Tag: experian attributes

As financial institutions and other organizations scramble to formulate crisis response plans, it’s important to consider the power of data and analytics. Jim Bander, PhD, Experian’s Analytics and Optimization Market Lead discusses the ways that data, analytics and models can help during a crisis. Check out what he had to say: What implications does the global pandemic have on financial institutions’ analytical needs?  JB: COVID-19 is a humanitarian crisis, one that parallels Hurricanes Sandy and Katrina and other natural disasters but which far exceeds their magnitude. It is difficult to predict the impact as huge parts of the global economy have shut down. Another dimension of this disaster is the financial impact: in the US alone, more than 17 million people applied for unemployment in the first 6 weeks of the COVID-19 crisis. That compares to 15 million people in 18 months during the Great Recession. Data and analytics are more important than ever as financial institutions formulate their responses to this crisis. Those institutions need to focus on three key things: safety, soundness, and compliance. Safety: Financial institutions are taking immediate action to mitigate safety risks for their employees and their customers. Soundness: Organizations need to mitigate credit and fraud risk and to evaluate capital and liquidity. Some executives may need a better understanding of how their bank’s stress scenarios were calculated in the past to understand how they must be updated for the future. Important analytic functions include performing portfolio monitoring and benchmarking—quantifying the effects not only of consumer distress, but also of low interest rates. Compliance: Understanding and meeting complex regulatory and compliance requirements is crucial at this time. Companies have to adapt to new credit reporting guidelines. CECL requirements have been relaxed but lenders should assess the effects of COVID, and not only during their annual stress tests. As more consumers seek credit, from an analytics perspective, what considerations should financial institutions make during this time?  JB: During this volatile time, analytics will help financial institutions: Identify financially stressed consumers with early warning indicators Predict future consumer behavior Respond quickly to changes Deliver the best treatments at the right time for individual customers given their specific situations and their specific behavior. Financial institutions should be reevaluating where their organizations have the most vulnerability and should be taking immediate action to mitigate these risks. Some important areas to keep an eye on include early warning indicators, changes in fraudulent behavior (with the increase in digital engagements), and changes in customer behavior. Banks are already offering payment flexibility, deferments, and credit reporting accommodations. If volatility continues or increases, they may need to offer debt forgiveness plans. These organizations should also be prepared to understand their own changing constraints—such as budget, staffing levels, and liquidity requirements— especially as consumers accelerate their move to digital channels. In the near future, lenders should be optimizing their operations, servicing treatments, and lending policies to meet a number of possibly conflicting objectives in the presence of changing constraints and somewhat unpredictable transaction volumes.   What is the smartest next play for financial institutions?  JB: I see our smartest clients doing four things: Adapting to the new normal Maintaining engagement with existing customers by refreshing data that companies have on-hand for these consumers, and obtain additional views of these customers for analytics and data-driven decisioning Reallocating operational resources and anticipating the need for increased capacity in various servicing departments in the future Improving their risk management practices   What is Experian doing to help clients improve their risk management? JB: During this time, banks and other financial institutions are searching for ways to predict consumer behavior, especially during a crisis that combines aspects of a natural disaster with characteristics of a global recession. It is more important than ever to use analytics and optimization. But some of the details of the methodology is different now than during a time of economic expansion. For example, while credit scores (like FICO® and VantageScore® credit scores) will continue to rank consumers in terms of their probability to pay, those scores must be interpreted differently. Furthermore, those scores should be combined with other views of the consumer—such as trends in consumer behavior and with expanded FCRA-compliant data (data that isn’t reported to traditional credit bureaus). One way we’re helping clients improve their credit risk management is to provide them with a list of 140 consumer credit data attributes in 10 categories. With this list, companies will be able to better manage portfolio risk, to better understand consumer behavior, and to select the next best action for each consumer. Four other things we’re doing: We’re quickly updating our loss forecasting and liquidity management offerings to account for new stress scenarios. We’re helping clients review their statistical models’ performance and their customer segmentation practices, and helping to update the models that need refreshing. Our consulting team—Experian Advisory Services—has been meeting with clients virtually--helping them update, execute their crisis and downturn responses, and whiteboard new or updated tactical plans. Last but not least, we’re helping lenders and consumers defend themselves against a variety of fraud and identity theft schemes. Experian is committed to helping your organization during these uncertain times. For more resources, visit our Look Ahead 2020 Hub. Learn more Jim Bander, PhD, Analytics and Optimization Market Lead, Decision Analytics, Experian North America Jim Bander, PhD joined Experian in April 2018 and is responsible for solutions and value propositions applying analytics for financial institutions and other Experian business-to-business clients throughout North America. Jim has over 20 years of analytics, software, engineering and risk management experience across a variety of industries and disciplines. He has applied decision science to many industries including banking, transportation and the public sector. He is a consultant and frequent speaker on topics ranging from artificial intelligence and machine learning to debt management and recession readiness. Prior to joining Experian, he led the Decision Sciences team in the Risk Management department at Toyota Financial Services.

Many companies rely on attributes for decisioning but lack the resources needed to invest in developing, managing, and updating the attributes themselves. Experian is there to guide you every step of the way with our Attribute Toolbox – our source independent solution that provides maximum flexibility and multiple data sources you can use in the calculation and management of attributes. To create and manage our attributes, Experian has established development principles and created a set methodology to ensure that our attribute management system works across the attribute life cycle. Here’s how it works: Develop Attributes The attribute development process includes: discovery, exploratory data analysis, filter leveling, and the development of attributes. When we create attributes, Experian takes great care to ensure that we: Analyze the available data elements and how they are populated (the frequencies of fields). Determine a “sensible” definition of the attribute. Evaluate attribute frequencies. Review consumer credit reports, where possible. Refine the definition and assess more frequencies and examples. Test Attributes Before implementing, Experian performs an internal audit of filters and attributes. Defining, coding and auditing filters is 80% of the attribute development process. The main objective of the auditing process is to ensure both programming and logical accuracy. This involves electronic and manual auditing and requires a thorough review of all data elements used in development. Deploy Attributes Deployment is very similar to attribute testing. However, in this case, the primary objective of the deployment audit is to ensure both the programming and logical accuracy of the output is executing correctly on various platforms. We aim to maintain consistency among various business lines and products, between batch and online environments across the life cycle, and wherever your models are deployed: on premises, in the cloud, and off-site in your partners’ systems. Govern Attributes Experian places a robust attribute governance process in place to ensure that our attributes remains up-to-date and on track with internal and external compliance regulations and audits. New learnings, industry and regulatory changes can lead to updated attributes or new attributes over time. Because attributes are ever-changing, we take great care to expand, update and add new attributes over time based on three types of external changes: economic, bureau, and reporting changes.   Fetch Data While we gather the data, we ensure that you can integrate a variety of external data sources, including: consumer bureau, business, fraud, and other data sources. Attributes need to be: Highly accurate. Suitable for use across the Customer Life Cycle. Suitable for use in credit decisioning and model development. Available and consistent across multiple platforms. Supportive and adaptable to ever-evolving regulatory considerations. Thoroughly documented and monitored. Monitor Performance We generate attribute distribution reports and can perform custom validations using data from credit reporting agencies (CRAs) and other data providers. This is based on monthly monitoring to ensure continued integrity and stability to stand up to regulatory scrutiny and compliance regulations. Variations that exceed predetermined thresholds are identified, quantified, and explained. If new fields or data values within existing fields are announced, we assess the impact and important of these values on attributes – to determine if revisions are needed. Maintain Attributes Credit bureau data updates, new attributes in response to market needs, compliance requirements, corrections in logic where errors are identified or improvements to logic often lead to new version releases of attributes. With each new version release, Experian takes care to conduct thorough analyses comparing the previous and current set of attributes. We also make sure to create detailed documentation on what’s changed between versions, the rationale for changes and the impact on existing attributes.   Experian Attributes are the key to unlocking consistent, enhanced and more profitable decisions. Our data analysts and statisticians have helped hundreds of clients build custom attributes and custom models to solve their business problems. Our Attribute Toolbox makes it easier to deploy and manage attributes across the customer lifecycle. We give companies the power to code, manage, test, and deploy all types of attributes, including: Premier AttributesSM, Trended 3DTM, and custom attributes – without relying on a third-party. We do the heavy lifting so that you don’t have to. Learn More