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Trended attributes and consumer lending Digging deeper into consumer credit data can help provide new insights into trending behavior, providing more than just point-in-time credit evaluation. The information derived through trended attributes can help you understand your customers’: Payment rates and account migration behavior. Slope of balance changes. Delinquency patterns over time. Today’s consumer lending environment is more dynamic and competitive than ever. Trended attributes can give additional lift in your segmentation strategies and custom models and provides a high-definition lens that opens a world of opportunity. Learn more

June 2018 will mark the one-year anniversary of the National Institute of Standards and Technology (NIST) release of Special Publication 800-63-3, Digital Identity Guidelines. While federal agencies are the most directly impacted, this guidance signals a seismic shift in identity proofing across the entire ecosystem of consumers, private sector businesses and public sector agencies. It’s the clearest claim I’ve seen to date that traditional, and rather basic, personally identifiable information (PII) verification should no longer be trusted for remote user interaction. For those of us in the fraud and identity space, this isn’t a new revelation, but one we as an industry have been dealing with for years. As the data breach floodgates continue to be pushed further open, PII is a commodity for the fraudsters, evident in PII prices on the dark web, which are often lower than your favorite latte. Identity-related schemes have increased due to fraud attacks shifting away from card compromise (due to the U.S. rollout of chip-and-signature cards), double-digit growth in online and mobile consumer channels, and high-profile fraud events within both the public and private sector. It’s no shock that NIST has taken a sledgehammer to previous guidance around identity proofing and replaced it with an aggressive and rather challenging set of requirements seemingly founded in the assumption that all PII (names, addresses, dates of birth, Social Security numbers, etc.) is either compromised or easily can be compromised in the future. So where does this leave us? I applaud the pragmatic approach to the new NIST standards and consider it a signal to all of us in the identity marketplace. It’s aggressive and aspirational in raising the bar in identity proofing and management. I welcome the challenge in serving our public sector clients, as we have done for nearly a decade. Our innovative approach to layered levels of identity verification, validation, risk assessment and monitoring adhere to the recommendations of the new NIST standards. I do, however, recommend that any institution applying these standards to their own processes and applications ensure they place equal focus on comparable alternatives for those addressable populations and users who are likely to either opt out of, or fail, initial verification steps stringently aligned with the new requirements. While too early to accurately forecast, it’s relatively safe to assume that the percentage of the population “falling out of the process” may easily be counted in the double digits. It’s only through advanced analytics and technology reliant on a significant breadth and depth of identity data and observations that we can provide trust and confidence across such a diverse population in age, demographics, expectations and access.

The average number of retail trades per consumer has been trending down since 2007. But the average consumer retail debt is trending up, roughly $73 year-over-year. When analyzing single-store credit card debt by state in 2017, we found: States with the highest retail debt: Texas ($2,198) Alaska ($2,170) Arkansas ($2,067) States with the lowest amount of retail debt: Wisconsin ($1,374) Minnesota ($1,440) Hawaii ($1,442) Whether you’re a retailer, credit union or financial institution, stay ahead of the competition by using advanced analytics to target the right customers and increase profitability. More credit trends

 Organizations that can mobilize their data assets to power critical business initiatives will see a distinct advantage in the coming years. In fact, most C-level executives (87%) believe data has greatly disrupted their organization’s operations over the past 12 months. Here are more insights from the newly released 2018 global data management benchmark report: As digital transformation efforts proliferate and become commonplace, organizations will need to implement processes and technology that scale with the demands of data-driven business. Read the full report

It’s clear the digital marketplace is here to stay. Online activities among consumers reflect the increased adoption of digital commerce. In fact, recent findings from our 2018 Global Fraud and Identity Report show the top activity on mobile devices is online shopping, followed closely by personal banking.   Consumers trust technology and, by proxy, the businesses that help enable it. It’s critical for organizations to continue to build trust online without disrupting the consumer experience. It’s the goal — and the responsibility — of businesses. Learn more

Experian® is honored to be an MRC Technology Award nominee. But we can’t win the MRC People’s Choice Award without your help! The annual MRC Technology Awards recognize the most elite solution providers making significant contributions in the fraud, payments and risk industries. CrossCore® is the first smart, open, plug-and-play platform for fraud and identity services. We know, and our clients agree, that it delivers a better way to modify strategies quickly, catch fraud faster, improve compliance and enhance the customer experience. Need further convincing? Here are the top 3 reasons you should vote for CrossCore. Reason 1: common access Manage your entire fraud and identity portfolio. Start immediately by turning on Experian services through a single integration. Connect to services quickly with a common, flexible API. Reason 2: open approach Control the data being used in decisions. CrossCore supports a best-in-class approach to managing a portfolio of services that work together in any combination — including Experian solutions, third-party services and client systems — delivering the level of confidence needed for each transaction. Reason 3: workflow decisioning Act quickly and adapt to new risks with built-in strategy design and workflow capabilities. You can precisely tailor strategies based on transaction type or risk threshold. Make changes dynamically, with no downtime. We hope you’ll vote for CrossCore as a better way to manage fraud prevention and identity services.

Are you ready to launch a new product to capture the revenue growth opportunities in today’s market? The competition is heating up for new growth, as banks increased personal loan balances by 10 percent year-over-year in 2015 and another 6 percent in 2016.* Many lenders are now looking for robust data to understand the market opportunity based on their risk appetite. This challenge usually takes a significant investment in consumer credit data to gain the necessary insights. In helping lenders launch new products, I’ve found there are common areas of focus and specific steps you must take to move from the initial business case to more tactical planning. The following details come to mind: refining risk thresholds, pricing, loss forecasting and use of models within the initial go-to-market strategy. These project tasks can’t be successfully completed without having the right breadth and depth of data available. Knowing the past can help you create a better future for your business. When I start working with a client on a new product launch, I want to ensure they have sufficient data that can provide a comprehensive historical consumer view. In my experience, the best data to use will show an exhaustive view of consumer behaviors through the economic cycle. Having this large volume of data enables me to evaluate the business strategy and risks through the financial crisis while also giving my clients the foundation for compliance with loss forecasting regulations. Obtaining this breadth of data often can be a significant, but necessary, investment. Data is a great starting point, but it isn’t enough. Understanding the data sufficiently to design an effective go-to-market strategy is critical for success. I’ve found that identifying specific attributes helps give my clients a deep dive into the structure of a consumer’s credit history at the trade level. This level of information provides insight into the structure of the consumer’s wallet and preferences. Additionally, this depth of data allows my clients to develop powerful custom models for use in their business strategy. Being prepared is half the victory. Having comprehensive data that will help you understand consumer spending behavior and the risk they carry through the economic cycle will assist in creating a successful go-to-market strategy. Our Market Entry ServicesTM data sets are analytics-ready, including attributes and performance flags, to give you a holistic view of your target market. Having this breadth and depth of data, along with strong tactical planning and execution, will ensure your success in launching new products and entering new markets.   *Experian–Oliver Wyman Market Intelligence Report

Once a scorecard has been redeveloped, it is important to measure the impact of changes within the strategy by replacing the old model with the new one. This impact assessment can be completed with a swap set analysis. The term swap set refers to “swapping out” a set of bad accounts and replacing them with or “swapping in” a set of good accounts. Different approaches can be used when evaluating swap sets to optimize your strategy and keep: The same overall bad rate while increasing the approval rate. The same approval rate while lowering the bad rate. The same approval and bad rates but an increase in customer activation or customer response rates. When measuring your swap sets, remember to also include the population that doesn’t change — those accounts that would be approved or declined using either the old or new model. Learn more>

You’ve been tasked with developing a new model or enhancing an existing one, but the available data doesn’t include performance across the entire population of prospective customers. Sound familiar? A standard practice is to infer customer performance by using reject inference, but how can you improve your reject inference design? Reject inference is a technique used to classify the performance outcome of prospective customers within the declined or nonbooked population so this population’s performance reflects its performance had it been booked. A common method is to develop a parceling model using credit bureau attributes pulled at the time of application. This type of data, known as pre-diction data, can be used to predict the outcome of the customer prospect based on a data sample containing observations with known performance. Since the objective of a reject inference model is to classify, not necessarily predict, the outcome of the nonbooked population, data pulled at the end of the performance window can be used to develop the model, provided the accounts being classified are excluded from the attributes used to build the model. This type of data is known as post-diction data. Reject inference parceling models built using post-diction data generally have much higher model performance metrics, such as the KS statistic, also known as the Kolmogorov-Smirnov test, or the Gini coefficient, compared with reject inference parceling models built using pre-diction data. Use of post-diction data within a reject inference model design can boost the reliability of the nonbooked population performance classification. The additional lift in performance of the reject inference model can translate into improvements within the final model design. Post-diction credit bureau data can be easily obtained from Experian along with pre-diction data typically used for predictive model development. The Experian Decision Analytics team can help get you started.

Auto originations continue to increase — particularly within prime categories. According to Experian’s latest State of the Automotive Finance Market report: Prime consumers grabbed the lion’s share of the total finance market, at 40.9%. Super-prime buyers showed the largest increase, reaching 20.2%. Consumers outside the prime category (credit score of 600 or lower) decreased to the lowest share on record since 2012. Credit unions and captive lenders increased market share of total vehicle financing, growing to 21% and 29.8% — an increase of 6.9% and 35.1%, respectively. As auto loan originations continue their upward trend, lenders can stay ahead of the competition by using advanced analytics to target the right customers and increase profitability.  

Experian on the State of Identity podcast In today’s environment, any conversation on the identity management industry needs to include some mention of synthetic identity risk. The fact is, it’s top of mind for almost everyone. Institutions are trying to scope their risk level and identify losses, while service providers are innovating ways to solve the problem. Even consumers are starting to understand the term, albeit via a local newscast designed to scare the heck out of them. With all this in mind, I was very happy to be invited to speak with Cameron D’Ambrosi at One World Identity (OWI) on the State of Identity podcast, focusing on synthetic identity fraud. Our discussion focused on some of the unique findings and recommended best practices highlighted in our recently published white paper on the subject, Synthetic identities: getting real with customers. Additionally, we discussed how a lack of agreement on the definition and size of the synthetic identity problem further complicates the issue. This all stems from inconsistent loss reporting, a lack of confirmable victims and an absence of an exact definition of a synthetic identity to begin with. Discussions must continue to better align us all. I certainly appreciate that OWI dedicated the podcast to this subject. And I hope listeners take away a few helpful points that can assist them in their organization’s efforts to better identify synthetic identities, reduce financial losses and minimize reputation risks.

The sheer range of dynamic and emerging fraud tactics can impede agencies from achieving security. These threats must be met with a variety of identity proofing and management tactics. Without monitoring, performance assessments and tuning, a singular and static identity proofing strategy can be exposed by evolving schemes and the use of high-quality compromised identity data. Traditional verification and validation parameters alone are simply too obtuse and can be circumvented easily by those with criminal intent. Static rules based on overly simplistic verification and validation checks can be outsmarted by intelligent fraudsters. Conversely, those same static rules must also have built-in mechanisms to accommodate true-name users who initially may not meet that criteria for identity proofing. Vast and diverse user populations, more arduous — and arguably more difficult to achieve — digital identity guidelines put forth by the National Institute of Standards and Technology, and operational constraints all pose significant challenges for government. But there are ways for government to modernize identity proofing successfully. Modern fraud and identity strategies There are many emerging trends and best practices for modern fraud and identity strategies, including: Applying right-sized fraud and identity proofing solutions. To reduce user friction or service disruption and manage fraud risk appropriately, agencies need to apply fraud mitigation strategies. Such strategies reflect the cost, measured risk and level of confidence, as well as compliance needed, for each interaction. This is called right-sizing the fraud solution. For example, agencies can cater a fraud solution that ensures a seamless experience when a citizen is calling a service center, versus an online interaction, versus a face-to-face one. Maintaining a universal view of the user. Achieved by employing a diverse breadth and depth of data assets and applied analytics, this tactic is the core of modern fraud mitigation and identity management. Knowing the individual user extends beyond a traditional 360-degree view. It means having knowledge of a person’s offline and online behavior, not only with your agency, but also with other agencies with which that user has a relationship. Expanding user view through a blended ecosystem. Increasingly, agencies are participating in a blended ecosystem — working with vendors, peer agencies and partners. There exists a collaborative culture in identity and fraud management that doesn’t exist in more competitive commercial environments. Fraudsters easily share information with one another, so those combatting it need to share information as well. Achieving agility and scale using service-based models. More agencies are adopting service-based models that provide greater agility and response to dynamic fraud threats, diverse population changes, and evolving compliance requirements or guidance. Service-based identity proofing provides government agencies the benefit of regularly updated data assets, analytics and expertise in strategy design. These assets are designed to respond to fraud or identity intelligence observed across various markets and industries, often protecting proactively rather than reactively. Future-proofing fraud solution choices. Technical and operational resources are always in relatively short supply compared to demand. Agencies need the ability to “code once” in order to expand and evolve their fraud strategies with ease. Future-proofing solutions must also be combined with an ever-changing set of identity proofing requirements and best practices, powered by a robust and innovative marketplace of service providers. The future of identity proofing in the public sector is more than just verifying individual identities. New standards in digital identity proofing are a responsive result of mass data compromise and failures in legacy techniques. Achieving compliant and confident identity assurance requires a layered approach, flexibly designed and orchestrated to accommodate diverse identity assertions, evidence, and contextual invocation of technologies and data assets. Government must now use risk-based approaches and mitigation strategies to identity threats quickly and determine the type of fraud before damage is done. Download our recent report in which we discuss the primary challenges of identity proofing in the public sector and what modernization of identity proofing looks like.

  Juniper Research recently recognized Experian as a Fraud Detection and Prevention Market Leader in its Online Payment Fraud Whitepaper. Juniper also shared important market insights in the report. The transactional value of card-not-present fraud is estimated to reach $19.3 billion in 2022. Online payment fraud is anticipated to grow 13.7% annually from 2017 to 2022. Digital banking fraud should reach $7.9 billion by 2022. $50.9 billion is expected to be spent on fraud detection and prevention software between 2017 and 2022. Fraud’s not going away anytime soon. Protecting your organization and customers is the new cost of doing business. Don’t wait until 2022 to start protecting yourself. Read the report>

  Our national survey found that consumers struggle to find a credit card that meets their needs. They say there are too many options and it’s too time-consuming to research. What do consumers want?     With 53% of survey respondents not satisfied with their current cards and 1 in 3 saying they’re likely to get a new card within 6 months, now’s the time to start personalizing offers and growing your portfolio. Start personalizing offers today>

  With 1 in 6 U.S. residents being Hispanic, now is a great time for financial institutions to reflect on their largest growth opportunity. Here are 3 misconceptions about the multifaceted Hispanic community that are prevalent in financial institutions: Myth 1: Hispanic consumers are only interested in transaction-based products. In truth, product penetration increases faster among Hispanic members compared with non-Hispanic members when there’s a strategic plan in place. Myth 2: Most Hispanics are undocumented. The facts show that of the country’s more than 52 million Hispanics, most are native-born Americans and nearly 3 in 4 are U.S. citizens. Myth 3: The law prevents us from serving immigrants. Actually, financial institutions can compliantly lend to individuals who have an Individual Taxpayer Identification Number. There are many forms of acceptable government-issued identification, such as passports and consular identification cards. Solidifying the right organizational mentality, developing a comprehensive strategy based on segmentation, and defining what success truly looks like. These are all part of laying the foundation for success with the Hispanic market. Learn more>