Tag: financial health

Despite economic uncertainty, new-customer acquisition remains a high priority in the banking industry, especially with increasing competition from fintech and big tech companies. For traditional banks, standing out in this saturated market doesn’t just involve enhancing their processes — it requires investing in the future of their business: Generation Z. Explore what Gen Z wants from financial technology and how to win them over in 2023 and beyond: Accelerate your digital transformation As digital natives, many Gen Zers prefer interacting with their peers and businesses online. In fact, more than 70% of Gen Zers would consider switching to a financial services provider with better digital offerings and capabilities.1 With a credit prescreen solution that harnesses the power of digital engagement, you can extend and represent firm credit offers through your online and mobile banking platforms, allowing for greater campaign reach and more personalized digital interactions. READ: Case study: Drive loan growth with digital prescreen Streamline your customer onboarding process With 70% of Gen Z and millennials having already opened an account online, it’s imperative that financial institutions offer a digital onboarding experience that’s quick, intuitive, and seamless. However, 44% of Gen Z and millennials state that their digital customer experience has been merely average, noting that the biggest gaps exist in onboarding and account opening.2 To improve the onboarding process, consider leveraging a flexible decisioning platform that accepts applications from multiple channels and automates data collection and identity verification. This way, you can reduce manual activity, drive faster decisions, and provide a frictionless digital customer experience. WATCH: OneAZ Credit Union saw a 25% decrease in manual reviews after implementing an integrated decisioning system Provide educational tools and resources Many Gen Zers feel uncertain and anxious about their financial futures, with their top concern being the cost of living. One way to empower this cohort is by offering credit education tools like step-by-step guides, score simulators, and credit alerts. These resources enable Gen Z to better understand their credit and how certain choices can impact their score. As a result, they can establish healthy financial habits, monitor their progress, and gain more control of their financial lives. By helping Gen Z achieve financial wellness, you can establish trust and long-lasting relationships, ultimately leading to higher customer retention and increased revenue for your business. To learn how Experian can help you engage the next generation of consumers, check out our credit marketing solutions. Learn more 1Addressing banking’s key business challenges in 2023.

"Out with the old and in with the new" is often used when talking about a fresh start or change we make in life, such as getting a new job, breaking bad habits or making room in our closets for a new wardrobe. But the saying doesn't exactly hold true in terms of business growth. While acquiring new customers is critical, increasing customer retention rates by just 5% can increase profits by up to 95%.1 So, what can your organization do to improve customer retention? Here are three quick tips: Stay informed Keeping up with your customers’ changing interests, behaviors and life events enables you to identify retention opportunities and create personalized credit marketing campaigns. Are they new homeowners? Or likely to purchase a vehicle within the next five months? With a comprehensive consumer database, like Experian’s ConsumerView®, you can gain granular insights into who your customers are, what they do and even what they will potentially do. To further stay informed, you can also leverage Retention TriggersSM, which alert you of your customers changing credit needs, including when they shop for new credit, open a new trade or list their property. This way, you can respond with immediate and relevant retention offers. Be more than a business – be human Gen Z's spending power is projected to reach $12 trillion by 2030, and with 67% looking for a trusted source of personal finance information,2 financial institutions have an opportunity to build lifetime loyalty now by serving as their trusted financial partners and advisors. To do this, you can offer credit education tools and programs that empower your Gen Z customers to make smarter financial decisions. By providing them with educational resources, your younger customers will learn how to strengthen their financial profiles while continuing to trust and lean on your organization for their credit needs. Think outside the mailbox While direct mail is still an effective way to reach consumers, forward-thinking lenders are now also meeting their customers online. To ensure you’re getting in front of your customers where they spend most of their time, consider leveraging digital channels, such as email or mobile applications, when presenting and re-presenting credit offers. This is important as 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. Importance of customer retention Rather than centering most of your growth initiatives around customer acquisition, your organization should focus on holding on to your most profitable customers. To learn more about how your organization can develop an effective customer retention strategy, explore our marketing solutions. Increase customer retention today 1How investing in cardholder retention drives portfolio growth, Visa. 2Experian survey, 2023.

According to Experian’s State of the Automotive Finance Market Report: Q2 2022, the average new vehicle interest loan rate for consumers with a credit score between 501 and 600, also referred to as subprime, was 9.75%—compared to prime consumers with a credit score between 661 and 780, who had an average new vehicle interest loan rate of 4.03% this quarter.

From awarding bonus points on food delivery purchases to incorporating social media into their marketing efforts, credit card issuers have leveled up their acquisition strategies to attract and resonate with today’s consumers. But as appealing as these rewards may seem, many consumers are choosing not to own a credit card because of their inability to qualify for one. As card issuers go head-to-head in the battle to reach and connect with new consumers, they must implement more inclusive lending strategies to not only extend credit to underserved communities, but also grow their customer base. Here’s how card issuers can stay ahead: Reach: Look beyond the traditional credit scoring system With limited or no credit history, credit invisibles are often overlooked by lenders who rely solely on traditional credit information to determine applicants’ creditworthiness. This makes it difficult for credit invisibles to obtain financial products and services such as a credit card. However, not all credit invisibles are high-risk consumers and not every activity that could demonstrate their financial stability is captured by traditional data and scores. To better evaluate an applicant’s creditworthiness, lenders can leverage expanded data sources, such as an individual’s cash flow or bank account activity, as an additional lens into their financial health. With deeper insights into consumers’ banking behaviors, card issuers can more accurately assess their ability to pay and help historically disadvantaged populations increase their chances of approval. Not only will this empower underserved consumers to achieve their financial goals, but it provides card issuers with an opportunity to expand their customer base and improve profitability. Connect: Become a financial educator and advocate Credit card issuers looking to build lifelong relationships with new-to-credit consumers can do so by becoming their financial educator and mentor. Many new-to-credit consumers, such as Generation Z, are anxious about their finances but are interested in becoming financially literate. To help increase their credit understanding, card issuers can provide consumers with credit education tools and resources, such as infographics or ‘how-to’ guides, in their marketing campaigns. By learning about the basics and importance of credit, including what a credit score is and how to improve it, consumers can make smarter financial decisions, boost their creditworthiness, and stay loyal to the brand as they navigate their financial journeys. Accessing credit is a huge obstacle for consumers with limited or no credit history, but it doesn’t have to be. By leveraging expanded data sources and offering credit education to consumers, credit card issuers can approve more creditworthy applicants and unlock barriers to financial well-being. Visit us to learn about how Experian is helping businesses grow their portfolios and drive financial inclusion. Visit us

Millions of consumers are excluded from the credit economy, whether it’s because they have limited credit history, dated information within their credit file, or are a part of a historically disadvantaged group. Without credit, it can be difficult for consumers to access the tools and services they need to achieve their financial goals. This February, Experian surveyed over 1,000 consumers across census demographics, including income, ethnicity, and age, to understand the perceptions, needs, and barriers underserved communities face along their credit journey. Our research found that: 75% of consumers with an average household income of less than $50,000 have less than $1,000 in savings. 1 in 5 consumers with an average household income of less than $35,000 say they’re confident in getting approved for credit. 80% of respondents who are not or slightly confident in getting approved for credit were women. When asked why they believed they would not get approved for credit, participants shared common responses, such as having poor payment history, a low credit score, and insufficient income. Given these findings, what can lenders provide to help underserved consumers strengthen their financial profiles and gain access to the credit they need and deserve? The power of credit education While only 20% of respondents were familiar with credit education tools, the majority expressed interest in these offerings. With Experian, lenders can develop and implement credit education programs, tools, and solutions to help consumers understand their credit and the impact certain choices can have on their credit scores. From interactive tools like Score Simulator and Score Planner to real-time alerts from Credit Monitoring, consumers can actively assess their financial health, take steps to improve their creditworthiness, and ultimately become better candidates for credit offers. In turn, consumers can feel more confident and empowered to achieve their financial goals. Credit education tools not only help consumers increase their credit literacy, confidence, and chances of approval, but they also create opportunities for lenders to build lasting customer relationships.  Consumers recognize that healthy credit plays an important role in their financial lives, and by helping them navigate the credit landscape, lenders can increase engagement, build loyalty, and enhance their brand’s reputation as an organization that cares about their customers. Empowering consumers with credit education is also a way for lenders to unlock new revenue streams. By learning to borrow, save, and spend responsibly, consumers can improve their creditworthiness and be in a better position to accept extended credit offerings, driving more cross-sell and upsell opportunities for lenders. More ways experian can help Experian is deeply committed to helping marginalized and low-income communities access the financial resources they need. In addition to our credit education tools, here are a few of our other offerings: Our expanded data helps lenders make better lending decisions by providing greater visibility and transparency around a consumer’s inquiry and payment behaviors. With a holistic view of their current and prospective customers, lenders can more accurately identify creditworthy applicants, uncover new growth opportunities, and expand access to credit for underserved consumers. Experian GoTM is a free, first-of-its-kind program to help credit invisibles and those with limited credit histories begin building credit on their own terms. After authenticating their identities and obtaining an Experian credit report, users will receive ongoing education about how credit works and recommendations to further build their credit history. To learn more about building profitable customer relationships with credit education, check out our credit education solutions and watch our Three Ways to Uncover Financial Growth Opportunities that Benefit Underserved Communities webinar. Learn more Watch webinar

There are many facets to promoting a more equitable society. One major driver is financial inclusion or reducing the racial wealth gap for underserved communities. No other tool has impacted generational wealth more than sustainable homeownership. However, the underserved and underbanked home buyers experience more barriers to entry than any other consumer segment. It is important to recognize the well-documented racial and ethnic homeownership gap; doing so will not only benefit the impacted communities, but also elevate the level of support of those lenders who serve them. What are we doing as an industry to reduce this gap? Many organizations are doing their part in removing barriers to homeownership and systemic inequities. In 2021, the FHFA published their Duty to Serve 2021 plans for Fannie Mae and Freddie Mac to focus on historically underserved markets. A part of this plan includes increasing liquidity of mortgage financing for lower- and moderate-income families. Fannie Mae and Freddie Mac each announced individual refinance offerings for lower-income homeowners – Fannie Mae’s RefiNow™ and Freddie Mac’s Refi PossibleSM. Eligible borrowers meet requirements including income at or below 100% area median income (AMI), a minimum credit score of 620, consideration for loans in forbearance and additional newly expanded flexibilities. As part of the plan, lenders will lower a borrower’s monthly payment by at least a half a percentage point reduction in their interest rate, which can translate into hundreds of dollars of savings per month and sustain their homeownership. Experian has the tools to help mortgage lenders take advantage of this offering  As a leader in data, analytics and technology, we have the tools needed to help lenders recognize opportunities to be inclusive and identify borrowers who may be eligible for Fannie Mae’s and Freddie Mac’s lower-income refinance offerings. To illustrate, we performed a data study and identified over 6M eligible mortgages nationwide (impacting over 8M borrowers) for this plan, and some lenders had as much as 30% of mortgages in their portfolio eligible with lower- and moderate-incomes.1 These insights can have a positive impact on the borrowers you serve by promoting more inclusion and benefit lenders through improved customer retention, strengthened customer loyalty and an opportunity to continue to build generational wealth through housing. We are committed to enabling the industry's DEI evolution As the Consumer’s bureau, empowering consumers is at the heart of everything we do. We’re committed to developing products and services that increase credit access, greater inclusion in homeownership and narrowing the racial wealth gap. Below are a few of our recent initiatives, and be sure to check out our financial inclusion resources here: United for Financial Health: Promotes inclusion in underserved communities through partnerships and have committed to investing our time and resources to create a more inclusive tomorrow for our communities. Project REACh (Roundtable for Economic Access and Change): brings together leaders from banking, business, technology, and national civil rights organizations to reduce barriers that prevent equal and fair participation in the nation’s economy, and we are engaged with the Alternative Credit Scoring Utility group as part of this initiative. Operation Hope: Empowers youth and underserved communities to improve their financial health through education, so they can thrive (not just survive) in the credit ecosystem so they can sustain good credit and responsibly use credit. DEI-Centric Solutions: From Experian Boost to our recent launch of Experian Go, we offer a variety of consumer solutions designed to empower consumers to gain access to credit and build a brighter financial future. What does this mean for you? Our passion, knowledge and partnerships in DEI have enabled us to share best practices and can help lenders prescriptively look at their portfolios to create inclusive growth strategies, identify gaps, and track progress towards diversity objectives. The mortgage industry has a unique opportunity to create paths to homeownership for underserved communities. Together, we can drive impact for generations of Americans to come. Let’s drive inclusivity and revive the American dream of homeownership. 1Experian Ascend™ as of November 2021

Credit plays a vital role in the lives of consumers and helps them meet important milestones – like getting a car and buying their own home. Unfortunately, not every creditworthy individual has equal access to financial services. In fact, 28 million adult Americans are credit invisible and another 21 million are considered unscorable.1 By leveraging expanded data sources, you can gain a more complete view of creditworthiness, make better decisions and empower consumers to more easily access financial opportunities. The state of credit access Credit is part of your financial power and helps you get the things you need. So, why are certain consumers excluded from the credit economy? There’s a host of reasons. They might have limited or no credit history, have dated or negative information within their credit file or be part of a historically disadvantaged group. For example, almost 30% of consumers in low-income neighborhoods are credit invisible and African and Hispanic Americans are less likely than White Americans to have access to mainstream financial services.2 By gaining further insight into consumer risk, you can facilitate first and second chances for borrowers who are increasingly being shut out of traditional credit offerings. Greater data, greater insights, greater growth Expanding access to credit benefits consumers and lenders alike. With a bigger pool of qualified applicants, you can grow your portfolio and help your community. The trick is doing so while continuing to mitigate risk – enter expanded data. Expanded data includes non-credit payments, demand deposit account (DDA) transactions, professional certifications, and foreign credit history, among other things. Using these data sources can drive greater visibility and transparency around inquiry and payment behaviors, enrich decisions across the entire customer lifecycle and allow lenders to better meet the financial needs of their current and future customers. Read our latest white paper for more insight into the vital role credit plays within our society and how you can increase financial access and opportunities in the communities you serve. Download now 1Data based on Oliver Wyman analysis using a random sample of consumers with Experian credit bureau records as of September 2020. Consumers are considered ‘credit invisible’ when they have no mainstream credit file at the credit bureaus and ‘unscorable’ when they have partial information in their mainstream credit file, but not enough to generate a conventional credit score. 2Credit Invisibles, The CFPB Office of Research, May 2015.

New challenges created by the COVID-19 pandemic have made it imperative for utility providers to adapt strategies and processes that preserve positive customer relationships. At the same time, they must ensure proper individualized customer treatment by using industry-specific risk scores and modeled income options at the time of onboarding As part of our ongoing Q&A perspective series, Shawn Rife, Experian’s Director of Risk Scoring, sat down with us to discuss consumer trends and their potential impact on the onboarding process. Q: Several utility providers use credit scoring to identify which customers are required to pay a deposit. How does the credit scoring process work and do traditional credit scores differ from industry-specific scores? The goal for utility providers is to onboard as many consumers as possible without having to obtain security deposits. The use of traditional credit scoring can be key to maximizing consumer opportunities. To that end, credit can be used even for consumers with little or no past-payment history in order to prove their financial ability to take on utility payments. Q: How can the utilities industry use consumer income information to help identify consumers who are eligible for income assistance programs? Typically, income information is used to promote inclusion and maximize onboarding, rather than to decline/exclude consumers. A key use of income data within the utility space is to identify the eligibility for need-based financial aid programs and provide relief to the consumers who need it most. Q: Many utility providers stop the onboarding process and apply a larger deposit when they do not get a “hit” on a certain customer. Is there additional data available to score these “no hit” customers and turn a deposit into an approval? Yes, various additional data sources that can be leveraged to drive first or second chances that would otherwise be unattainable. These sources include, but are not limited to, alternative payment data, full-file public record information and other forms of consumer-permissioned payment data. Q: Have you noticed any employment trends due to the COVID-19 pandemic? How can those be applied at the time of onboarding? According to Experian’s latest State of the Economy Report, the U.S. labor market continues to have a slow recovery amidst the current COVID-19 crisis, with the unemployment rate at 7.9% in September. While the ongoing effects on unemployment are still unknown, there’s a good chance that several job/employment categories will be disproportionately affected long-term, which could have ramifications on employment rates and earnings. To that end, Experian has developed exclusive capabilities to help utility providers identify impacted consumers and target programs aimed at providing financial assistance. Ultimately, the usage of income and employment/unemployment data should increase in the future as it can be highly predictive of a consumer’s ability to pay For more insight on how to enhance your collection processes and capabilities, watch our Experian Symposium Series event on-demand. Watch now Learn more About our Experts: Shawn Rife, Director of Risk Scoring, Experian Consumer Information Services, North America Shawn manages Experian’s credit risk scoring models while empowering clients to maximize the scope and influence of their lending universe. He leads the implementation of alternative credit data within the lending environment, as well as key product implementation initiatives.

In what has been an unprecedented year, marked by a global pandemic and a number of economic and personal challenges for both businesses and consumers, Americans are maintaining healthy credit profiles during the COVID-19 pandemic. Experian released the 11th annual State of Credit report, which provides a comprehensive look at the credit performance of consumers across America by highlighting consumer credit scores and borrowing behaviors. This year’s report provided an extended view into how consumers are managing and repaying their debts; showing most Americans are practicing responsible credit management by reducing utilization rates, credit card balances and late payments. Even in light of the pandemic, data on American consumers across all generations shows responsible credit management including reduced utilization rates, credit card balances and late payments. “While it’s difficult to predict when the economy will return to pre-pandemic levels, we are seeing promising signs of responsible credit management, especially among younger consumers,” said Alex Lintner, group president Experian Consumer Information Services. Highlights of Experian’s State of Credit report: 2020 State of Credit Report 2019 2020 Average VantageScore® credit score [1,2] 682 688 Average number of credit cards 3.07 3.0 Average credit card balance $6,629 $5,897 Average revolving utilization rate 30% 26% Average number of retail credit cards 2.51 2.42 Average retail credit card balance $1,942 $2,044 Average nonmortgage debt [3] $25,386 $25,483 Average mortgage debt $213,599 $215,655 Average 30 - 59 days past due delinquency rates 3.9% 2.4% Average 60 - 89 days past due delinquency rates 1.9% 1.3% Average 90 - 180 days past due delinquency rates 6.8% 3.8%   Though not the same, some consumers are experiencing a second economic downturn. The economic fallout stemming from COVID-19 coming after the Great Recession of 2009, which took place in the not too distant past. Silent, Boomer, Gen X and Gen Z Americans are managing responsible credit utilization rates and holding credit cards below the recommended maximum. Are the older generations more credit responsible? Average VantageScore® credit score follows rank order from oldest to youngest – though contributed to by length of time possessing credit, number of lines of credit, and other factors that drive credit score – with the Silent Generation having the highest score (729), then Boomers (716), followed by Gen X (676), Gen Y (658) and Gen Z (654). Gen X consumers have the highest average credit card balance at $7,718 and utilization at 32%, while Gen Z has the lowest average credit card balance at $2,197 and the Silent Generation has the lowest utilization at 13%. Year over year data shows positive results driven by younger borrowers. While average utilization rates dropped for every generation, the most significant decreases were seen in Gen Z borrowers who saw a 6 percent reduction in their use of available credit, followed by Millennials who saw a 5% decrease year-over-year.  While Gen Z and Gen Y are carrying more credit cards than they were in 2020, their credit card balances decreased year-over-year. These factors fueled a 13-point increase in average credit scores for Gen Z and an 11-point increase for Millennials. When spliced by state, the data Minnesota had the highest credit score, while Mississippi had the lowest credit score. While the future is still uncertain, perhaps consumers can find comfort in knowing there is much they can do to improve their financial health – including their credit scores – and that there are numerous resources for them to access during these unprecedented times. “As the consumer’s bureau, we are committed to informing, guiding, and protecting consumers. Educating Americans about the factors included in their credit profile and how to manage these responsibly is of critical importance, especially on the road to economic recovery from the COVID-19 pandemic,” said Lintner. In an effort to encourage consumers to regularly monitor and understand the information in their credit reports, Experian joined forces with the other U.S. credit reporting agencies, to offer free weekly credit reports to all Americans through April 2021 via AnnualCreditReport.com.  In addition to the free weekly credit report at AnnualCreditReport.com, Experian also offers consumers free access to their credit report and ongoing credit monitoring at Experian.com. Additional credit education resources and tools Experian’s #CreditChat: Hosted by @Experian on Twitter with financial experts every Wednesday at 3 p.m. Eastern time The Ask Experian blog: Find answers to common questions, advice and education about credit Experian Boost: Add positive telecom and utility payments to your Experian credit report for an opportunity to improve your credit scores experian.com/consumer-education-content/ experian.com/coronavirus   1VantageScore® is a registered trademark of VantageScore Solutions, LLC. 2VantageScore® credit score range is 300 to 850.

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

Retailers are already starting to display their Christmas decorations in stores and it’s only early November. Some might think they are putting the cart ahead of the horse, but as I see this happening, I’m reminded of the quote by the New York Yankee’s Yogi Berra who famously said, “It gets late early out there.” It may never be too early to get ready for the next big thing, especially when what’s coming might set the course for years to come. As 2019 comes to an end and we prepare for the excitement and challenges of a new decade, the same can be true for all of us working in the lending and credit space, especially when it comes to how we will approach the use of alternative data in the next decade. Over the last year, alternative data has been a hot topic of discussion. If you typed “alternative data and credit” into a Google search today, you would get more than 200 million results. That’s a lot of conversations, but while nearly everyone seems to be talking about alternative data, we may not have a clear view of how alternative data will be used in the credit economy. How we approach the use of alternative data in the coming decade is going to be one of the most important decisions the lending industry makes. Inaction is not an option, and the time for testing new approaches is starting to run out – as Yogi said, it’s getting late early. And here’s why: millennials. We already know that millennials tend to make up a significant percentage of consumers with so-called “thin-file” credit reports. They “grew up” during the Great Recession and that has had a profound impact on their financial behavior. Unlike their parents, they tend to have only one or two credit cards, they keep a majority of their savings in cash and, in general, they distrust financial institutions. However, they currently account for more than 21 percent of discretionary spend in the U.S. economy, and that percentage is going to expand exponentially in the coming decade. The recession fundamentally changed how lending happens, resulting in more regulation and a snowball effect of other economic challenges. As a result, millennials must work harder to catch up financially and are putting off major life milestones that past generations have historically done earlier in life, such as homeownership. They more often choose to rent and, while they pay their bills, rent and other factors such as utility and phone bill payments are traditionally not calculated in credit scores, ultimately leaving this generation thin-filed or worse, credit invisible. This is not a sustainable scenario as we enter the next decade. One of the biggest market dynamics we can expect to see over the next decade is consumer control. Consumers, especially millennials, want to be in the driver’s seat of their “credit journey” and play an active role in improving their financial situations. We are seeing a greater openness to providing data, which in turn enables lenders to make more informed decisions. This change is disrupting the status quo and bringing new, innovative solutions to the table. At Experian, we have been testing how advanced analytics and machine learning can help accelerate the use of alternative data in credit and lending decisions. And we continue to work to make the process of analyzing this data as simple as possible, making it available to all lenders in all verticals. To help credit invisible and thin-file consumers gain access to fair and affordable credit, we’ve recently announced Experian Lift, a new suite of credit score products that combines exclusive traditional credit, alternative credit and trended data assets to create a more holistic picture of consumer creditworthiness that will be available to lenders in early 2020. This new Experian credit score may improve access to credit for more than 40 million credit invisibles. There are more than 100 million consumers who are restricted by the traditional scoring methods used today. Experian Lift is another step in our commitment to helping improve financial health of consumers everywhere and empowers lenders to identify consumers who may otherwise be excluded from the traditional credit ecosystem. This isn’t just a trend in the United States. Brazil is using positive data to help drive financial inclusion, as are others around the world. As I said, it’s getting late early. Things are moving fast. Already we are seeing technology companies playing a bigger role in the push for alternative data – often powered by fintech startups. At the same time, there also has been a strong uptick in tech companies entering the banking space. Have you signed up for your Apple credit card yet? It will take all of 15 seconds to apply, and that’s expected to continue over the next decade. All of this is changing how the lending and credit industry must approach decision making, while also creating real-time frictionless experiences that empower the consumer. We saw this with the launch of Experian Boost earlier this year. The results speak for themselves: hundreds of thousands of previously thin-file consumers have seen their credit scores instantly increase. We have also empowered millions of consumers to get more control of their credit by using Experian Boost to contribute new, positive phone, cable and utility payment histories. Through Experian Boost, we’re empowering consumers to play an active role in building their credit histories. And, with Experian Lift, we’re empowering lenders to identify consumers who may otherwise be excluded from the traditional credit ecosystem. That’s game-changing. Disruptions like Experian Boost and newly announced Experian Lift are going to define the coming decade in credit and lending. Our industry needs to be ready because while it may seem early, it’s getting late.

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

With delinquencies on the rise, financial institutions are looking for new tools to evaluate and improve the financial lives of customers and members. As the consumer’s bureau, Experian is also committed to improving the financial well-being of consumers. As part of that commitment, Experian supports the mission of the Center for Financial Services Innovation (CFSI), an organization focused on improving the financial health of Americans, especially the underserved, through innovative financial products and services.    Experian recently spoke with CFSI’s Thea Garon, a Director on CFSI’s Program Team to learn more about a new free, open-source tool the organization will be launching in June to help financial institutions drive consumer financial health. Here are some insights she shared about the new tool. Can you provide an overview of the CFSI Financial Health Score™ and how it is calculated? The CFSI Financial Health Score™ is designed to help financial service providers, employers, and other organizations diagnose and measure the financial health of their customers, clients, and employees. The framework provides a holistic, moment-in-time snapshot of an individual’s financial health based on eight multiple-choice questions that align with CFSI’s eight indicators of financial health. It includes one Financial Health Score and four sub-scores (Spend, Save, Borrow, and Plan). A set of nationally representative benchmarks offers comparisons across peer groups. CFSI has designed the framework to be free, open-source, simple, and easy-to-use. It’s intended to be a starting point; a proof point that financial health can be quantified, measured, and ultimately improved. Why did CFSI decide to develop this framework? At CFSI, we believe, and have recently released research to support the concept that financial institutions have a business incentive to help their customers lead financially healthy lives. Financial health comes about when your daily financial systems allow you to be resilient and pursue opportunities over time. As a financial service provider, you can help your customers lead financially healthy lives by helping them spend wisely, build savings, borrow responsibly, and plan for the future. To do this, you need a measurement framework to understand and track your customers’ financial health over time. The CFSI Financial Health Score™ is one way to do this. You can use the methodology to diagnose your customers’ financial needs and use these insights to develop products, programs, and solutions to help them improve their financial health over time. You can also share financial health scores directly with your customers to help them understand the actions they can take to improve their own financial health. Ongoing tracking will allow you to assess whether your company is making a meaningful difference in your customers’ lives over time. Can you provide any early examples of how CFSI Health Network members have adopted and incorporated this framework? Approximately 100 financial service providers have downloaded the framework, representing a diverse range of companies, including banks, credit unions, fintechs, non-profits, payment networks, and B2B technology providers. At least 14 companies are actively using the Financial Health Score to measure and track their customers’ financial health and have committed to sharing data and insights with us through CFSI’s Financial Health Leaders program. Some companies, are using the framework to assess their customers’ financial health for strategic planning purposes. Other companies, such as Wright-Patt Credit Union, are using the financial health score to engage their customers in a dialogue about financial health. The credit union has incorporated the framework into their MoneyMagnifier program, a financial coaching program designed to provide free, one-on-one advice and guidance to members in a judgment-free environment. Financial coaches have been trained to use the framework to start a conversation with members to help them improve their spending, saving, borrowing, and planning behaviors. Coaches help members set goals and develop personalized action plans to achieve those goals toward a better financial future, following up with them after six months to measure improvement and advance the conversation. What have you learned from companies who have started measuring and improving their customers’ financial health with the CFSI Financial Health Score™? While interest in advice is high, uptake can be slow. Making the interaction quick and easy, whether online or in person, is critical. The health check lengthens the interaction, so conducting the health check by appointment rather than with walk-in customers, can help set customer expectations for a lengthier interaction, but may reduce the number of potential participants. Enabling customers to expedite the session by taking the survey online can be helpful, but requires development resources to implement. Many companies are exploring the pros and cons of sharing customers’ scores with them. A single score can help motivate individuals to take action that will improve their financial well-being. However, sharing a low score can also be demoralizing to some, and focusing on the number itself can divert attention from behavioral changes and action steps. Some organizations are choosing to use customers’ response patterns to drive recommendations without sharing the score. Others are opting for a middle ground, sharing an indicator (such as green, yellow, red) instead of a specific number. The most effective measurement and improvement strategies go beyond the CFSI Financial Health Score™. While the framework can help you get started identifying high-level needs, targeted recommendations often require a more nuanced understanding of behaviors and challenges. Combining survey data with account or transaction data can provide a more holistic view into a customer’s full financial life. Each organization must find a balance between the comprehensiveness required to provide meaningful advice and the simplicity required to engage both customers and staff. How can interested companies start using the CFSI Financial Health Score™? We will be publicly releasing the CFSI Financial Health Score™ at the EMERGE: Financial Health Forum (June 6 -8 in Los Angeles). The score will be easy to download and completely free to use. Those who are interested in learning more can also sign up for our newsletter to get an update when the Toolkit is released.

Financial health means more than just having a great credit score or money in a savings account. Although those things are good indicators of financial well-being, personal finance experts believe that financial health means more: being able to manage daily finances, save for the future and weather a financial shock, such as a job loss. As we approach #FinHealthMatters Day on June 27—a day created to bring attention to the 46 percent of Americans who are struggling financially—let’s take a look at financial health trends of Americans. Young adults not actively saving for retirement: Roughly 31% of non-retired adults have no retirement savings or a pension, according to a survey by the Federal Reserve. Nearly half of 18- to 29-year-olds surveyed had no retirement savings or pension, and about 75% of non-retired people 45 and older had some savings. Still, about 14% of adults 60 or older who are not retired and employed had no retirement savings, according to the report. Managing daily finances a challenge for many: Living paycheck to paycheck is a reality for about 1 in 10 Americans (11%), who say they spend more on monthly expenses than their household income allows, according to a Harris Poll. Of those surveyed, about one-third (32%) say they just make ends meet. Most lack an emergency fund: About 50% of people are unprepared for a financial emergency. Nearly 1 in 5 (19%) Americans have no savings set aside to cover unexpected emergencies, while about 1 in 3 (31%) Americans don’t have $500 reserved for an unexpected emergency expense, according to a survey released by HomeServe USA, a home repair service. Renewed focus on personal savings: On a positive note, Americans are sharpening their focus on personal savings, with slight increases among those who say they are saving more than last year (26% in 2017 vs. 24% in 2016). And the portion of those contributing income toward non-retirement savings has returned to its 2013 level of 69%. The good news is it’s never too late for people to achieve financial health. To do so, they need guidance to develop financial routines that build long-term resilience and opportunity. Promoting financial health is good for the financial services industry, as financially healthy consumers drive new opportunities for increased engagement, loyalty, and long-term revenue streams. We invite you to join the conversation and contribute your support and ideas for a healthier future.