Tag: economy

Do you have 20/20 vision when it comes to the readiness of your organization? How financially healthy are your customers today? They are likely facing some challenges and difficult choices. Based on a study by the Center for Financial Services Innovation (CFSI), almost half of the US adult population - that’s 112.5 million - say they do not have enough savings to cover at least three months of living expenses. With debt rising and a possible recession on the horizon, it’s crucial to have a solid strategy in place for your organization. Here are three easy steps to help you prepare: Anticipate the recession before it arrives Gathering a complete view of your customers can be difficult if you have multiple systems, which can result in subjective, costly and inefficient processes. If you don’t have a full picture of your customers, it’s hard to understand their risk, behavior and ability to pay and to determine the most effective treatment decisions. Having the right data is only the first step. Using analytics to make sense of the data helps you better understand your customers at an individual level, which will increase recovery rates and improve the customer experience. Analytics can provide early-warning indicators that identify customers most likely to miss payments, predict future behavior, and deliver the best treatment option based on a customer’s specific situation or behavior. With a deeper understanding of at-risk customers, you can apply more targeted interventions that are specific to each customer, so you can be confident your collections process is individualized, efficient and fair. The result? A cost-effective, compliant process focused on retaining valuable customers and reducing losses.   What to look for: ✔ Know when customers are experiencing negative credit events ✔ View consumer credit trends that may not yet be visible on your own account base ✔ Watch for payment stress – understand the actual payment consumers are making. Is it changing? ✔ See individual trends and take action – are your customers sliding down to a lower score band? ✔ Understand how your client-base is performing within your own portfolio and with other organizations   Take immediate and impactful actions around risk mitigation and staffing Every interaction with consumers needs optimizing, from target marketing through to collections and recovery. Organizations that proactively modernize their business to scale and increase effectiveness before the next economic downturn may avoid struggling to address rising delinquencies when the economy corrects itself. This may improve portfolio performance and collection capabilities — significantly increasing recoveries, containing costs and sustaining returns. Identify underperforming products and inefficient processes by staff. Consider reassessing the data used and the manual processes required for making decisions. Optimize product pricing and areas where organizations or staff could automate the decision processes.   Areas to focus: ✔ Identity theft protection and account takeover awareness ✔ Improve underwriting strategy and automation ✔ Maximize profitability — drive spend, optimize approvals, line assignment and pricing ✔ Evaluate collection risk strategies and operational efficiencies   Design and deploy a strategy to be organizationally and technologically ready for change Communication is key in debt recovery. Failing to contact customers via their preferred channel can cause frustration and reduce the likelihood of recovery. Your customers are looking for a convenient and discreet way to negotiate or repay debt, and if you aren’t providing one, you’re incurring higher collections costs and lower recovery rates. With developments in the digital world, consumer interactions have changed. Most people prefer to communicate via mobile or online, with little to no human interaction. Behavioral analytics help to automate and decide the next best action, so you contact the right customer at the right time through the right channel. In addition, offering a convenient, discreet way to negotiate or repay debt can result in customers who are more engaged and more likely to pay. Online and self-service portals along with AI-powered chatbots use the latest technology to provide a safe and customer-centric experience, creating less time-consuming interactions and higher customer satisfaction. Your digital collections process is more convenient and less stressful for consumers and more profitable and compliant for you. Visualize the future... ✔ Superior customer service is embraced at the end of the customer life cycle as it is in the beginning ✔ Leverage data, analytics, software, and industry expertise to drive an automated collections process with fewer manual interventions ✔ Meet the growing expectation for digital consumer self-service by providing the ability to proactively negotiate and manage debt through preferred contact channels ✔ When economy and market conditions change for the worst, have the right data, analytics, software in place and be prepared to implement relevant collections strategies to remain competitive in the market   Don’t wait until the next recession hits. Our collaborative approach to problem solving ensures you have the right solution in place to solve your most complex problems and are ready for market changes. The combination of our data, analytics, fraud tools, decisioning software and consulting services will help you proactively manage your portfolio to minimize the flow of accounts into collections and modernize your collections and recovery processes. Learn More

Fintech is quickly changing. The word itself is synonymous with constant innovation, agile technology structures and being on the cusp of the future of finance. The rapid rate at which fintech challengers are becoming established, is in turn, allowing for greater consumer awareness and adoption of fintech platforms. It would be easy to assume that fintech adoption is predominately driven by millennials. However, according to a recent market trend analysis by Experian, adoption is happening across multiple generational segments. That said, it’s important to note the generational segments that represent the largest adoption rates and growth opportunities for fintechs. Here are a few key stats: Members of Gen Y (between 24-37 years old) account for 34.9% of all fintech personal loans, compared to just 24.9% for traditional financial institutions. A similar trend is seen for Gen Z (between 18-23 years old). This group accounts for 5% of all fintech personal loans as compared to 3.1% for traditional Let’s take a closer look at these generational segments… Gen Y represents approximately 19% of the U.S. population. These consumers, often referred to as “millennials,” can be described as digital-centric, raised on the web and luxury shoppers. In total, millennials spend about $600 billion a year. This group has shown a strong desire to improve their credit standing and are continuously increasing their credit utilization. Gen Z represents approximately 26% of the U.S. population. These consumers can be described as digital centric, raised on the social web and frugal. The Gen Z credit universe is growing, presenting a large opportunity to lenders, as the youngest Gen Zers become credit eligible and the oldest start to enter homeownership. What about the underbanked as a fintech opportunity? The CFPB estimates that up to 45 million people, or 24.2 million households, are “thin-filed” or underbanked, meaning they manage their finances through cash transactions and not through financial services such as checking and savings accounts, credit cards or loans. According to Angela Strange, a general partner at Andreessen Horowitz, traditional financial institutions have done a poor job at serving underbanked consumers affordable products. This has, in turn, created a trillion-dollar market opportunity for fintechs offering low-cost, high-tech financial services. Why does all this matter? Fintechs have a unique opportunity to engage, nurture and grow these market segments early on. As the fintech marketplace heats up and the overall economy begins to soften, diversifying revenue streams, building loyalty and tapping into new markets is a strategic move. But what are the best practices for fintechs looking to build trust, engage and retain these unique consumer groups? Join us for a live webinar on November 12 at 10:00 a.m. PST to hear Experian experts discuss financial inclusion trends shaping the fintech industry and tactical tips to create, convert and extend the value of your ideal customers. Register now

Preparation is key – whether you’re an amateur/professional sports, free-soloing up El Capitan, or business contingency planning as part of a recession readiness strategy. It’s not so much predicting when events will occur, or trying to foresee and pivot for every possible outcome, but rather, acting now so that your business can act faster and smarter in the future. There are certain priorities that have come to be associated with what are widely accepted as the three environments the economy can sustain at any one time: As with recessions throughout the country’s history, those periods have often been characterized by layoffs, charge-offs, delinquencies, and other behaviors as the economy turns to a counter-cycle environment. Rather than wait to implement reactive strategies , the time to manage accounts, plan, stress test and implement contingency plans for when the next economic correction comes, is now. While economists and financial services industry experts argue over when a recession will hit and how severe its implications may be (in comparison with the Great Recession of 2008), there’s a  need to start tactical business discussions now. Even in the face of a strong economy, that has seen high employment levels and increased spending, 45% of Americans (112.5 million) say they do not have enough savings to cover at least three months of living expenses, according to a 2018 survey by the Center for Financial Services Innovation. Regardless of the economic environment – pro-cycle, counter-cycle, and cycle-neutral – those statistics paint an alarming picture of consumers' financial health as a whole. These are four crucial considerations you should be taking now: Create individualized treatments while reducing manual interactions Meet the growing expectation for digital consumer self-service Understand your customer to ensure fair treatment React quickly and effectively to market changes While it may not be on the immediate horizon just yet, it’s important to prepare. For more information, including portfolio mixes, collections considerations and macroeconomic trends, download our latest white paper on recession readiness. Download white paper now  

It's been over 10 years since the start of the Great Recession. However, its widespread effects are still felt today. While the country has rebounded in many ways, its economic damage continues to influence consumers. Discover the Great Recession’s impact across generations: Americans of all ages have felt the effects of the Great Recession, making it imperative to begin recession proofing and better prepare for the next economic downturn. There are several steps your organization can take to become recession resistant and help your customers overcome personal financial difficulties. Are you ready should the next recession hit? Get started today

“Experian is transforming our business from a traditional credit bureau to a true technology and software provider,” said Craig Boundy, CEO of Experian, North America, as part of his opening remarks Monday morning to kick off the 2019 Experian Vision Conference. “We are committed to working as a force of good.” Covering the themes of financial inclusion, giving consumers control of their lives and better outcomes, a digital-first society, and the latest trends in fraud and security, Boundy addressed a crowd of over 850. Alex Lintner, Experian’s Group President, gave a quick history of the past 3,000 years, from the first credit card, to the addition of wheels to a suitcase, to the iPhone and artificial intelligence. “Innovation is not invention,” Lintner said. He gave the example of the iPhone and how a tear down analysis revealed there were no new elements; however, it was the translation of an idea into a good or service that benefited everyone (as the entire audience raised their hand when asked who had a smart phone). Lintner’s mainstage presentation also featured three live demos, including how the Ascend Technology Platform takes complex model building and outputs from days and weeks to a few clicks, to the incorporation of Small Business Financial Exchange (SBFE) data into the Ascend Analytical Sandbox (incorporating more than 17 years of small business tradeline data and 150 predictive attributes) and lastly, Experian Boost, which according to a live tracker, has boosted consumer credit scores by a total of 3.2 million points, as of this morning, since its launch eight weeks ago. Keynote Speaker: Gary D. Cohn Gary D. Cohn, Former Director of the U.S. National Economic Council, was Monday morning’s keynote speaker. He weighed in on the domestic and global economy, policy issues, financial institutions’ responsibilities and some of his predictions. Cohn brought attention to the ever-changing financial services space, including new forms of encryption and the world of biometric security, calling the financial services industry the “tip of the spear” when it comes to the digitization of the world. Session Highlights - Day 1 Machine Learning From the building blocks of neural networks to artificial intelligence, machine learning has been used in the areas of financial services that do not have adverse actions – think fraud, ID, collections. As we look to harness machine learning for models and other spaces (including adverse action), it’s important to delineate descriptive data (what’s happening now); predictive data (what’s happening in the future); prescriptive data (what am I going to do now); and cognitive data (are we asking the right question?). In addition, it’s necessary to address the five advanced analytic drivers including customer experience, cost, risk and loss, growth and compliance. Home Equity & Lending US macroeconomic trends show consumer confidence is still on an upward trend. While investor confidence is a little volatile, the GDP remains strong (though slightly slowing down) and unemployment is low and forecasted to remain low. Since 2006, the US hasn’t returned in the HELOC space. Mortgage and personal loans are up 20% and 13% respectively, while mortgages have dropped 1% and HELOCs have dropped 2%. With an estimated market potential of over $700 billion, HELOCs may be an untapped credit line given the strength of the economy. Identity Evolution From dumpster divers, aka pulling receipts out of dumpsters behind businesses, to today’s identity-based authentication, there’s been an evolution of how identity is defined as well as its corresponding risks. According to Experian’s Global Fraud & Identity Report, 74% of consumers value security as the most important part of the online experience (over convenience and personalization). However, 74% of consumers abandoned a shopping session that required too much information, and 72% of consumers said they were willing to share more data if it meant a seamless experience. What does this mean? Consumers want it all. Identity today now includes proxies and activity, which can also mean greater risk. Because of aggregators and other associated entities acting on a consumer’s behalf, there are lots of nuances that will need to be looked through. Consumer-Permissioned Data In order to be more consumer-centric, there are four levers through which consumers are given control: data accuracy, knowing their financial profile, the ability to improve their scores (via Experian BoostTM and UltraFICOTM) and protecting consumers when they permission access to their identity credentials. Using Experian Boost, consumers have seen an average increase of 13 points for consumers with positive changes. Additionally, using alternative credit data, financial institutions can score more people and score more accurately. One hundred million consumers could gain greater access to credit with consumer-permissioned data sources.   --- Meanwhile, the tech showcase featured over 20 demos covering alternative data, digital credit marketing, consumer empowerment, fraud and identity, integrated decisioning and technology. More insights from Vision to come. Follow @ExperianVision and #ExperianVision on Twitter to see more of the action.

Alternative credit data. Enhanced digital credit marketing. Faster, integrated decisioning. Fraud and identity protections. The latest in technology innovation. These were the themes Craig Boundy, Experian’s CEO of North America, imparted to an audience of 800-plus Vision guests on Monday morning. “Technology, innovation and new sources of data are fusing to create an unprecedented number of new ways to solve pressing business challenges,” said Boundy. “We’re leveraging the power of data to help people and businesses thrive in the digital economy.” Main stage product demos took the shape of dark web scans, data visualization, and the latest in biometric fraud scanning. Additionally, a diverse group of breakout sessions showcased all-new technology solutions and telling stats about how the economy is faring in 2018, as well as consumer credit trends and preferences. A few interesting storylines of the day … Regulatory Under the Trump administration, everyone is talking about deregulation, but how far will the pendulum swing? Experian Sr. Director of Regulatory Affairs Liz Oesterle told audience members that Congress will likely pass a bill within the next few days, offering relief to small and mid-sized banks and credit unions. Under the new regulations, these smaller players will no longer have to hold as much capital to cover losses on their balance sheets, nor will they be required to have plans in place to be safely dismantled if they fail. That trigger, now set at $50 billion in assets, is expected to rise to $250 billion. Fraud Alex Lintner, Experian’s President of Consumer Information Services, reported there were 16.7 million identity theft victims in 2017, resulting in $16.8 billion in losses. Need more to fear? There is also a reported 323k new malware samples found each day. Multiple sessions touched on evolving best practices in authentication, which are quickly shifting to biometrics-based solutions. Personal identifiable information (PII) must be strengthened. Driver’s licenses, social security numbers, date of birth – these formats are no longer enough. Get ready for eye scans, as well as voice and photo recognition. Emerging Consumers The quest to understand the up-and-coming Millennials continues. Several noteworthy stats: 42% of Millennials said they would conduct more online transactions if there weren’t so many security hurdles to overcome. So, while businesses and lenders are trying to do more to authenticate and strengthen security, it’s a delicate balance for Millennials who still expect an easy and turnkey customer experience. Gen Z, also known as Centennials, are now the largest generation with 28% of the population. While they are just coming onto the credit scene, these digital natives will shape the credit scene for decades to come. More than ever, think mobile-first. And consider this … it's estimated that 25% of shopping malls will be closed within five years. Gen Z isn’t shopping the mall scene. Retail is changing rapidly! Economy Mortgage originations are trending up. Consumer confidence, investor confidence, interest rates and home sales are all positive. Unemployment remains low. Bankcard originations have now surpassed the 2007 peak. Experian’s Vice President of Analytics Michele Raneri had glowing remarks on the U.S. economy, with all signs pointing to a positive 2018 across the board. Small business loan volumes are also up 10% year-to-date versus the same time last year. Keynote presenters speculate there could be three to four rate hikes within the year, but after years of no hikes, it’s time. Data There are 2.5 quintillion pieces of data created daily. And 80% of what we know about a consumer today is the result of data generated within the past year. While there is no denying there is a LOT of data, presenters throughout the day talked about the importance of access and speed. Value comes with more APIs to seamlessly connect, as well as data visualization solutions like Tableau to make the data easier to understand. More Vision news to come. Gain insights and news throughout the day by following #ExperianVision on Twitter.    

In 2017, a meaningful jump in consumer sentiment bolstered spending, and caused the spread between disposable personal income and consumer spending to reach an all-time high. This increase in spread was mostly financed through consumer debt, which according to the Federal Reserve Bank of New York has brought total consumer debt to a new peak of $12.8 Trillion surpassing the prior peak in 2008. The Experian eighth annual State of Credit report greatly supported the consumer behavior trends observed for the past year. Spanning the generations  It is no surprise that generation Z (the “Great Recession Generation”) is conservative and prudent in their approach to credit because they are the most familiar with the post financial crisis economy. Results showed Millennials experienced a drop in overall debt, and an increase in mortgage debt reflects the national homeownership affordability challenge facing this generation. As first time homebuyers, millennials have to relatively tighten their spending as they dedicate an ever-growing portion of their income to housing. On the other end of the spectrum, the results of the study showed that Baby Boomers’ had sizable debt (including mortgage debt), which reflects the generation’s intent to stay active in their communities and in their homes much longer than prior generations have done. A recent Harvard study reported that by 2035, one out of three American households will be headed by an individual 65 years of age or older, compared to current ratio of one out of five households. What’s on the horizon? It is reasonable to assume that these trends may continue into 2018, as the underlying conditions continue to persist. A closer eye should be kept on student and auto loans due to the significant increase in portfolio size and increasing default rates compare to other debt.   Editor’s note: This post was written by Fadel N. Lawandy, Director of the C. Larry Hoag Center for Real Estate and Finance and the Janes Financial Center at the George L. Argyros School of Business and Economics, Chapman University. Fadel joined the George L. Argyors School of Business and Economics, Chapman University after retiring as a Portfolio Manager from Morgan Stanly Smith Barney in 2009. He has two decades of experience in the financial industry with banking, credit management, commercial/residential real estate acquisition and financing, corporate finance, mergers and acquisitions, quantitative and qualitative analysis and research, and portfolio management. Fadel currently serves as the Chairman of the Board and President of CFA Society Orange County, and is an active member of the CFA Institute.

The final day of Vision 2017 brought a seasoned group of speakers to discuss a wide range of topics. In just a few short hours, attendees dove into a first look at Gen Z and their use of credit, ecommerce fraud, the latest in retail, the state of small business and leadership. Move over Millennials – Gen Z is coming of credit age Experian Analytics leaders Kelley Motley and Natasha Madan gave audience members an exclusive look at how the first wave of Gen Z is handling and managing credit. Granted most of this generation is still under the age of 18, so the analysis focused on those between the ages of 18 to 20. Yes, Millennials are still the dominant generation in the credit world today, standing strong at 61 million individuals. But it’s important to note Gen Z is sized at 86 million, so as they age, they’ll be the largest generation yet. A few stats to note about those Gen Z individuals managing credit today: Their average debt is $12,679, compared to younger Millennials (21 to 27) who have $65,473 in debt and older Millennials (28 to 34) who sport $121,460. Given their young age, most of Gen Z is considered thin-file (less than 5 tradelines) Average Gen Z income is $33,000, and average debt-to-income is low at 5.7%. New bankcard balances are averaging around $1,574. As they age, acquire mortgages and vehicles, their debt and tradelines will grow. In the meantime, the speakers provided audience members a few tips. Message with authenticity. Think long-term with this group. Maintain their technological expectations. Build trust and provide financial education. State of business credit and more on the economy Moody’s Cris deRitis reiterated the U.S. economy is looking good. He quoted unemployment at 4.5%, stating “full employment is here.” Since the recession, he said we’ve added 15 million jobs, noting we lost 8 million during the recession. The great news is that the U.S. continues to add about 200,000 jobs a month, and that job growth is broad-based. Small business loans are up 10% year-to-date vs. last year. While there has been a tremendous amount of buzz around small business, he adds that most job creation has come from mid0size business (50 to 499 employees). The case for layered fraud systems Experian speaker John Sarreal shared a case study that revealed by layering on fraud products and orchestrating collaboration, a business can go from a string 75% fraud detection rate to almost 90%. Additionally, he commented that Experian is working to leverage dark web data to mine for breached identity data. More connections for financial services companies to make with mobile and social Facebook speaker Olivia Basu reinforced the need for all companies to be thinking about mobile. “Mobile is not about to happen,” she said. “Mobile is now. Mobile is everything. You look at the first half of 2017 and we’re seeing 40% of all purchases are happening on mobile devices.” Her challenge to financial services companies is to make marketing personal again, and of course leverage the right channels. Experian Sr. Director of Credit Marketing Scott Gordon commented on Experian’s ability to reach consumers accurately – whether that be through direct or digital delivery channels. A great deal of focus has been around person-based marketing vs. leveraging the cookie. -- The Vision conference was capped off with a keynote speech from legendary quarterback and Super Bowl MVP Tom Brady. He chatted about the details of this past season, and specifically the comeback Super Bowl win in February 2017. He additionally talked about leadership and what that means to creating a winning team and organization. -- Multiple keynote speeches, 65 breakout sessions, and hours of networking designed to help all attendees ready themselves for growing profits and customers, step up to digital, regulatory and fraud challenges, and capture the latest data insights. Learn more about Experian’s annual Vision conference.  

In just a few short hours, Vision attendees immersed themselves into the depths of the economy, risk models, specialty finance data, credit invisibles, student loan data, online marketplace lending and more. The morning kicked off with one of the most respected and trusted macroeconomists in the U.S., Diane Swonk. With a rap sheet filled with advising central banks and multinational companies, Swonk treated a packed house to a look back on what has transpired in the U.S. economy since the Great Recession, as well as launching into current state and speculating on the months ahead. She described the past decade not as “lost, but rather lagging.” She went onto to say this past year was transitional, and while markets slowed slightly during the months leading up the U.S. presidential election, good things are happening: We’ve finally broken out of the 2% wage rut Recruiting on college campuses has picked up The labor force is growing Debt-to-income levels have returned to where they were prerecession and Investment is coming back. “I believe we’ll see growth over 2% this year,” said Swonk. Still, change is underway. She commented on how the way U.S. consumer spending is changing, and of course we’re seeing a restructuring in the retail space. While JC Penney announces store closings, you simultaneously see Amazon moving from “click to brick,” dabbling in the opening of some actual storefronts. Globally, she said the economy is the strongest it has been in eight years. She closed by noting there is a great deal of political change and unrest in the world today, but says, “Never underestimate our abilities when we tap our human capital.” -- More than 100 attendees filled a room to hear about the current trends and the future of online lending with featured guests from Oliver Wyman, Marlette Funding and Lending USA. While speakers commented on the “hiccup” in the space last year with some layoffs and mergers, volume has continued to double every year for the past several years with roughly $40 billion in cumulative originations today. Panelists discussed the use of alternative data to decision, channel bias, the importance of partnerships and how the market will see fewer and fewer players offering just one product specialty. “It is expensive to acquire customers, so you don’t just want to have one product to sell, but rather a range,” said Sharat Shankar of Lending USA. -- The numbers in the student lending universe are astounding. In a session focused on the U.S. student loan market, new Experian data reveals there is $1.49 billion in total student loan outstandings. In fact, total outstandings have grown 21% over the past four years, while the number of trades have only grown 4%. Costs are skyrocketing. The average balance per trade has grown 17% over the past four years. “We don’t ration education in this country,” said Joe DePaulo of College Ave. Student Loans. “We give everyone access to liquidity when it comes to federal student loans – and it’s not like that in other countries.” While DePaulo notes the access is great, offering many students the opportunity to obtain higher education, he says the problem is with disclosures. Guardians are often the individuals filling out the FAFSA, but the students inherit the loans. Students, he says, rarely understand how much their monthly payment will ultimately be after graduation. For every $10,000 in student loans, he says that will generally equate to a $100 monthly payment. -- Tomorrow, Vision attendees will be treated to more breakout sessions and a concluding keynote with legendary quarterback Tom Brady.