly changing compliance environment. Over the last few years, organizations have also had to react to changes that can impact Telephone Consumer Protection Act (TCPA) compliance. The automated systems you use should be nimble enough to comply with required changes, and they should be able to support your overall operation's compliance. In particular, you may want to focus on how automated systems collect, verify, safeguard and send consumers' personal information. Why partner with Experian? Whether you're looking to explore or expand your use of automated systems in your collection efforts, you want to make sure you're taking the right approach. Experian helps clients balance effective collections and a great customer experience within their given constraints, including limited budgets and regulatory compliance. The Experian Ascend Intelligence Platform and award-winning PowerCurve® Collections solutions are also making AI-driven automated systems accessible to more lenders and collectors than ever before. Taking a closer look at Experian's offerings, we can focus on three particular areas: Industry-leading data sources Experian's data sources go well beyond the consumer credit database, which has information on over 245 million consumers. Clients can also benefit from alternative financial services data, rental payment data, modeled income estimates, information on collateral and skip tracing data. And real-time access to information from over 5,000 local exchange carriers, which can help you validate phone ownership and phone type. Tools for maximizing recovery rates Experian helps clients turn data into insights and decisions to determine the best next step. Some of Experian's offerings include: Collection AdvantageSM: A one-stop shop for comprehensive and efficient debt collection, Collection AdvantageSM allows you to segment, prioritize and make contact on collections accounts by leveraging speciality collection scoring models. PriorityScore for CollectionsSM: Over 60 industry-specific debt recovery scores that can help you prioritize accounts based on the likelihood to pay or expected recovery amount. RecoveryScore 2.0: Helps you prioritize charged-off accounts based on collectability. TrueTrace™ and TrueTrace Live™: Find consumers based on real-time contact information. We've seen a 10 percent lift in RPC with clients who use Experian's locating tools, TrueTrace or TrueTrace Live. Collection Triggers℠: Sometimes, waiting is the best option. And with an account monitoring tool like Collection Triggers℠, you'll automatically get notified when it makes sense to reach out. RPC contact scores: Tools like Phone Number ID™ and Contact Monitor™ can track phone numbers, ownership and line type to determine how to contact consumers. Real-time data can also increase your RPC rates while limiting your risk. LEARN MORE: See how Collection Triggers can help you establish a more profitable debt collection strategy to increase recovery rates. You can use these, and other, tools to prioritize collection efforts. Experian clients also use different types of scores that aren't always associated with collections to segment and prioritize their collection efforts, including bankruptcy and traditional credit-based scores. Custom models based on internal and external scores can also be beneficial, which Experian can help you build, improve and house. Prioritize collections activities with confidence Collections optimization comes down to making the right contact at the right time via the right channel. Equally important is making sure you're not running afoul of regulations by making the wrong contact. Experian's data standards and hygiene measures can help you: Identify consumers who require special handling Validate email addresses and identify work email addresses Get notified when a line type or phone ownership changes Append new contact information to a consumer's file Know when to reach out to consumers to update contact information and permissions Recommend the best way to reach consumers Automated tools can make these efforts easier and more accurate, leading to a better consumer experience that increases the customer's lifetime value and maximizes your recovery efforts. Learn more

As 2023 unfolds, rental housing owners and operators find themselves faced with a slightly different market than in the recent past. While rents are still high, rent growth has slowed somewhat, and the prospect of a cooler U.S. economy means more renters could be facing economic hardships in the months ahead. So, who is today's renter? In The State of the U.S. Rental Housing Market, a new report from Experian, we uncover that today’s renters are typically younger. According to our data derived from Experian RentBureau® and our analysis, 68.8% of today’s renters are either millennials (41.8%) or Gen Z (27%). Meanwhile, 17.3% are Gen X, 11.9% are baby boomers and only 2.2% are from the Silent Generation. Similarly, when you look at the renters who have a higher propensity to move — and thus need a new apartment or home to rent — they tend to skew younger. Our analysis shows that, of the renters who made two or more moves during the last two years, 43.2% were Gen Y (millennials). The younger Gen Y segment accounts for 25.2% of the frequent movers. As the population of renters has increased over the past decade, the concentration of growth appears to be among households earning $75,000 or more in annual income. About 7.6 million of these households were renters in 2009; by 10 years later, that figure had increased to 11.2 million. What is their financial status? Also, by some measurements, U.S. consumers — and, by extension, renters — improved their financial standing during the pandemic era. Credit scores rose as consumers used stimulus payments to pay down debt and save, but this trend is starting to normalize. The median conventional credit score rose above 700 in 2022, up from just above 680 in 2019. Still, according to Experian RentBureau, 63% of all renter households are low- to moderate-income earners, meaning they make less than 80% of the area median income. Furthermore, the average renter spends 38.6% of their income on rent. Households that spend more than 30% of their income on housing costs — including rent or mortgage payments, utilities and other fees — are considered “housing cost burdened” by the U.S. Department of Housing and Urban Development. For more insight and analysis of today’s rental-housing market, click here to download your free copy of The State of the U.S. Rental Housing Market report.

After a period of historic, double-digit rent growth and razor-thin vacancy rates, the rental housing market has shown some signs of softening in recent months. And economic uncertainty still looms. The potential of a downturn this year and the existing economic strains faced by large swaths of renters may impact many rental-housing owners and managers nervous about their ability to find renters who can fulfill their lease terms. In The State of the U.S. Rental Housing Market, a new report from Experian, our data scientists and analysts offer key insights into the U.S. housing market and its impact on renters. The analysis in this report is derived from synthesizing various data samples and sources, including Experian credit attributes and models as well as data from the U.S. Census Bureau and Experian RentBureau®. Experian RentBureau is the largest rental payment database and contains over 4.4 million transactions and more than 25 million renter profiles. This report yields three major takeaways: Soaring interest rates and a slowing mortgage sector over the last year have taken heat out of the homebuying market, leading to more renters remaining in the renter pool. Inflation and other economic strains continue to squeeze renters’ finances. As rent prices increase and negative payment activity becomes more frequent, rental-housing owners and operators are striving to grow without expanding default risk and need to find renters with the best chances of fulfilling the terms of their leases. Among the report’s other notable findings: The average renter spends 38.6% of their income on rent. Households that spend more than 30% of their income on housing costs — including rent or mortgage payments, utilities and other fees — are considered “housing cost burdened” by the U.S. Department of Housing and Urban Development. Experian data shows 28% of renters with negative payment activity in 2022 (negative payment activity is defined as having late charges, insufficient funds, write-offs or outstanding balances). The figure represented an increase of 5.7 percentage points from 2021 and 3.8 percentage points from 2020. Also of note, low-to-moderate income renters are twice as likely to have a negative payment activity compared to other renters. Rent-to-income ratios are highest in the West and the Northeast. Among all 50 states, the leaders are Washington D.C. (40.9%), California (39.7%), Washington state (35.6%), Utah (35.6%) and New York (35.3%). Keep pace with trends in future blog posts that will dive deeper into the current conditions affecting the rental housing market and renters. In the meantime, click here to download your free copy of The State of the U.S. Rental Housing Market Report in full.

Credit portfolio management has often involved navigating uncertainty, but some periods are more extreme than others. With the right data and analytics you can gain deeper insight into financial behaviors and risk to make better decisions and drive profitable growth. Along with access to an increasing amount of data, advanced analytics can help lenders more accurately: Forecast losses under different economic scenarios to estimate liquidity requirements. Identify fraud by detecting behaviors that could indicate identity theft, account takeover fraud, first-party or synthetic identity fraud. Incorporate real-time and alternative data,1 such as cash flow transaction data and specialty bureau data, in decisioning and scoring to accurately assess creditworthiness and expand your lending pool without taking on undue risk. Precisely segment consumers using internal and external data to increase automation during underwriting and identify cross-sell opportunities. Improve collections using AI-driven strategies and automated debt collection software to enhance operations and increase recovery rates. It’s imperative to take a proactive approach to portfolio monitoring. Monthly portfolio reviews with bureau scores, credit attributes and specialized scores — and using the results to manage credit lines and loan terms — are critical during volatile times. View our interactive e-book for the latest economic and consumer trends and learn how to set your portfolio up to succeed in any economic cycle. Download e-book 1"Alternative credit data" 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.

To reach customers in our modern, diverse communications landscape, it's not enough to send out one-size-fits-all marketing messages. Today's consumers value and continue to do business with organizations that put them first. For financial institutions, this means providing personalized experiences that enable your customers to feel seen and your marketing dollars to go further. How can you achieve this? The answer is simple: a customer-driven credit marketing strategy. What is customer-driven marketing? Customer-driven marketing is a strategy that focuses on putting consumers first, rather than products. It means thinking about the needs, wants and motivations of the prospects you're trying to reach and centering your marketing campaigns and messages around that audience. When done well, this comprehensive approach extends beyond the marketing team to all members of a company. The benefits of customer-driven credit marketing One benefit of this type of personalized credit marketing is that you can target customers with a potentially higher lifetime value. By focusing your marketing efforts on the right prospects, you'll ensure that budgets are being spent wisely and that you're not wasting valuable marketing dollars communicating with consumers who either won't respond or aren't a fit for your business. Customer-driven marketing enables you to identify and reach the most profitable, highly responsive prospects in the most efficient way, while also engaging with current customers to optimize retention rates. When you create marketing programs that are customer-driven, you're not just selling; you're building relationships. Rather than being simply a service provider, you become a trusted financial partner and advisor. This kind of data-driven customer experience can help you onboard more customers and retain them for longer, translating to better results when it comes to your bottom line. Customer-driven marketing: How to get started Customer-driven marketing is less funnel, more spiral. You research, test, refine and repeat, all while taking into account customer feedback and campaign results. It starts with defining your target audience and creating customer personas. As you do this, think about all the factors that are involved in your target customers’ path to purchase, from general awareness and growing need to the final motivation that pushes them to commit. You'll also want to consider what their pain points may be and the barriers that may prevent them from buying. Next, develop a marketing strategy that aligns with your target customers' needs and outlines how and where you'll reach them. It may also be helpful to gather and respond to customer feedback to ensure the value propositions in your campaigns are aligned with customer expectations. These insights can help you refine your messaging, resulting in increased response and retention rates. Use the right data to extend relevant credit offers When you send credit offers, you want to ensure they're reaching the right prospects at the right time. You also want to make sure these credit offers are relevant to the consumers that receive them. That's where quality data comes in. By optimizing your data-driven customer segmentation, you can develop timely and personalized credit offers to boost response rates. For example, you might have a target audience of consumers who are both creditworthy and looking for a new vehicle. Segmenting this audience into smaller groups by demographic, life stage, financial and other factors helps you create credit marketing campaigns that speak to each type of customer as an individual, not just a number. Meet consumers on their preferred channels Nowadays, consumer behavior is more fragmented than ever. This is relevant not just from a demographic point of view, but from the perspective of purchasing behavior. Customer-driven marketing helps you interact with prospects as individuals so that the value propositions they encounter are a true fit for their life situation. For instance, different age groups tend to spend time on different platforms. But why they're on those channels at any particular time matters too. Messaging aimed at prospects in their leisure time should be different from messaging they'll encounter when actively researching potential purchases. Keep up with your customers This is one answer to the question of how to improve customer retention as well. Research demonstrates that it's more cost-effective to keep a customer than to acquire a new one. When you tailor retention efforts with a well-thought-out customer-driven marketing strategy, you're likely to boost retention rates, which in many cases lead to better profits over time. Importance of a customer-driven marketing strategy Putting consumers at the center of credit marketing strategies — and at the center of your business as a whole — is the foundation for personalized experiences that can ultimately increase response rates and customer satisfaction. For more on how your organization can develop an effective customer-driven marketing strategy, learn about our credit marketing solutions.

A data-driven customer experience certainly has a nice ring, but can your organization deliver on the promise? What we're really getting at is whether you can provide convenience and personalization throughout the customer journey. Using data to personalize the customer journey About half of consumers say personalization is the most important aspect of their online experience. Forward-thinking lenders know this and are working to implement digital transformations, with 87 percent of business leaders stating that digital acceleration has made them more reliant on quality data and insights. For many organizations, lack of data isn't the issue — it's collecting, cleaning and organizing this data. This is especially difficult if your departments are siloed or if you're looking to incorporate external data. What's more, you would need the capabilities to analyze and execute the data if you want to gain meaningful insights and results. LEARN: Infographic: Automated Loan Underwriting Journey Taking a closer look at two important parts of the customer journey, here's how the right data can help you deliver an exceptional user experience. Prescreening To grow your business, you want to identify creditworthy consumers who are likely to respond to your credit offers. Conversely, it's important to avoid engaging consumers who aren't seeking credit or may not meet your credit criteria. Some of the external data points you can incorporate into a digital prescreening strategy are: Core demographics: Identify your best customers based on core demographics, such as location, marital status, family size, education and household income. Lifestyle and financial preferences: Understand how consumers spend their time and money. Home and auto loan use: Gain insight into whether someone rents or owns a home, or if they'll likely buy a new or used vehicle in the upcoming months. Optimized credit marketing strategies can also use standard (and custom) attributes and scores, enabling you to segment your list and create more personalized offers. And by combining credit and marketing data, you can gain a more complete picture of consumers to better understand their preferred channels and meet them where they are. CASE STUDY: Clear Mountain Bank used Digital Prescreen with Micronotes to extend pre-approved offers to consumers who met their predetermined criteria. The refinance marketing campaign generated over $1 million in incremental loans in just two months and saved customers an average of $1,615. Originations Once your precise targeting strategy drives qualified consumers to your application, your data-driven experience can offer a low-friction and highly automated originations process. Alternative credit data: Using traditional and alternative credit data* (or expanded FCRA-regulated data), including consumer-permissioned data, allows you to expand your lending universe, offer more favorable terms to a wider pool of applicants and automate approvals without taking on additional risk. Behavioral and device data: Leveraging behavioral and device data, along with database verifications, enables you to passively authenticate applicants and minimize friction. Linked and digital applications: Offering a fully digital and intuitive experience will appeal to many consumers. In fact, 81 percent of consumers think more highly of brands after a positive digital experience that included multiple touchpoints. And if you automate verifications and prefill applications, you can further create a seamless customer experience. READ: White paper: Getting AI-driven decisioning right in financial services Personalization depends on persistent identification The vast majority (91 percent) of businesses think that improving their digital customer journey is very important. And rightly so: By personalizing digital interactions, financial institutions can identify the right prospects, develop better-targeted marketing campaigns and stay competitive in a crowded market. DOWNLOAD: A 5-Step Checklist for Identifying Credit-Active Prospect To do this, you need an identity management platform that enables you to create a single view of your customer based on data streams from multiple sources and platforms. From marketing to account management, you can use this persistent identity to inform your decisions. This way, you can ensure you're delivering relevant interactions and offers to consumers no matter where they are. WATCH: Webinar: Omnichannel Marketing - Think Outside the Mailbox Personalization offers a win-win Although they want personalization, only 33 percent of consumers have high confidence in a business' ability to recognize them repeatedly.4 To meet consumer expectations and remain competitive, you must deliver digital experiences that are relevant, seamless, and cohesive. Experian Consumer View helps you make a good first impression with consumer insights based on credit bureau and modeled data. Enrich your internal data, and use segmentation solutions to further refine your target population and create offers that resonate and appeal. You can then quickly deliver customized and highly targeted campaigns across 190 media destinations. From there, the Experian PowerCurve® Originations Essentials, an automated decisioning engine, can incorporate multiple external and internal data sources to optimize your strategy. *Disclaimer: When 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.

Alternative credit scoring has become mainstream. Lenders that use alternative credit scores can find opportunities to expand their lending universe without taking on additional risk and more accurately assess the credit risk of traditionally scoreable consumers. Obtaining a more holistic consumer view can help lenders improve automation and efficiency throughout the customer lifecycle. What is alternative credit scoring? Alternative credit scoring models incorporate alternative credit data* that isn't typically found on consumer credit reports. These scores aren't necessarily trying to predict alternative outcomes. The goal is the same — to understand the likelihood that a borrower will miss payments in the future. What's different is the information (and sometimes the analytical techniques) that inform these predictions.Traditional credit scoring models solely consider information found in consumer credit reports. There's a lot of information there — Experian's consumer credit database has data on over 245 million consumers. But although traditional consumer data can be insightful, it doesn't necessarily give lenders a complete picture of consumers' creditworthiness. Alternative credit scores draw from additional data sources, including: Alternative financial services: Credit data from alternative financial services (AFS) can tell you about consumers' experiences with small-dollar installment loans, single-payment loans, point-of-sale financing, auto title loans and rent-to-own agreements. Buy Now Pay Later: Buy Now Pay Later (BNPL) borrowing is popular with consumers across the scoring spectrum, and lenders can use access to open BNPL loans to better assess consumers' current capacity. Rental payments: Landlords, property managers, collection companies, rent payment services and consumer-permissioned data can give lenders access to consumers' rent payment history. Full-file public records: Credit reports generally only include bankruptcy records from the previous seven to ten years. However, lenders with access to full-file public records can also learn about consumers' property deeds, address history, and professional and occupational licenses. READ: Take a deep dive into Experian's State of Alternative Credit Data report to learn more about the different types of alternative credit data and uses across the loan lifecycle. With open banking, consumers can now easily and securely share access to their banking and brokerage account data — and they're increasingly comfortable doing so. In fact, 70% would likely share their banking data for better loan rates, financial tools or personalized spending insights.Tools like Experian Boost allow consumers to add certain types of positive payment information to their Experian credit reports, including rent, utility and select streaming service payments. Some traditional scores consider these additional data points, and users have seen their FICO Score 8 from Experian boosted by an average of 13 points.1 Experian Go also allows credit invisible consumers to establish a credit report with consumer-permissioned alternative data.  The benefits of using alternative credit data The primary benefit for lenders is access to new borrowers. Alternative credit scores help lenders accurately score more consumers — identifying creditworthy borrowers who might otherwise be automatically denied because they don't qualify for traditional credit scores. The increased access to credit may also align with lenders' financial inclusion goals.Lenders may additionally benefit from a more precise understanding of consumers who are scoreable. When integrated into a credit decisioning platform, the alternative scores could allow lenders to increase automation (and consumers' experiences) without taking on more credit risk. The future of alternative credit scoring Alternative credit scoring might not be an alternative for much longer, and the future looks bright for lenders who can take advantage of increased access to data, advanced analytics and computing power.Continued investment in alternative data sources and machine learning could help bring more consumers into the credit system — breaking barriers and decreasing the cost of basic lending products for millions. At the same time, lenders can further customize offers and automate their operations throughout the customer lifecycle. Partnering with Experian Small and medium-sized lenders may lack the budget or expertise to unlock the potential of alternative data on their own. Instead, lenders can turn to off-the-shelf alternative models that can offer immediate performance lifts without a heavy IT investment.Experian's Lift PlusTM score draws on industry- leading mainstream credit data and FCRA-regulated alternative credit data to provide additional consumer behavior insights. It can score 49% of mainstream credit-invisible consumers and for thin file consumers with a new trade, a 29% lift in scoreable accounts. Learn more about our alternative credit data scoring solutions. Learn more * When 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 (FCRA). Hence, the term “Expanded FCRA Data" may also apply in this instance and both can be used interchangeably.1Experian (2023). Experian Boost

For a credit prescreen marketing campaign to be successful, financial institutions must first define their target audience. But just because you’ve identified your ideal customers, it doesn’t mean that every individual within that group has the same needs, interests or behaviors. As such, you’ll need to use data-driven customer segmentation to create messages and offers that truly resonate. Customer segmentation example Customer segmentation is the practice of dividing your target audience into smaller sub-groups based on shared characteristics, behaviors or preferences. This allows you to develop highly targeted marketing campaigns and engage with individual groups in more relevant and meaningful ways. What role does data play in customer segmentation? When it comes to segmenting customers, there isn’t a one-size-fits-all approach that works perfectly for all campaigns and markets. However, regardless of the campaign, you’ll need accurate and relevant data to inform your segmenting strategy. Let’s walk through a customer segmentation example. Say you want to launch a credit marketing campaign that targets creditworthy consumers in the market for a new mortgage. Some of the most influential data points to consider when segmenting include: Demographics Demographic data allows you to get to know your customers as individuals in terms of age, gender, education, occupation and marital status. If you want to create a segment that consists of only middle-aged consumers, leveraging demographic data makes it easier to identify these individuals, refine your messaging and predict their future buying behaviors. Life stage Life event data, such as new parents and new homeowners, helps you connect with consumers who have experienced a major life event. Because you’re targeting consumers in the market for a new mortgage, using fresh and accurate life stage data can help you create an engaging, event-based marketing campaign relevant to their timeline. Financial Financial data segments go beyond income and estimate the way consumers spend their money. With deeper insights into customers’ financial behaviors, you can more accurately assess creditworthiness and make smarter lending decisions. Transactional Transactional data segments group your customers according to their unique buying habits. By getting to know why they purchase your products or their frequency of spend, you can gain a better understanding of who your most engaged customers are, segment further and find opportunities for cross-sell and upsell. Why is data-driven customer segmentation critical for your business? With data-driven customer segmentation, you can develop relevant marketing campaigns and messages that speak to specific audiences, enabling you to demonstrate your value propositions more clearly and deliver personalized customer experiences. Additionally, because customer segmentation enables you to tailor your marketing efforts to those most likely to respond, you can achieve higher conversions while cutting down on marketing spend and resources. Ready to get started? While data-driven customer segmentation may seem overwhelming, Experian can help fill your marketing gaps with custom-based data, audiences and solutions. Armed with a better understanding of your consumers’ patterns and journeys, you can start targeting them more effectively. Create highly targeted credit marketing campaigns

Financial institutions have gone through a whirlwind in the last few years, with the pandemic forcing many to undergo digital transformations. More recently, rising interest rates and economic uncertainty are leading to a pullback, highlighting the need for lenders to level up their marketing strategies to win new customers. To get started, here are a few key trends to look out for in the new year and fresh marketing ideas for lenders. Challenges and consumers expectations in 2023 It might be cliche to mention the impact that the pandemic had on digital transformations — but that doesn't make it any less true. Consumers now expect a straightforward online experience. And while they may be willing to endure a slightly more manual process for certain purchases in their life, that's not always necessary. Lenders are investing in front-end platforms and behind-the-scenes technology to offer borrowers faster and more intuitive services. For example, A McKinsey report from December 2021 highlighted the growth in nonbank mortgage lenders. It suggested nonbank lenders could hold onto and may continue taking market share as these tech-focused lenders create convenient, fast and transparent processes for borrowers.2 Marketers can take these new expectations to heart when discussing their products and services. To the extent you have one in place, highlight the digital experience that you can offer borrowers throughout the application, verifications, closing and loan servicing. You can also try to show rather than tell with interactive online content and videos. Build a data-driven mortgage lending marketing strategy The McKinsey report also highlighted a trend in major bank and nonbank lenders investing in proprietary and third-party technology and data to improve the customer experience.2 Marketers can similarly turn to a data-driven credit marketing strategy to help navigate shifting lending environments. Segment prospects with multidimensional data Successful marketers can incorporate the latest technological and multidimensional data sources to find, track and reach high-value prospects. By combining traditional credit data with marketing data and Fair Credit Report Act-compliant alternative credit data* (or expanded FCRA-regulated data), you can increase the likelihood of connecting with consumers who meet your credit criteria and will likely respond. For example, Experian's mortgage-specific In the Market Models predict a consumer's propensity to open a new mortgage within a one to four-month period based on various inputs, including trended credit data and Premier Attributes. You can use these propensity models as part of your prescreen criteria, to cross-sell current customers and to help retain customers who might be considering a new lender. But propensity models are only part of the equation, especially when you're trying to extend your marketing budget with hyper-segmented campaigns. Incorporating your internal CRM data and non-FCRA data can help you further distinguish look-alike populations and help you customize your messaging. LEARN MORE: Use this checklist to find and fix gaps in your prospecting strategy Maintain a single view of your borrowers An identity management platform can give you a single view of a consumer as they move through the customer journey. The persistent identity can also help you consistently reach consumers in a post-cookie world and contact them using their preferred channel. You can add to the persistent identity as you learn more about your prospects. However, you need to maintain data accuracy and integrity if you want to get a good ROI. Use triggers to guide your outreach You can also use data-backed credit triggers to implement your marketing plan. Experian's Prospect Triggers actively monitors a nationwide database to identify credit-active consumers who have new tradelines, inquiries or a loan nearing term. Lenders using Prospect Triggers can receive real-time or periodic updates and customize the results based on their screening strategy and criteria, such as score ranges and attributes. They can then make firm credit offers to the prospects who are most likely to respond, which can improve cross-selling opportunities along with originations. Benefit from our expertise Forward-thinking lenders should power their marketing strategies with a data-backed approach to incorporate the latest information from internal and external sources and reach the right customer at the right time and place. From list building to identity management and verification, you can turn to Experian to access the latest data and analytics tools. Learn about Experian credit prescreen and marketing solutions. Explore our credit prescreen solutions Learn about our marketing solutions 1Mortgage Bankers Association (October 2022). Mortgage Applications Decrease in Latest MBA Weekly Survey 2McKinsey & Company (2021). Five trends reshaping the US home mortgage industry

Today’s changing economy is directly impacting consumers’ financial behaviors, with some individuals doing well and some showing signs of payment stress. And while these trends may pose challenges to financial institutions, such as how to expand their customer base without taking on additional risk, the right credit attributes can help them drive smarter and more profitable lending decisions. With Experian’s industry-leading credit attributes, organizations can develop precise and explainable acquisition models and strategies. As a result, they can: Expand into new segments: By gaining deeper insights into consumer trends and behaviors, organizations can better assess an individual’s creditworthiness and approve populations who might have been overlooked due to limited or no credit history. Improve the customer experience: Having a wider view of consumer credit behavior and patterns allows organizations to apply the best treatment at the right time based on each consumer’s specific needs. Save time and resources: With an ongoing managed set of base attributes, organizations don’t have to invest significant resources to develop the attributes themselves. Additionally, existing attributes are regularly updated and new attributes are added to keep pace with industry and regulatory changes. Case study: Enhance decision-making and segmentation strategies A large retail credit card issuer was looking to grow their portfolio by identifying and engaging more consumers who met their credit criteria. To do this, they needed to replace their existing custom acquisition model with one that provided a granular view of consumer behavior. By partnering with Experian, the company was able to implement an advanced custom acquisition model powered by our proprietary Trended 3DTM and Premier AttributesSM. Trended 3D analyzes consumers’ behavior patterns over time, while Premier Attributes aggregates and summarizes findings from credit report data, enabling the company to make faster and more strategic lending decisions. Validations of the new model showed up to 10 percent improvement in performance across all segments, helping the company design more effective segmentation strategies, lower their risk exposure and approve more accounts. To learn how Experian can help your organization make the best data-driven decisions, read the full case study or visit us. Download case study Visit us

When a data breach occurs, it can have a ripple effect on your business, your employees, and your customers. Depending on the severity of the breach, large volumes of personally identifiable information – such as email addresses, birth dates, passwords, social security numbers, etc. – may fall into the hands of unauthorized people who intend to exploit that information for personal gain. While data breaches are difficult to predict, you can take proactive steps to ensure that your business and your customers are well equipped to respond quickly and drive faster resolution. Create a plan The average cost of a data breach in 2023 is $4.45 million, a 15% increase from 2020[1]. This is a considerable loss that can be devastating to a business of any size. The best strategy to mitigate this kind of loss is to be prepared with a data breach response plan. If your business experiences a data breach and you’re unprepared for it, the losses you and your customers incur can be much more serious, and the damage to your company’s bottom line and reputation can last much longer than necessary. By establishing a data breach response plan, you can limit the downside potential of an attack and considerably shorten the recovery time. This can help your business and your customers return to good standing as soon as possible. Arm your team with knowledge The IT department is no longer the only line of defense against cyberattack or data breaches. Many hackers will try to illegally obtain sensitive information from front line or associate level employees using a variety of methods like phishing, ransomware, or social engineering. This puts the responsibility of protecting company data on every employee, not just on the cybersecurity team. This is why it’s important to educate all of your employees on how to recognize potential threats of a data breach. With this knowledge, they can work collectively to keep consumers’ data safe and secure. Address your customers’ concerns effectively If a data breach happens to your business, it’s crucial to notify your customers as soon as possible. Not only should you alert them of the breach, but you should also have a protocol in place to provide up-to-date information, helpful resources, and reassurance. Whether through email, in-app notifications, or call center agents, your customer response process should include clear, frequent, and timely communication throughout the duration of the breach. Keeping your customers informed and at ease during a breach will encourage them to remain calm and feel confident to continue doing business with you. Data breaches and cyberattacks are unpredictable and can have unforeseen, long-lasting negative effects on small, medium, and large businesses alike. But if you have a solid plan, keep your employees knowledgeable about potential threats, and provide useful, timely information to your customers, you can minimize the damage of any breach on your organization. Visit our website for more information about our offerings and how Experian can help you prepare and respond to data breaches. [1]IBM. Cost of a Data Breach Report 2023.