Tag: financial services

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.

Direct mail is not dead, but it's 2017. Financial services companies need to acknowledge there might be other ways to deliver credit offers and capture consumer eyeballs. There are multiple screens competing for our attention, including one of the originals - TV. Advertising and TV have been married forever, but addressable TV allows marketers to target on a much more sophisticated level. Welcome to credit marketing in the digital age. To help financial services companies understand the addressable TV channel, Experian marketing expert Brienna Pinnow answered the following questions in a short interview. What is addressable TV? Addressable TV is an amazing 1-to-1 direct marketing capability. To put it simply, addressable TV is the ability for an advertiser to deliver a TV ad to a specific household. From a consumer perspective, that means even if you and your next door neighbor are watching the latest episode of The Voice, you may see an ad for a mini-van while your neighbor sees an ad for upcoming one-day sale from their favorite retailer. With addressable TV, brands can define their target audience based on 1st, 2nd or 3rd party data (like Experian’s). With the help of satellite and cable companies, they can deliver a personalized, measurable experience. This is an exciting departure from the way that TV advertising has been planned and targeted for nearly 70 years. Instead of focusing on the program, marketers can now focus on the person. Addressable TV makes reaching a precise audience – the same way you would with a direct mail piece or an email – a marketing reality.  How long have marketers been leveraging addressable TV? Experian has been an pivotal player in the development of the addressable TV space. Since the first addressable TV trials back in 2004, nearly 13 years ago, Experian has provided the audience targeting data and privacy-compliant matching capabilities that make addressable TV possible. The past 3 years, however, have demonstrated unprecedented, hockey-stick growth in addressable TV. In 2016 alone, the volume of addressable campaigns doubled from the previous year accounting for nearly $300 million spend.  That trajectory remains the same in 2017 and beyond. So why are we seeing this growth now? Here are a few reasons addressable TV is continuing to grow… Scale: Millions of households can now be targeted using addressable technology, and the footprint continues to grow with smart TVs and additional cable operators. Data: As organizations put data at the heart of their business, addressable TV enables them to infuse their most important customer information into the targeting. Education: Agencies, data providers, and TV providers have invested time educating brands on the process and power of addressable TV. And now, advertisers are becoming more experienced at making this a consistent part of their marketing plan. Accountability: You’ll be hard pressed to find a marketer that doesn’t have to demonstrate ROI on their marketing campaigns. The measurement capabilities that addressable TV provides adds a layer of accountability and insight that was not previously possible. Technology: Experian has developed an audience management platform, the Audience Engine, which makes addressable TV possible in a matter of clicks. In the past year alone, our platform has distributed over 1,800 audiences for addressable advertising campaigns. What types of companies have been utilizing addressable TV? Have you seen many financial services companies test this channel? The early adopters of addressable TV were primarily automotive advertisers. Compared to other verticals, auto advertisers still spend the largest proportion of their budgets across TV. For that reason, they know it’s a necessity to see if their dollars are actually driving sales for their big-ticket items. Addressable TV solves that problem for auto advertisers. In a DIRECTV campaign leveraging Experian’s automotive data for audience targeting and post-campaign sales reporting, one major auto OEM saw a 26.2%  lift in sales for the advertised model compared to the control group. In the past few years, Experian has worked closely with advertisers across verticals – from retail to travel to finance – to launch addressable campaigns. Financial services clients particularly find Experian’s financial related segments, such as income or net worth, to be accurate and powerful in creating qualified target audiences that improve campaign performance. I’ve read that millennials are abandoning cable and TV providers in favor of services like Hulu and Netflix. Does this mean the market for addressable TV will shrink in the coming years? There is a segment of consumers who are abandoning traditional cable services. However, this doesn’t mean they are abandoning content. In fact, content consumption is at an all-time high with offerings from Roku, Hulu, Netflix, Sling TV, CBS, and beyond. All this shift in behavior means is that the definition of TV is becoming more fluid. “TV” doesn’t have to be a big screen sitting in your living room; it can be a laptop on a red-eye flight. And from a marketing perspective, the concept of addressable, 1-to-1 targeting is already moving into some of these products and services. The footprint of addressable TV will only continue to rise as consumers stay connected to the content they love. How can companies measure the success of utilizing addressable TV as a channel? Not only does addressable TV provide laser-targeted ad delivery, but it also opens up measurement capabilities that were never possible for TV advertisers in the past. Traditionally, TV audience measurement has focused simply on eyeballs and not revenue impact, with little insight into how TV advertising converts into sales. The primary source for audience measurement in the TV world has been program ratings and expensive brand studies. With addressable TV, that story is changing. With companies that collect second-by-second viewership data linked to households, marketers now have the ability to tie this data back to their online and offline sales. Experian is pivotal in making closed-loop TV reporting possible. As a data and matching safe-haven, we link together the viewing information from the target audience with the sales data provided by the advertiser. The end result is a privacy compliant report that clearly demonstrates the impact of the campaign on the target audience. Did the targeted audience visit a bank location? Email customer service? Sign up for a new account? Spend a certain amount? These are all questions our TV attribution reporting answers for clients. If a company wants to begin marketing in addressable TV, what is required in terms of set-up? Addressable TV may sound new, exciting or even complex. But it doesn’t have to be. Getting started is as simple as defining the target audience. Decide whether you would like to leverage your own CRM data, a custom model, third-party data or a combination of these data sources. If you’re still not sure where to start, ask yourself a very simple question, “Who am I sending a direct mail piece or email to in the next month?” There’s your audience. Better yet, you will be amplifying your message, reaching the customer with a consistent message and meeting them wherever they are. After you’ve determined who you want to target, a matching partner like Experian can work with you to show you the reach of your audience across TV providers. You’ll finalize your budget, creative and media plan while Experian distributes your audience to the selected media destinations. Before you know it, your campaign will be live, and reaching your target audience whether they’re watching Shark Tank or Sharknado. When the campaign wraps, you’ll be on your way to measuring results like never before. Are there any additional trends you see emerging in the addressable TV space? The future of addressable TV is related to both the targeting and measurement capabilities. More advertisers are working with Experian, for example, to launch coordinated campaigns. That doesn’t just mean launching a digital campaign and TV campaign at the same time. It really means targeting the same exact people for the digital and TV campaign. We like to consider this a "surround sound" approach where the customer or prospect experiences a consistent message across channels. As for measurement, Experian is working closely with advertisers to explore the power of mobile data. Recently, Experian partnered with Ninth Decimal and DIRECTV to incorporate mobile location data into the post-campaign measurement process for Toyota.  The results proved a 19% lift in dealership visits for those exposed to the campaign. This is an exciting development because this approach can translate well for any other advertiser who wants to measure metrics like location visitation. If you’d like to learn more, check out our Addressable TV whitepaper.

As 2016 comes to a close, many in the financial services industry are trying to assess the impact the Trump administration and Republican controlled Congress will have on regulatory issues. Answers to these questions may be clearer after President-elect Trump is inaugurated on Jan. 20. However, those in the federal regulatory environment are already exploring oversight and regulation of the FinTech and marketplace lending sector. Warning on alternative credit risk models Inquiries by federal and state policymakers over the past year have centered on how FinTech and marketplace lenders are assessing credit risk. In particular, regulators have asked about how credit models different from traditional credit scoring models and what, if any, new attributes or data are being incorporated into credit risk models for consumers and small businesses. On Dec. 2, Federal Reserve Governor Lael Brainard signaled that policymakers continue to be interested in this area during a wide-ranging speech on the potential opportunities and risks associated with FinTech. In particular, Brainard warned that “While nontraditional data may have the potential to help evaluate consumers who lack credit histories, some data may raise consumer protection concerns” and that nontraditional data “… may not necessarily have a broadly agreed upon or empirically established nexus with creditworthiness and may be correlated with characteristics protected by fair lending laws.” Brainard also suggested that there are transparency concerns with alternative scoring models, saying that “alternative credit scoring methods present new challenges that could raise questions of fairness and transparency” given that consumers may not always understand what data is used utilized and how it impacts a consumer’s ability to access credit at an affordable price. Look for regulators and Congress to continue to focus on the fairness and accuracy of new credit risk models and the data underpinning those models in debates surrounding FinTech and Marketplace lending in 2017. A national charter for FinTech? Earlier this month, the Office of the Comptroller of the Currency (OCC) announced that it was considering the creation of a national charter for FinTech lenders. There has long been speculation that the OCC would offer a national charter for FinTech. Analysts have suggested that the creation of a charter could help increase regulatory oversight of the growing market and also provide additional regulatory certainty for the emerging FinTech industry. The OCC’s proposal would create a special purpose national bank charter for FinTech businesses that are engaged in at least one of three core banking activities: receiving deposits; paying checks; or lending money. The OCC will be developing a formal agency policy for evaluating special purpose bank charters for Fintech companies that will designate the specific criteria that companies applying for a charter will have to meet for approval. OCC has suggested that this will likely focus on safety and soundness; financial inclusion; consumer protection; and community reinvestment. The OCC is collecting comments on the proposed policy through Jan. 15, 2017.