Tag: covid-19

This is the final part of a three part series of blog posts highlighting key focus areas for your response to the COVID-19 health crisis: Risk, Operations, Consumer Behavior, and Reporting and Compliance. For more information and the latest resources, please visit Look Ahead 2020, Experian’s COVID-19 resource center with the latest news and tools for our business partners as well as links to consumer resources and a risk simulator. To read the first post, click here. To read the second post, click here.  Consumer Behavior Changes Consumers will be hit hard by the economic fallout from the virus. They’ll need to manage available credit and monthly income to bridge the gap when many people are faced with lost wages, tips and the ability to work. Often, the only way to monitor these short-term risks is with trended credit attributes, from both traditional and alternative data sources. These attributes were developed to provide additional insights into how consumer credit usage is trending over time. Is their debt and spending increasing? Have their credit lines been reduced? Have they historically been a transactor but have now started revolving balances? Could the account be a synthetic identity, set up for intentional misuse of credit? The most predictive attributes available in these times can transform how you can identify and respond to risk.   Reporting and Compliance The regulatory environment is continuing to shift. There are continuous changes to compliance in the digital space for emerging channels and applications. There will be impacts to credit reporting and processes that may echo the response from other major natural disasters. The good news is that the framework developed for Comprehensive Capital Analysis and Review (CCAR) stress testing can be used to run scenarios and understand impacts. Although bank capital is very strong, additional regulation, such as the Current Expected Credit Losses (CECL), with all the latest shifts around compliance, may continue to increase the pressure on financial institutions. Having an adaptable process to forecast and stress-test scenarios to adjust capital requirements, especially in light of government fiscal and monetary stimulus measures, will be at the core of managing financial stability during a period of changes.   Conclusion We need to brace for the pending recession after the longest economic expansion in our lifetimes. These are the times where organizations may struggle to survive or thrive in the face of adversity. This is the time to act on your strategic plan, lean on your strategic partners, and leverage industry leading data and capabilities to soften the landing and thrive in the next phase of growth. Let’s prepare and get through this, together.   Learn More

This is the second of a three part series of blog posts highlighting key focus areas for your response to the COVID-19 health crisis: Risk, Operations, Consumer Behavior, and Reporting and Compliance. For more information and the latest resources, please visit Look Ahead 2020, Experian’s COVID-19 resource center with the latest news and tools for our business partners as well as links to consumer resources and a risk simulator. To read the introductory post, click here.  Strategic Focus on Risk The last recession spurred an industry-wide systemic focus on stressed scenario forecasting. Now’s the time to evaluate the medium- to long-term impacts of the downturn response on portfolio risk measurement. The impact will be wide ranging, requiring recalibration of scorecards and underwriting processes and challenging assumptions related to fees, net interest income, losses, expenses and liquidity. There are critical inputs to understand portfolio monitoring and benchmarking by account types and segments.   Higher unemployment across the country is likely. You need a thorough response to successfully navigate the emerging risks. Expanding credit line management efforts for existing accounts is critical. Proactively responding to the needs of your customers will demand a wide range of data and analytics and more frequent and active processes to take action. Current approaches and tools with increased automation may need to be reevaluated. When sudden economic shocks occur, statistical models may still rank-order effectively, while the odds-to-score relationships deteriorate. This is the time to take full advantage of explainable machine learning techniques to quickly calibrate or rebuild scorecards with refreshed data (traditional and alternative) and continue the learning cycle.   As your risk management tools are evaluated and refreshed, there are many opportunities to target your servicing strategies where they can produce results. This may take the form of identifying segments exhibiting financial stress that can benefit from deferred payments, loan consolidation or refinancing. It might also involve more typical risk mitigation strategies, such as credit line reduction. There are several scenarios that may emerge over the next nine to 12 months that can offer opportunities to deepen relationships with your customers while managing long-term risk exposure. Optimizing Business Operations One of the most significant impacts to your business is the increase in transaction volumes as a result of the economic shock. We expect material increases in collections, refinancing and hardship programs. These increases are arriving at a time when many businesses have streamlined their teams in concert with periods of low delinquency and credit losses. Additional strain from call center shutdowns and limited staffing can easily overwhelm operations and cause business continuity plans to breakdown.   More than ever, the use of digital channels and self-servicing technology are no longer nice-to-haves. Customers expect online access, and efficiency demands automation, including virtual assistants. As more volume migrates to these channels, it’s critical to have the right customer experience and fraud risk controls deployed through flexible, cloud-based systems.   Learn More

In uncertain times, we need to find ways to adapt to our situation. We want to help you manage through this unprecedented period.