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As data privacy regulations become more strict and tech firms implement change, we share how marketers can remain effective while remaining compliant.

This handy guide explains the practice of Credit Portfolio Management, managing, and monitoring all aspects of your company's credit portfolio.

Images of giant container ships clogging up ports have become the public face of global supply chains' disruptions. With widespread factory and shipping operations interruptions, supplier delivery times increased dramatically. According to U.S. Census, 38.8 percent of small businesses experienced domestic supplier delays during the pandemic. Some even predict that global supply chain disruptions could continue into next year. While some aspects of the supply chain—such as increased consumer demand and labor shortages—are out of your hands, there are risks within your supply chain that you can manage and build resiliency and agility. Running a tight supplier network gives you a competitive advantage during periods of crisis when others are struggling to keep up. What is Supplier Risk Management? Supplier risk management is the process of evaluating your suppliers to understand better where the vulnerabilities lie and then taking proactive steps to mitigate the risks you've identified. In the past, many client companies overlooked their suppliers' health and operational resiliency. If one supplier faltered, another supplier could be counted on to step in and take their place. But it's not always simple. As the global pandemic has revealed, there can be challenges to finding alternative suppliers if demand soars. Whether it's geopolitical risks, natural disasters or labor unrest, many risks can impact the operational health of the entire supply chain. One supplier slip-up can throw off the whole chain and put a business in jeopardy. Client companies need to know how stable their suppliers are—not just today, but in the foreseeable future too. Companies need to manage their supplier networks proactively. Common Supplier Risks Assessing the health of the entire supply chain is more critical than ever. Put these common supplier risks on your radar. Social, Ethical or Environmental Risks Increasingly, businesses are screening their suppliers for how well they perform on environmental, social or governance (ESG) factors. Businesses want to ensure that they are working with vendors with a solid track record on sustainability, employee relationships and transparency. For example, working with suppliers that flout emissions standards or engage in bribery can pose liability risks for you. The negative reputations of these types of suppliers can carry over to their clients. Moreover, doing business with suppliers that are on government sanctions or non-compliance lists can result in penalties for you and potentially even legal liability. Even companies that profess a commitment to ESG principles must demonstrate adherence to certain standards within their supply chain. It's what consumers increasingly demand and some governments are legislating. But how can you screen suppliers to ensure compliance with ESG principles? Technology can help: Experian's partner Global Risk Management Solutions (GRMS) allows companies to keep track of all their suppliers and verifies compliance within the required Environmental, Social and Governance (ESG) parameters. How to Create a World-Class Supplier Risk Assessment Program To learn more about Global Risk Management Solutions watch our interview where we discuss the main points of setting up a world-class program. Financial Risks Many businesses monitor their suppliers for financial risks, which is the likelihood that a supplier will run into financial difficulty, and therefore, renege on their obligations. Working with a supplier on shaky financing footing can undermine the operational health of your organization. For example, suppliers in financial distress can suffer service interruptions, poor quality and safety problems – all of which can spill over to clients, especially if it's a main supplier. If one of your suppliers suddenly closes its doors or goes bankrupt, it may be difficult to find a replacement supplier on short notice. Screening for financial risks has become more straightforward, thanks to technological advancements. Tools like Experian's  Small Business Financial Exchange and Supplier Check Reports provide information on small business credit performance to help you assess financial risks more efficiently. Operational Risks Any risk that results from flawed internal processes or management, rather than external events, is known as operational risk. This can include labor unrest, factory closures and equipment failures, which can ultimately prevent a supplier from meeting their deliverables. Understanding the potential and actual operational challenges faced by your suppliers can help you assess whether to work with them. Continuity Risks As the pandemic has shown, it's impossible to predict when a crisis might hit your supply chain. That's why businesses need to develop a continuity plan for how they'll handle unexpected crises and the steps they'll take for recovery. That's true of your suppliers too. Suppliers that lack continuity plans can easily get kicked off the line without a plan for a rebound. That can cause major disruptions to their clients. But how do you know what your suppliers' business continuity plans are? Strategic Risks Internal or external events that make it difficult or impossible for a company to achieve its business goals are strategic risks and you need to monitor your supply chain against them. For example, a supplier that may not have the resources to hire enough workers poses a strategic risk for its clients and can undermine its market position and reputation. Until recently, companies hadn't considered their supply chain as a strategic decision because of the siloed decision-making process. Bringing together supply chain functions with risk management and corporate strategy places supply chain management at the center of strategic planning and can build resiliency. Expanding the role of procurement within your organization can help management better assess the weak links, anticipate unexpected events and adapt to changing conditions. Insights drive awareness Managing your supply chain risk is only possible when you have insight and clarity into the financial health of your suppliers. Experian's powerful technology solutions allow you to do this in several ways: Finding alternative lookalike suppliers Your existing performing suppliers can be valuable in identifying other possible alternative or contingent suppliers. By leveraging tools like Experian's Business TargetIQ (BTIQ), you can effortlessly profile your ideal supplier with premier firmographic, geographic, risk and credit attributes. Once you have determined your ideal supplier profile, use the "find similar" feature to swiftly and easily identify other companies that meet your criteria and have similar profiles. Further expand your segment and qualify by adjusting the platform's robust built-in filters. In addition, third-party and other data can easily be uploaded to get a comprehensive 360-view of the suppliers. Why start from scratch when you can easily leverage existing relationships that are performing? Develop an Integrated Supplier Database Your ability to make informed decisions hinges on access to quality data about your suppliers. But getting reliable, real-time data on your own may be difficult. You may need to work with a third-party vendor that gathers and validates this information. But vast amounts of data can quickly overwhelm an organization, especially if it's siloed. For data to be useful, it must integrate with existing customer relationship management and enterprise resource planning software that your workforce uses each day. Integrating these databases offers a 360-degree view of your entire supply chain, which makes it easier to isolate risks. Look for vendors that can work with your legacy systems. Segment Suppliers into Risk Categories Segmenting suppliers by different attributes can provide valuable insights into how vital each supplier is to your operations. While there are several ways to segment suppliers – such as the amount of spend, product, service or volume – consider segmenting suppliers based on their risk profiles. This approach can uncover the level of risk exposure for each supplier, no matter how small. A risk event, even with a smaller supplier, can cause downstream disruptions. Translate Risk Data into Predictive Intelligence With vast amounts of data on suppliers, it's possible to create forecasting models to play out "what if" scenarios based on both historical information as well as real-time events. However, even the most powerful artificial intelligence programs are only as good as the quality of the data input. Quality data increases the probability of an accurate forecast and makes it meaningful. To tackle this, GRMS monitors suppliers in real-time and sends clients push notifications alerting them to any status changes. That way, they can act on potential problems before they hit their supply chain. Keep Supplier Assessments Up to Date While some companies may perform supplier assessments internally, it can be hard to continuously monitor them. For example, knowing when a supplier's insurance policy has lapsed or if regulatory actions have been taken against a supplier is crucial to building their risk profile. Companies without in-house expertise on supply chain risk factors should seek out third-party vendors that can gather, assess and monitor supplier data. Why is Supplier Risk Management Important? During difficult market conditions, a well-managed supplier network means having a leg up in the industry. Businesses that manage actual or potential risks may continue to operate without disruption, as well as gain important insights that can help turn risks into opportunities. They can also improve their competitive position and lower supplier costs. Information is power. On the flip side, companies that fail to adequately assess the supply chain risks can get blindsided. Here are a few reasons why supplier risk management is critical to business success. Greater Insights Help Create Strategies That Turn Risk into Competitive Advantages A supply chain is more than the building block of your business. It's what makes your business possible and is a revenue driver and a differentiator. A powerful, reliable supply chain enables you to get products and services to market faster and with lower costs than competitors. Case in point: according to Deloitte, 79 percent of organizations identified as "supply chain leaders" achieve revenue growth that is "significantly above-average." Disruptions anywhere along the supply chain can undermine those goals. According to that same report, only 8 percent of the organizations with "lower-performing supply chains" were able to achieve "above-average" revenue growth. The bottom line: with greater technology-enabled insights into your supplier network, you can turn risk into competitive advantages. For example, data insights can alert you if a major supplier faces financial difficulties, which gives you time to find a new, better-positioned alternative. Your competitors may not have access to such a resource, putting them at a disadvantage. An Improved Competitive Position in Your Market With shipping delays and poor customer service befalling businesses of all types in recent months, a well-managed supply chain can help you deliver greater value to customers compared to your competitors. According to a recent Oracle survey, 76 percent of people would trust and be more willing to buy from (78 percent) a company if they knew it used advanced technologies like artificial intelligence to manage its supply chain. By emphasizing supply chain risk management within your organization and creating processes to assess the risks, you can gain a competitive advantage in the industry. Lower Supplier Costs The cost of supply chain disruption is higher than you may think. Downtime, sourcing a new supplier and missed deliverables on your end can add up to astronomical amounts: on average, global supply chain disruptions cost $184 million per year in lost revenue for each large organization, according to Interos Annual Global Supply Chain Report. There are also long-term costs, such as reputational damage and customer perceptions, which are difficult to measure. In that same Interos report, 83 percent of responding organizations reported suffering "at least a little reputational damage" due to supply chain problems. Ultimately, a supply chain that delivers and allows you to keep your brand promises is worth its weight in gold. Reliable suppliers allow you to keep your overall costs in check. Proactive risk management of your supply chain is an essential cost containment best practice. Looking Ahead to the Future of Supply Chain Risk Management Some supply chain disruptions are out of your hands. But there are ways to intelligently and efficiently manage risks and bring stability to your company. Until now, it's been difficult for companies to assess and monitor the financial and operational health of their suppliers, either due to a lack of internal capacity or the necessary transparency. But that's changed: by utilizing robust technology solutions, organizations can minimize supply chain disruptions and optimize their strategic value.

By all indications, the supply chain challenge of this year will stretch well into 2022. Risk managers and finance departments are working in real-time to pivot, and keep customers satisfied, and while there’s currently no silver bullet to port delays, the lack of truck drivers or warehouse space, there are new strategies to consider. Join us for a very special supplier management webinar.   Will your current suppliers be capable of delivering or do you need to pivot? In our upcoming webinar our panel of experts will talk about simplifying supplier discovery and diversification. In this talk you will learn: How to conduct a world-class supplier risk assessment program How to identify look-a-like suppliers in specific industries How to filter on multiple risk factors and more We will also be taking your questions, it promises to be an illuminating discussion, we hope you can join us. Register for Webinar  

Experian hosted a commercial fraud trends webinar titled 'Uncovering Undiscovered Fraud Within The Portfolio'. During our session, key Experian experts Dominic DeGuiseppe, Javier Rodriguez-Paiva, and Li Mao, discussed the critical issue of commercial fraud within the financial industry and how it's often misclassified, leading to significant impacts on businesses. The speakers emphasized how businesses often underestimate their commercial fraud issues. Misclassification happens when business operational losses are erroneously categorized as credit losses. Businesses come to realize this when they delve deeper into the instances of credit misuse by fraudsters. Javier Rodriguez-Paiva argued that commercial fraud rates remain concerningly high, especially in small business lending and credit facilities, which are attractive magnets for criminals and credit abusers. This ongoing situation is worsened by lenders often lacking the specific capabilities to detect and manage fraud. In response to these challenges, Experian offers solutions aimed at rapid and early detection of different types of fraudulent activity. As Li Mao explained, the goal is to design solutions that allow businesses to identify risk quickly at the time of account opening, using advanced analytics and substantial data sources. Experian's solutions aim to ensure businesses can understand the different commercial fraud classifications and treat each case uniquely. By identifying the fraud type, be it first-party, third-party or synthetic ID fraud, appropriate responses can be triggered for each application. During the webinar, Li Mao introduced Experian's Multi-Point Verification solution, which verifies application information against trusted sources, allowing businesses to be confident of the identity of the business they are dealing with. This solution incorporates credit, fraud, and identity verification within a single tool. Javier Rodriguez-Paiva concluded by emphasizing the need for a more comprehensive risk management framework. Lenders could benefit from combining traditional credit scores with fraud-screening tools to provide a 360-degree view of a potential customer's risks. Such a multi-dimensional analysis can significantly improve fraud detection and prevention. The webinar highlighted Experian's commitment to supporting businesses in managing and mitigating prevalent commercial fraud challenges. While identity theft and credit abuse fraud are expected to increase, Experian's new strategies, enhanced verification tools, and advanced analytics solutions offer a promising shield against fraudulent activities. Click below to watch this webinar on-demand.

As the economy continues to recover, commercial service providers have a significant opportunity to expand their market share by growing their business and commercial portfolios through new customer acquisition. Compared to consumer relationships, which typically carry a more limited number of accounts, business customers offer the opportunity for a more expansive relationship, with the ability to onboard the customer into multiple accounts and products. A  relationship with a business customer may start with a single checking account, and if the customer is pleased with the service and experience, that relationship may blossom with the customer’s adoption of additional products and services including telephone lines and devices,  business credit cards, loans and lines of credit for business needs, software, and treasury management products, among many others. To gain more share of the wallet, commercial service providers must offer an excellent digital customer experience as the cornerstone of a successful customer relationship, as the market becomes more and more competitive.  Business customers are quickly transitioning their operational processes to be digital-first, and they expect vendors and suppliers, across many industries especially financial institutions, to be a step ahead in offering digital account opening and support. How fraud tools help the customer experience Commercial service providers must continuously innovate their operations and account onboarding strategy to stay competitive and shut out cybercriminals.  A robust fraud prevention strategy should help to reduce losses and operational costs. By prioritizing fraud tools that enable automation, commercial service providers can reduce costs by eliminating labor-intensive processes. The challenge for service providers becomes how to effectively manage that trade-off: creating a technology-enabled process that accurately disrupts fraud attempts while not inconveniencing and adding undue friction to legitimate customers. For example, fraud tools that activate during the onboarding phase can help service providers offer a better customer experience, allowing low-risk accounts to pass through with minimal friction while applying safeguards to slow down applicants in the danger zone for further review. Many commercial service providers are unaware of the amount of undiscovered fraud that lies within their customer portfolio. Undiscovered fraud is a subset of your approved customers who represent a risk of future fraud.  These cases exist because many legacy fraud tools take a one-size-fits-all approach to screening for fraud. But these customers are at a higher risk for future fraud occurrence.  Now, advanced fraud prevention improves the experience for the majority of customers by enabling a less intrusive application process, reducing friction within the customer experience, and increasing operational efficiency. Preventing fraud with an integrated framework of tools There are three major types of application fraud: First-Party Fraud —the perpetrator opens an account without an intent to repay the creditorThird-Party Fraud — the perpetrator opens an account under someone else’s identitySynthetic Fraud — the perpetrator uses stolen information and creates a fictitious identity with pieces of real information, in order to carry out fraud. Tailoring your approach to specific fraud makes for a better customer experience and bottom-line savings. However, identifying and remediating all types of fraud requires a cascade of tools, experts, and data sources. Experian’s commercial fraud suite can be customized within a commercial service provider’s operational workflows to address each form of fraud with the correct treatment.  Experian’s tools are supported by the most robust consumer and business data available, in addition to new, third-party sources, giving commercial service providers the ability to gain efficiency through a single partnership, as opposed to manually integrating data from multiple disparate tools and sources. One way we have created efficiencies for commercial service providers is by blending consumer and business data through our next-generation business verification solution Multipoint Verification. It helps clients cross-reference application information with robust databases backed by blended bureau data and new, third-party data sources. With Multipoint Verification, commercial service providers can leverage practical intelligence gathered from signals that describe the validity of attributes like the applicant’s phone number, professional social media profiles, historical employment information; and business information like a business’ web domain, email addresses, mailing address, industry classification, corporate linkage, Tax ID, and much more. Once the business owners have been verified, providers can score their applicants with Experian’s First Party Fraud Score, a new-generation blended predictive scoring model designed to identify first-party fraud risk or the likelihood of a first payment default within the first 6 months of account opening and to identify credit bust-out scenarios. Growing business customer bases with fraud prevention tools Customer expectations of online applications have changed in recent years, and your lower-risk good customers can enjoy that lower friction experience while higher-risk applications get more scrutiny. Focusing on the customer experience in how you screen for fraud can be a great growth opportunity. By using a comprehensive suite of tools such as Experian’s Commercial Entity Fraud Solutions, which specifically addresses each fraud type and applies the right type of friction when needed, your firm can drive operational efficiency that reduces risk and cost. Learn more about Multipoint Verification

Experian is very excited to unleash game-changing commercial fraud detection capabilities with Multipoint Verification, a key component in our commercial fraud suite. Innovations in digital consumer experiences mean your commercial customers have new expectations. They want personalized, digital, secure faceless experiences, and fast decisions. But faster digital experiences without proper checks can often open the door to commercial fraud.  Manual application reviews can slow things down, and cut into your bottom line. Experian can help you control costs and protect you from the high price of commercial fraud, and labor-intensive manual review processes. Multipoint Verification facilitates fraud detection at the point of application, so your lower-risk good customers can continue to enjoy a frictionless experience while you mitigate fraudulent applications. Introducing Experian Multipoint Verification Multipoint Verification helps you verify a business's legitimacy. In addition, it enables you to discern fraudulent applications from bad credit through comprehensive data sets. Single-sourced verification products can be limited in their capability and often prone to false positives. Multipoint Verification arms you with practical intelligence, so you can confirm the linkage between the applicant and claimed business, state filings, email issuance, or identify potential corporate linkage to other entities at the point of application. Experian is transforming the commercial fraud screening landscape, let’s start a conversation. Learn more about Experian Multipoint Verification

For decades, lenders and others have relied on core credit data focused on financial borrowing and repayment behavior. Many factors go into the decision-making process, including the length of credit history, the number of open accounts, and on-time bill payments. What happens when a consumer or small business owner relies on cash for financial transactions or has never held a mortgage or a business loan? A significant portion of the U.S. adult population faces this problem. According to a 2020 report by the Federal Reserve, as many as 21 percent of U.S. consumers survive without a credit card. As a result, the traditional credit-scoring model doesn't tell the full story of their financial health, and they could be labeled “credit invisible" or “unscored" due to limited access to credit. It's both a personal and business problem. For consumers, that might mean not being able to secure a mortgage, insurance, or even be considered for a job. Start-ups and small businesses, meanwhile, may not be able to access credit to fuel their future growth and success. The recent explosion of new business filings brings the challenge of credit access to a head. Because small and emerging businesses can lack sufficient credit histories to qualify for credit on their own, they may rely on the owner's personal credit profile for lending decisions. Yet, some small businesses continue to struggle to get financing. It's especially pronounced in communities of color. For example, Black-owned businesses get turned down for bank financing at twice the rate that white-owned businesses do, according to the Federal Reserve. Source: Federal Reserve SBCS 2021 Report on Firms Owned by People of Color Technological innovations such as Experian's DataShare ™, Experian Boost and Social Media Insight are shaking up the conventional scoring system by bringing in alternative credit factors to fill out the credit picture. For lenders, the emergence of alternative data, otherwise known as non-traditional data, helps them make informed business credit decisions among a wider number of customers and prospects. What is non-traditional data? Traditionally, lending and other credit decisions have been based on factors such as credit history and on-time payments. That can allow people and businesses that do not have a lot of cash but can demonstrate good repayment behavior to borrow. However, it's quite another story when the situation is flipped. Some consumers and businesses don't utilize financial products, though they might have healthy cash flow. As a result, they lack the necessary data to generate a credit score, making them appear to be unattractive credit risks. Non-traditional data is an important way to give consumers access to better rates and open up borrowing to more consumers and businesses. This data can include things like rent and cell phone payments, giving lenders a broader range of information to consider. According to FinRegLab, 96 percent of U.S. households have a bank account or a prepaid card and 91 percent of U.S. adults have at least one utility account in their names. Overall, including other credit data, in addition to core credit data, would bring more people into the credit system. Including non-traditional forms of data can create financial inclusion for consumers and businesses. Where does non-traditional data come from? Non-traditional data is generated by aggregators that scour utility accounts, public records and property information to understand the financial activities of consumers. It considers a wider range of financial behaviors than what just appears on a credit report. These can include: - Rent payments - Utility payments - Employment verification - Bank account information, including recurring payroll deposits, average account balances and withdrawal activity. - Property records Non-traditional credit data goes one step further and supplements this data with information on consumers' use of alternative lending arrangements such as payday loans, small-dollar credit lenders, auto financiers, rent-to-own, retail financing, and others. Commercial lenders can also take advantage of technological innovations to gather non-traditional data for lending decisions, which can drive more approvals and greater profits. For businesses, non-traditional credit data can include: - Social media: How many user check-ins and reviews is a business getting on social media? That can say a lot about its business. Experian Social Media Insight™ provides a social media view to help lenders better score business borrowers with thin credit profiles. - Online financial activity: An uptick in PayPal or Venmo transactions can suggest healthy cash flow. - Bank details: Borrowers can permit lenders to view their business banking account, which shows how much cash on hand they have. - Accounting software: With direct access to QuickBooks or FreshBooks, lenders can make determinations about a potential customer's financial health in real-time. - Shipping information: For businesses moving products, analyzing shipping data allows lenders to make assumptions on cash flow. How is non-traditional data currently used? Financial institutions have become receptive to other credit data sources to provide additional insights. That can improve the accuracy of credit scoring and allow lenders to find more creditworthy consumers. According to Experian's 2020 State of Alternative Credit Data report, 96 percent of lenders believe that during times of economic stress, non-traditional credit data allows them to more closely evaluate consumers' creditworthiness and reduce their credit risk exposure. By deeming more consumers creditworthy, financial institutions can increase financial inclusion, while uncovering new lending opportunities for themselves. Modern tools make that possible. For example, Experian's Clarity Services provides insights on more than 62 million U.S. consumers, helping lenders better assess and manage risk. Lenders can see consumers' utilization of alternative finance and payment behaviors for a more holistic view of their creditworthiness. Likewise, Experian's DataShare™ is a non-traditional digital solution, which can be used to make commercial lending decisions. It provides owner-permissioned data to expedite new client onboarding and increase retention by bringing digital transformation to document gathering. With real-time financial data, lenders can understand the trends in their customers' financial positions to better assess risk. How can non-traditional data be used to calculate credit risk? Non-traditional credit data can help lenders gain deeper insights into their borrowers to better assess risk. For starters, it allows them to spot creditworthiness trends in real-time, rather than a snapshot in time that traditional credit data typically provides. A deteriorating financial position among prime customers and signs of improvement among marginal customers can be spotted faster with a combination of traditional and non-traditional data. Also, some consumers may appear to be “risky" through the lens of core credit data but may prove less so when non-traditional data points are included. For example, according to FinRegLab research, cash flow data can be predictive of credit risk, not just credit utilization and history. Owner-permissioned data lets consumers decide what lenders can see when making their credit determinations. For instance, lenders who use only traditional data might see an account that has been turned over to collections. With owner-permissioned data, on the other hand, a lender can also see a record of paying rent and cell phone bills on time. As a result, lenders can evaluate both types of behaviors in their credit decision, providing them with a fuller picture. Looking at how consumers leverage alternative financial products to manage debt can also reveal responsible credit-management behaviors. Consumers who appear to be low-risk in the eyes of traditional credit data may actually be riskier if they do not manage their alternative finance products well – an activity that doesn't appear on most credit reports. The challenges of non-traditional credit data Non-traditional credit data has the potential to open the world of credit to underserved communities. For lenders, it can unlock opportunities by bringing in a wider range of potential customers. But it's important to recognize that there are challenges too. For starters, lenders are still figuring out how to incorporate it into their lending decisions. While non-traditional credit data has always been available, big data collection now makes it easier to access. As lenders and regulators become more comfortable with its use, they will begin to incorporate it into credit decisions, while also being aware of its limitations. Consumers, meanwhile, may have data security and privacy concerns about how their information will be used and who may have access to it. The Consumer Financial Protection Bureau is working on guidelines that ensure that lenders are using data appropriately and fairly. Taking the next step Ready to see how non-traditional credit data can drive more business while also reaching your diversity, equity and inclusion goals? Modern tools simplify the process and bring a more holistic view to inform the lending decision. Learn more about how you can expand your customer base and improve profitability with non-traditional credit data. Learn more about Experian DataShare Related Articles Alternative data can help to facilitate small business lending Beyond Credit Risk - Understanding Alternative Data Bid Alternatives: How New Data Sources are Reshaping Online Lending

[Gary]: I'm joined by Yvon Desieux, a Senior Director in our product team, and Yvon is responsible for product strategy and driving innovation in lending through the creation of products and applications for commercial lenders.  Sitting next to Yvon is Mike Myers, our Vice President of Product Management here in Business Information, and he leads the product team and AgileWorks Innovation Lab. Welcome to Business Chat, gentlemen. The COVID-19 pandemic spurred a wave of innovation in e-commerce, in restaurant delivery services, in FinTech, digital has raised the stakes. There's an expectation with consumers and businesses that client experiences should be on an even playing field across industries. But when it comes to applying for loans, particularly on the commercial side, those processes can be quite manual. One of the things that speed things along is real-time, financial statement data. What is real-time financial statement data? [Yvon]: Well, simply, financial statement data in real-time is just when lenders are able to access accounting software via the Internet, to power their lending decisions, and our new product offering Experian Datashare, provides this capability with the power of owner permission data. With this permissioning, small business owners are empowered with the ability to leverage their own financial data, to apply for the loans and other services that they need. So, unlike a credit report, permissioning puts the owner in control of what transactional data they share, to qualify for the loans and lines of credit that they need to keep their businesses running. So this consented data provides personalization balanced with privacy for businesses and growth, balanced with accountability for the lenders. What problem is real-time financial statement data solving for lenders? [Yvon]: The feedback that we've received falls into four-tier categories. It's revenue growth creating operational efficiencies, decreasing risk, and creating a better client experience through a modern digital journey that's easy to understand and delivers faster decisions and quicker access to the financing that the small businesses need. Mike, when you talk to clients about digital transformation, what are the things that are keeping them up at night? What are they most concerned with? [Mike]: I think all of our clients, to some degree, are going through a technical transformation, or we often call a path to modernization, and Experian is in the same boat. You know, it's hard to stay on top of technology and really leverage the cloud and be able to get new products, new services, new capabilities to market quickly. Some of the biggest challenges our clients expressed to us are how do we operate in what's become a very different environment over the last year, year, and a half with COVID. Things have moved at a much more rapid pace, as far as digitization. So the interactions with their clients have changed. It's become a bit more impersonal. It's become a bit more quick and with a sense of urgency, and many clients are struggling to do everything online and do it at a breakneck speed. This is often where API's and with different technologies, we can keep pace and help our clients integrate data, access data, and ultimately render decisions to their end-users in a much quicker and more time-efficient way. Can you talk a little bit about Experian's API Hub and getting access to our data? [Mike]: The API economy has been here for many years, and our clients are integrating our data and, you know, putting it into their systems so their users can access data real-time. And Datashare is one of those services where this data can be integrated into our client's systems. And there's no drop-off, there's no manual, or swivel chair type activity where you're going to multiple systems. It becomes a much more efficient process. And not only the client wins, but also an applicant gets a much more rapid decision and can go ahead and power their business. Can financial statement data play a role in helping emerging and underserved businesses grow? If so, how? [Yvon]: Yeah, for new and small businesses that haven't yet established business credit and rely on the owner's personal credit profile for lending decisions, Datashare gives them the ability to share their financial statements and show the financial health of the business. This expanded data can be used, in the decision-making process in addition to the standard bureau data to create more approvals. By permissioning data, these businesses are able to move out of an unscorable or subprime, hard money loan bracket,  into a space that helps them qualify for more traditional loans and lines of credit, with better rates in terms. [Gary]: Mike, I've got another slide here; businesses of color, have been severely impacted by COVID. You can see some of these stats here. 30% of black business owners say that access to credit is the biggest challenge in the next 12 months. 47% said they didn't apply for financing because they did not think they would be approved, only 37% received all of the financing they sought. Recently on a CBA webinar with a Experian, Janelle Williams from the Atlanta Fed was saying that 83% of the PPP loans went to white-owned businesses, but only 1.9% went to businesses of color. How can Experian DataShare help underserved businesses of color? [Mike]: Yeah, Gary, you're really touching on a key point here. You know, small businesses, power our economy. They make up the majority of businesses out there. And based on that recent stat you and Yvon just discussed about new business startups. There's more than ever, and we all have to do a better job of making sure there's an equal playing field when it comes to accessing capital, whether it's trade credit or financial packages, to help them manage their cash flow. And that became more evident than ever again, with the pandemic and the sudden shift in the economy. It became more and more challenging for many small businesses to manage their cash flow, pay their employees, and really see a path forward. So data share is exciting in a number of ways. What excites me is that it now combines a historical process that was done in a much more offline manual way. And now can be done in real-time. And if you start combining that with historical payment information, historical public record filings, in addition to real-time financials, you have a winning combination that can provide a clear view of a small business's financial status and real-time view. So not only the historical, which is a great way to predict future payment behavior, but also the most current accounts receivable accounts payable information that can really help you understand what their future holds. How can DataShare deepen the relationships between lenders and the small businesses that they serve? [Yvon]: Datashare drives operational efficiency. So, it allows the lenders to receive the financial statement data in a standardized format. This is regardless of the size of the business or the source of the accounting data. It drastically reduces the level of manual effort required to underwrite a loan. And it automates much of the time spent on the administrative tasks associated with the lending process. So this means that relationship managers and underwriters and credit teams are going to spend less time creating reports and gathering documents and chasing clients. And they're going to be able to spend more time holding,  we hope, value-driven conversations to deepen the relationships they have with their clients and help those businesses grow and expand in line with their needs. [Gary]: So those small businesses are going to experience greater efficiency, ease of doing business with their lender. The lender has more time to devote and work more closely with those clients, but also maybe the underserved businesses, the unscored businesses, they have that additional insight to see really how that business is doing and how they can grow that relationship with them. Am I right? [Yvon]: Yeah, absolutely. Time is the big commodity, and speed kills. So what Datashare allows lenders to do is negate all of the wasted time and effort spent onboarding and processing clients. And they can dig into that live transactional data, and get to understand the business, and perhaps share insights with the business owners that even the owners don't know. So, it allows both sides to work more efficiently and more profitably. [Gary]: Are you seeing a change in perception on the part of the business owners of today? I mean, a lot of the Millennial business owners they're used to mobile technology, they're used to delivery services on-demand services. Do you see a change in perception in permissioning, access to financial statement data? [Yvon]: Yeah, actually, we have. We typically see adoption rates as high as 90% when it comes to small businesses that are actively looking for financing. So these are motivated clients who typically go with a lender that can provide the quickest time to cash, and Datashare typically cuts down that time to about 65%. We live in a rapidly developing world where digital adoption is at an all-time high, and the same is true for small businesses. As we shift from the stacks of paper and filing cabinets, both lenders and borrowers see the benefits of leveraging technology to make their organizations more efficient and profitable. The annual review process is one pain point that we've heard a lot from clients. Is this something that could help clients minimize some of that pressure, that's a real stressor on bandwidth? [Yvon]: Yeah, absolutely. Datashare automates the monthly, quarterly, or annual review process. So when a small business permissions their data, lenders are able to choose the data refresh frequency, that is also permissioned. So, combined with covenant monitoring Datashare is able to flag accounts that fall out of an agreed risk threshold, which saves the credit team valuable time having to review their entire book of business and allows them to strategically focus on problem accounts and mitigate risk before it gets out of hand. [Gary]: So, any further thoughts on how Experian DataShare can help lenders or the small businesses they serve? [Yvon]: Yeah. Our focus will continue to be on finding ways to automate processes and provide insights into the financial statement data that we acquire. We'll continue to receive feedback from the clients that we've partnered with and integrate that into our roadmap to create new products and services that will benefit both lenders and the borrowers that they serve. [Mike]: Yeah. I would add Gary that we're at a really interesting time. You know, there's the speed and the in-depth view of a small business's financials at our client's fingertips that can help equal that playing field and open up financial opportunities for businesses of all shapes, sizes, and colors, and Experian Datashare helps with that. Combine that with our historical trade and public record data, and you've got a winning solution for both our clients who are offering the financial vehicles, as well as the applicants, the small businesses out there that need help. And that historically may have been on the outside looking in. Now they have an opportunity to share their financial situation, a picture that can help them move their business forward and access capital when they most need it. [Gary]: Well, this has been super informative, guys. I want to thank you for taking the time to come on Business Chat. And if you would like to learn more about how real-time financial statement data can help small businesses, Experian recently published a free ebook perspective paper. We'll provide a link and a QR code for you to download. If you have any questions, of course, feel free to reach out to your Experian account representative to get a conversation started about helping small businesses grow through innovative solutions like Experian DataShare. Thank you very much, gentlemen. Download our perspective paper