Data & Analytics

Using digital technology like a big bank How was your holiday? Are the chargebacks rolling in yet? It’s no secret - digital technology like mobile device usage has increased significantly over the years, making it a breeding ground for fraudsters. As credit unions continue to grow their membership, their fraud security treatments need to grow as well. Bigger banks are constantly updating their fraud tools and strategies to fight against cybercrime and, therefore, fraudsters are setting their eyes on credit unions. Even as I write this, fraudsters are searching and targeting credit unions that don’t have their mobile channel secured. They attempt to capitalize on any weakness or opportunity: Registering stolen cards to mobile wallets Taking over an account via mobile banking apps Using a retailers’ mobile app to make fraudulent payments Disabling the SIM card in the victim’s phone and diverting the one-time password sent through text message to their own phones These are clever ways to commit fraud. But credit unions are becoming wise to these new threats and are serious about protecting their members. They are incorporating device intelligence with a solid identity authentication service. This multi-layered approach is essential to securing mobile channels, and protecting your Credit Union from chargebacks. To learn more about our fraud solutions, click here.

Experian shares five trends and twists coming over the next 12 months, that could push new boundaries and in many cases improve the customer experience as it pertains to the world of credit and finance.

VantageScore found consumers rendered “unscoreable” by commonly used credit scoring models are nearly identical financial/credit behavior to scoreables

Technology sharing can unlock a more effective strategy in fighting fraud. Experian’s multi-layered and risk-based approach to fraud management is discussed

Experian Data Breach Resolution releases its fourth annual Data Breach Industry Forecast report with five key predictions on the 2017 data breach landscape

During Thanksgiving 2015, 736 million pounds of turkey were consumed in the United States.

personalized subject lines have a 27% higher unique click rate, an 11% higher CTO and more than double the transaction of other promotional mailings

Businesses believe that 23% of their customer or prospect data is inaccurate.

Prescriptive solutions can synthesize big data, analytics, and business strategies to provide businesses an optimized workflow to reach a final decision.

For lenders to capitalize and identify the right consumers for their respective portfolios, they need insights. Trade level fields can bridge the gap.

Experian defines how businesses should approach Identity Relationship Management for user authentication and devices to enable better fraud protection.

Experian estimates card-to-card consumer balance transfer activity to be between $35 and $40 billion a year, representing a sizeable opportunity for proactive lenders seeking to grow their revolving product line. This opportunity, however, is a threat for reactive lenders that only measure portfolio attrition instead of working to retain current customers. While billions of dollars are transferred every year, this activity represents only a small percentage of the total card population. And given the expense of direct marketing, lenders seeking to capitalize on and protect their portfolio from balance transfer activity must leverage data insights to make more informed decisions. Predicting a consumer’s future propensity to engage in card-to-card balance transfers starts with trended data. A credit score is a snapshot in time, but doesn’t reveal deep insights about a consumer’s past balance transfer activity. Lenders that rely only on current utilization will group large populations of balance revolvers into one bucket – and many of these individuals will have no intention of transferring to another product in the near future. Still, balance transfer activity can be identified and predicted by utilizing trended data. By analyzing the spend and payment data over time to see when one (or multiple) trade’s payment approximately matches another trade’s spend, we have the logic that suggests there has been a card-to-card transfer. What most people don’t realize is that trended data is difficult to work with. With 24 months of history on five fields, a single trade includes 120 data points. That’s 720 data points for a consumer with six trades on file and 72,000,000 for a file with 100,000 records, not to mention the other data fields in the file. It’s easy to see why even the most sophisticated organizations become paralyzed working with trended data. While teams of analysts get buried in the data, projects drag, costs swell, and eventually the world changes as rates climb and fall. By the time the analysis is complete, it must be recalibrated. But there is a solution. Experian has developed powerful predictions tools that combine past balance transfer history, historical transfer amounts, current trades carried and utilized, payments, and spend. Combined, these data fields can help identify consumers who are most likely to transfer a balance in the future. With Experian’s Balance Transfer Index the highest scoring 10 percent of consumers capture nearly 70 percent of total balance transfer dollars. Imagine the impact on ROI of reducing 90 percent of the marketing cost of your next balance transfer campaign and still reaching 70 percent of the balance transfer activity. Balance transfer activity represents a meaningful dollar opportunity for growth, but is concentrated in a small percentage of the population making predictive analytics key to success. Trended data is essential for identifying those opportunities, but financial institutions must assess their capabilities when it comes to managing the massive data attached. The good news is that regardless of financial institution size, solutions now exist to capture the analytics and provide meaningful and actionable insights to lenders of all sizes.

Recent survey by Experian revealed opportunities for businesses to build relationships with future homebuyers before they’re ready to obtain a loan.

While organizations increasingly rely on data to make decisions, when it comes to data accuracy, too many wait to correct errors rather than implement proactive solutions.

James W. Paulsen, Chief Investment Strategist for Wells Capital Management, kicked off the second day of Experian’s Vision 2016, sharing his perspective on the state of the economy and what the future holds for consumers and businesses alike. Paulsen joked this has been “the most successful, disappointing recovery we’ve ever had.” While media and lenders project fear for a coming recession, Paulsen stated it is important to note we are in the 8th year of recovery in the U.S., the third longest in U.S. history, with all signs pointing to this recovery extending for years to come. Based on his indicators – leverage, restored household strength, housing, capital spending and better global growth – there is still capacity to grow. He places recession risk at 20 to 25 percent – and only quotes those numbers due the length of the recovery thus far. “What is the fascination with crisis policies when there is no crisis,” asks Paulsen. “I think we have a good chance of being in the longest recovery in U.S. history.” Other noteworthy topics of the day: Fraud prevention Fraud prevention continues to be a hot topic at this year’s conference. Whether it’s looking at current fraud challenges, such as call-center fraud, or looking to future-proof an organization’s fraud prevention techniques, the need for flexible and innovative strategies is clear. With fraudsters being quick, and regularly ahead of the technology fighting them, the need to easily implement new tools is fundamental for you to protect your businesses and customers. More on Regulatory The Military Lending Act has been enhanced over the past year to strengthen protections for military consumers, and lenders must be ready to meet updated regulations by fall 2016. With 1.46 million active personnel in the U.S., all lenders are working to update processes and documentation associated with how they serve this audience. Alternative Data What is it? How can it be used? And most importantly, can this data predict a consumer’s credit worthiness? Experian is an advocate for getting more entities to report different types of credit data including utility payments, mobile phone data, rental payments and cable payments. Additionally, alternative data can be sourced from prepaid data, liquid assets, full file public records, DDA data, bill payment, check cashing, education data, payroll data and subscription data. Collectively, lenders desire to assess someone’s stability, ability to pay and willingness to repay. If alternative data can answer those questions, it should be considered in order to score more of the U.S. population. Financial Health The Center for Financial Services Innovation revealed insights into the state of American’s financial health. According to a study they conducted, 57 percent of Americans are not financially healthy, which equates to about 138 million people. As they continue to place more metrics around defining financial health, the center has landed on four components: how people plan, spend, save and borrow. And if you think income is a primary factor, think again. One-third of Americans making more than $60k a year are not healthy, while one-third making less than $60k a year are healthy. --- Final Vision 2016 breakouts, as well as a keynote from entertainer Jay Leno, will be delivered on Wednesday.