According to research from VantageScore® Solutions LLC, 30 to 35 million people are not scored by the most popular credit-scoring models. When measured by more modern scoring methodologies — methods that leverage the data that exists in a person's credit file better — as many as 10 million of these unscoreable consumers were found to have prime or near prime credit scores. The study reinforces the importance of using advanced credit scores in order to profitably grow portfolios while providing consumers with access to fair and equitable credit. Credit Scoring Gaps Are Leaving Millions of Consumers Behind VantageScore® is a registered trademark of VantageScore Solutions, LLC.

The news of the latest breach last week reported that tens of millions of customer and employee records were stolen by a sophisticated hacker incursion. The data lost is reported to include names, birth dates, Social Security numbers, and addresses. The nature of the stolen data has the potential to create long-term headaches for the organization and tens of millions of individuals. Unlike a retailer or financial breach, where stolen payment cards can be deactivated and new ones issued, the theft of permanent identity information is, well, not easily corrected. You can’t simply reissue Social Security numbers, birth dates, names and addresses. What’s more, the data likely includes identity data on millions of dependent minors, who are prime targets for identity thieves and whose credit goes frequently unmonitored. According to the Identity Theft Resource Center’s 2014 Data Breach Report, a record 783 breaches, representing 85 million records, occurred from January through September 2014 alone. The breaches have ranged across virtually every industry segment and data type. So where does all this breached data go? It goes into the massive, global underground marketplace for stolen data, where it’s bought and sold, and then used by cybercriminals and fraudsters to defraud organizations and individuals. Like any market, supply and demand determines price, and the massive quantity of recent breaches has made stolen identities more affordable to more fraudsters, exacerbating the overall problem. In fact, stolen health credentials can go for $10 each, about 10 or 20 times the value of a U.S. credit card number, according to Don Jackson, director of threat intelligence at PhishLabs, a cyber crime protection company. The big question: So what now? The answer: Assume that all data has been breached, and act accordingly. Such a statement sounds a bit trivial, but it’s a significant paradigm shift. It’s a clear-headed recognition of the implications of the ongoing, escalating covert war between cybercriminals and fraudsters, on one side, and organizations and consumers on the other. For individuals, we need to internalize this fact: our data has likely been breached, and we need to become vigilant and defend ourselves. Sign up for a credit monitoring service that covers all three credit bureaus to be alerted if your data or ID is being used in ways that indicate fraud. Include your children, as well. A child’s identity is far more valuable to a fraudster as they know it can be several years before their stolen identity is detected. Many parents do not check their child’s credit regularly, if at all. For organizations, it’s a war on two fronts: data protection and fraud prevention. And the stakes are huge, bigger than many of us recognize. We’re not just fighting to prevent financial theft, we’re fighting to preserve trust — trust between organizations and consumers, at the first level, and ultimately widespread consumer trust in the institutions of finance, commerce, and government. We must collectively strive to win the war on data protection, no doubt, and prevent future data breaches. But what breaches illustrate is that, when fundamental identity data is breached, a terrible burden is placed on the second line of defense — fraud prevention. Simply put, organizations must continually evolve their fraud prevention control and skills, and minimize the damage caused by stolen identity data. And we must do it in ways that reinforce the trust between consumers and organizations, enhance the customer experience, and frustrate the criminals. At 41st Parameter, we are at the front lines of fraud prevention every day, and what we see are risks throughout the ecosystem. Account opening is a particular vulnerability, as consumer identity data obtained in the underground will undoubtedly be used to open lines of credit, submit fraudulent tax returns, etc. unbeknownst to the consumer. Since so much data has been breached, many of these new accounts will look “clean,” presenting a major challenge for traditional identity-based fraud and compliance solutions. But it’s more than new accounts — account takeover, transactions, loyalty, every stage is in jeopardy now that so much identity data is on the loose. Even the call center is vulnerable, as the very basis for caller authentication often relies on components of identity. At 41st Parameter and Experian Fraud & Identity solutions, we advocate a comprehensive layered approach that leverages multiple solutions such as FraudNet, Precise ID, KIQ, and credit data to protect all aspects of the customer journey while ensuring a seamless, positive user experience across channels and lines of business. Read our fraud perspective paper to learn more. Now is the time to take action.  http://www.reuters.com/article/2014/09/24/us-cybersecurity-hospitals-idUSKCN0HJ21I20140924

By: Scott Rhode   This is the second of a three-part blog series focused on the residential solar market looking at; 1) the history of solar technology, 2) current trends and financing mechanisms, and finally 3) overcoming market and regulatory challenges with Experian’s help. Lets discuss the current trends in solar and, more importantly, the mechanisms used to finance solar in the US residential market.  As I discussed in the last blog, the growth in this space has been astronomical.  To illustrate this growth, there was a recent article in The Washington Post by Matt McFarland, highlighting that solar-related jobs are significantly outpacing the rest of labor market in terms of year over year growth.  The article states that since 2010 the number of solar-related jobs has doubled in the US, bring the total number of jobs in this industry to 173,807.  While this is still smaller in comparison to other sectors of our economy, it underscores how much growth has occurred in a short amount of time. So what is driving this explosive growth?  There are a few factors that should be considered; however, in the residential solar market, financing, is the main catalyst.  As you might expect, there are a variety of financial products in the market giving the consumer lots of choices. First, there are traditional loans like home improvement loans, home equity loans, or energy efficiency loans offered by a bank, credit union, or specialty finance company.  For homeowners that do not choose to secure their loan against their property, there are a variety of specialty lenders that will offer long-term, unsecured loans that only file a UCC against the panels themselves.  For these types of offerings, some specialty lenders will even have special credit plans for the 30% Solar Investment Tax Credit so that the homeowner can have a deferred interest plan with the expectation that once they get the tax credit from the federal government, they will pay off the special plan and all of the deferred interest will be waived.  If the customer does not pay in full, the plan rolls to their regular loan plan and the customer has a higher cost of financing. Second, there is a lease product which offers zero to little down and a monthly payment that is less than the savings that the homeowner will experience on their utility bill.  Of all the financing options, the lease has been the biggest driver of growth since it offers an inexpensive, no-hassle way to get all the benefits of going solar without breaking the bank.  What is unusual to most people that are unfamiliar with this concept is the term of the lease, which is typically 20 years.  However, when you consider that most manufacturers warrant their panels for 25 and many have a usable life of 40 years, this term does not seem all that unusual.  The benefits of this program look something like this: The homeowner has an average electric utility bill of $350 / month A solar company quotes a customer a savings of $200 / month in the form of a net metering energy credit, so their bill after solar is now $150 / month The lease payment for the installed solar array, metering equipment, and monitoring software is $150 / month The homeowner’s net saving is an average of $50 / month with nothing out of pocket Over the life of the lease, energy prices will increase which will mean more savings over time so long as there are not escalators in the contract that exceed the increase in energy prices The lessor “owns” the equipment and is responsible for maintenance, performance, and insurance With this product comes complexity.  Many companies offering this program do not have the cash or the appetite to take on massive debt, so they partner with Tax Equity investors to make this transaction possible.  Because of the 30% ITC and accelerated depreciation, this transaction is very favorable for a Tax Equity investor like Google, US Bank, or Bank of America Merrill Lynch.  There are a number of structures they can use; however, the Sale-Leaseback structure is the easiest and most efficient way to fund the transaction.  While this is not “known” to the end customer, it is important because the Tax Equity Investor effectively owns the asset and has the final say in setting credit policy.  This transaction does require that the developer have a stake as well; however, many of the developers go to the debt market for “back leverage” on their stake so that they can reduce the impact to their balance sheet. This complexity carries a cost, as the cost of capital is higher than most traditional loan products from established financial services firms.  That said, the fact that the lease allows the customer to monetize the tax credit and accelerated depreciation in the amount financed, balances out the higher costs of capital.  In the next blog we will touch more on the challenges this product, in particular, has in the market. Last, but not least, there is another mechanism gaining popularity in the market.  This concept is known as community solar.  One of the obstacles of the lease and Tax Equity arrangement is that the lease is only available to single family residence homeowners and, if they have multiple homes, only the homeowner’s primary residence.  That means that people who rent, own a condo, own a vacation home, or own a small business do not qualify for this type of lease.  As a result, community solar has become a great option. With community solar, the panels are put in an ideal location for maximum exposure to the sun and they often produce 10-15% more power than panels on a rooftop.  Portions of this solar farm can be sold, rented, or sublet to consumers regardless of their living situation.  As the panels produce electricity, that power gets sold to the local utility and the customer gets money from that utility that shows up as a credit on their next bill.  In this structure, the customer is not required to put money down in most cases and they are signing up for a specific term. Like a rooftop lease, this structure often has a Tax Equity investor that funds the project.  Again, this allows them to take the 30% ITC and accelerated depreciation which, in turn, gets monetized and lowers the costs of construction. In the final installment of this blog series, I will discuss some of the challenges that this market faces as the ITC expiration date approaches and the market becomes more mature. Leasing is driving the market, so if the ITC does not get renewed, the market will need to have a plan in place to find other innovative ways to keep solar affordable so more consumers can realize the benefits of going solar.   Solar Financing — The current and future catalyst behind the booming residential solar market (Part 1)

Did you know that privacy policies do not guarantee that your information will be kept private? Most companies use privacy policies to inform customers about how their personal information may be used, i.e. sold, shared, exchanged, not necessarily guaranteeing absolute confidentiality. In today’s increasingly digital world where exchanging personal information – your name, email address, home address, etc. – for access to websites, coupons and the like has become the norm. And, it can be difficult for consumers to understand the value of their personal information. Today is the eighth annual Data Privacy Day, an international awareness effort spearheaded by the National Cyber Security Alliance (NCSA) that encourages all Internet users to consider the privacy implications of their online actions and motivate all companies to make privacy and data protection a greater priority. Since most consumers aren’t fully aware of the implications of sharing personal information, we’re taking a deeper look at what can happen when personal information is shared online. Companies that collect don’t always protect When you share personal information with a company online, that company is responsible for protecting your information. Even data that is seemingly harmless is extremely valuable to cyber criminals, like your email address or your mother’s maiden name for a password reset. When you share this valuable, personal information with a company online be sure to read the company’s privacy policy fine print in order to be certain that your information is not being shared publicly or with outside companies. In some instances, even reading the company’s fine print cannot keep your information safe. Millions were affected last year due to retail and medical data breaches, proving it difficult for companies to protect your data no matter how secure it may seem. Once cyber criminals have their hands on your personal information, you may be surprised at what they can do with it. Cyber criminals patch together your digital profile Bits and pieces of personal information stolen from companies can help cyber criminals patch together a complete picture of your digital identity. They can then use your digital identity to access more important information like your financial records from retail sites that have your credit card information stored. Many consumers leave a trail of personal information on the Internet, leading cyber criminals to steal your identity and your financial information. How to make a difference during Data Privacy Day Here are some tips on how you can increase your privacy online from the NCSA: Think of your personal information like money – value it and protect it. You are often paying for “free” services with your personal information. Before you willingly provide your information to a service, make sure it is a business you trust to handle your information with care. Manage your browser cookies to maximize your privacy and prevent unwanted tracking. Demand that businesses be honest about how they collect, use and share personal information. Be cautious about who you “friend” and communicate with online. Visit our website for more information on identity protection products you can offer your customers.

Customer experience strategies for success Sometimes it’s easier to describe something as the opposite of something else.  Being “anti-” something can communicate something meaningful. Cultural movements in the past have taken on these monikers:  consider the “anti-establishment” or “anti-war” movements.  We all need effective anti-virus protection.  And there are loads of skin products marketed as “anti-aging”, “anti-wrinkle”, or “anti-blemish.” But when you think about a vision for the customer experience that your company aspires to deliver, this approach of the “anti-X” falls flat. Would you want to aspire to basically “not stink?”  Would that inspire you and your team to run through walls to deliver on that grand aspiration? Would it motivate customers to stick with you, buy more of what you sell, and tell others about you? I think not…But it sure seems like many out there indeed do aspire to “not stink.” Sure, there are great companies out there who have a set a high standard for customer experience, placing it at the center of their strategies and their success. Some, like Zappos, started that way from the beginning.  Others, like The Ritz-Carlton, realized that they had lost their way and made the commitment to do the hard work of reaching and sustaining excellence. On the other hand, there are hundreds of firms who have a weak commitment to or even understanding of the importance of customer experience to their strategy and performance.  Their leaders may give lip service or just pay attention for a few days or hours following the release of reports from leading analysts and firms. They may have posters and slogans that talk about putting the customer first or similar platitudes. These companies probably even have talented and passionate professionals working tirelessly to improve the customer experience in spite of the fact that nobody seems to care much. What these firms lack is a clear customer experience strategy. As nature abhors a vacuum, customers and employees are free to infer or just guess at it.  Focusing on customer experience only when a report comes out – and paying special attention only when weak results put the firm near the bottom of the ranking leads people to conclude that all that really matters is to “not stink.”  In other words, don’t stand out for being bad…but don’t worry much about being good as it is not important to the company’s strategy or results. I think that this “don’t stink” implicit strategy helps explain a fascinating insight from a Forrester survey in 2013: “80% of executives believe their company is delivering a superior customer experience, yet in 2013 only 8% of companies surveyed received a top grade from their customers.”  Many leaders simply have not invested the energy and commitment necessary to define a real customer experience vision that reflects a deep understanding of the role that it plays in the company’s strategy.  Beyond setting that vision, there is a big and sustained commitment required to deliver on the vision, measure results, and continuously adjust as customer needs evolve. Like all journeys, a great customer experience starts with one step. Establishing a customer experience strategy is the first one – and “don’t stink” simply stinks as a strategy. Download our recent perspective paper to learn how exceptional customer experience can give companies the competitive edge they need in a market where price, products and services can no longer be a differentiator.

This is the third post in a three-part series. Experian® is not a doctor. We don’t even play one on TV. However, because of our unique business model and experience with a large number of data providers, we do know data governance. It is a part of our corporate DNA. Our experiences across our many client relationships give us unique insight into client needs and appropriate best practices. Note the qualifier — appropriate. Just as every patient is different in his or her genetic predispositions and lifestyle influences,  every institution is somewhat unique and does not have a similar business model or history. Nor does every institution have the same issues with data governance. Some institutions have stabile growth in a defined footprint and a history of conservative audit procedures. Others have grown quickly through aggressive acquisition marketing plans and unique channels and via institution acquisition/merger, leading to multiple receivable systems and data acquisition and retention platforms. Experian has provided valuable services to both environments many times throughout the years. As the regulatory landscape has evolved, lenders/service providers demand a higher level of hands-on experience and regulatory-facing credibility. Most recently, lenders have required assistance on the issues driven by mandates coming from the Comprehensive Capital Analysis and Review (CCAR), Office of the Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau (CFPB) bulletins and guidelines. Lenders are best served to begin their internal review of their data governance controls with a detailed individual attribute audit and documentation of findings. We have seen these reviews covering  fewer than 200 attributes to as many as more than 1,000 attributes. Again, the lender/provider size, analytic sophistication and legacy growth and IT issues will influence this scope. The source and definition of the attribute and any calculation routines should be fully documented. The life cycle stage of attribute acquisition and usage also is identified, and the fair lending implication regarding the use of the attribute across the life cycle needs to be considered and documented. As part of this comprehensive documentation, variances in intended definition and subsequent design and deployment are to be identified and corrective action guidance must be considered and documented for follow-up. Simultaneously, an assessment of the current risk governance policies, processes and documentation typically is undertaken. A third party frequently is leveraged in this review to ensure an objective perspective is maintained. This initiative usually is a series of exploratory reviews and a process and procedures assessment with the appropriate management team, risk teams, attribute design and development personnel, and finally business and end-user teams, as necessary. From these interviews and the review of available attribute-level documentation, documents depicting findings and best practices gap analysis are produced to clarify the findings and provide a hierarchy of need to guide the organization’s next steps: A more recent evolution in this data integrity ecosystem is the implication of leveraging a third party to house and manipulate data within client specifications. When data is collected or processed in “the cloud,” consistent data definitions are needed to maintain data integrity and to limit operational costs related to data cleansing and cloud resource consumption. Maintaining the quality of customer personal data is a critical compliance and privacy principle. Another challenge is that of maintaining cloud-stored data in synchronization with on-premises copies of the same data. Delegation to a third party does not discharge the organization from managing risk and compliance or from having to prove compliance to the appropriate authorities. In summary, a lender/service provider must ensure it has developed a rigorous data governance ecosystem for all internal and external processes supporting data acquisition, retention, manipulation and utilization: A secure infrastructure includes both physical and system-level access and control. Systemic audit and reporting are a must for basic compliance standards. If data becomes corrupted, alternative storage, backup or other mechanisms should be available to protect the information. Comprehensive documentation must be developed to reveal the event, the causes and the corrective actions. Data persistence may have multiple meanings. It is imperative that the institution documents the data definition. Changes to the data must be documented and frequently will lead to the creation of a new data attribute meeting the newer definition to ensure that usage in models and analytics is communicated clearly. Issues of data persistence also include making backups and maintaining multiple archive copies. Periodic audits must validate that data and usage conform to relevant laws, regulations, standards and industry best practices. Full audit details, files used and reports generated must be maintained for inspection. Periodic reporting of audit results up to the board level is recommended. Documentation of action plans and follow-up results is necessary to disclose implementation of adequate controls. In the event of lost or stolen data, appropriate response plans and escalation paths should be in place for critical incidents. Throughout this blog series, we have discussed the issues of risk and benefits from an institution’s data governance ecosystem. The external demands show no sign of abating. The regulators are not looking for areas to reduce their oversight. The institutional benefits of an effective data governance program are significant. Discover how a proven partner with rich experience in data governance, such as Experian, can provide the support your company needs to ensure a rigorous data governance ecosystem. Do more than comply. Succeed with an effective data governance program.

By: Scott Rhode This is the first of a three-part blog series focused on the residential solar market looking at; 1) the history of solar technology, 2) current trends and financing mechanisms, and finally 3) overcoming market and regulatory challenges with Experian’s help. Most people tend to think of the solar industry as a recent, and not so stable, market phenomenon.  However, the residential solar industry is still gaining traction as component prices come down. For more than two thousand years man has been trying to harness the sun’s energy and power. In fact, architects and city planners in early civilizations would also look to the sun when designing dwellings, buildings and bathhouses, so that they could capture as much of the sun’s energy to heat their homes and the water they used.  Our ancestors knew that the sun, unlike any other resource, was a consistent and powerful source of energy that fueled life. Fast forward to the late 19th and early 20th centuries where renowned scientists in the US and across the globe started looking at ways to harness the sun’s energy to generate electricity, and the birth of the modern solar industry was here.  By the mid 1950’s, US architects were trying to incorporate the power of the sun in their designs so that heating the water and commercial office space could be done without heavy use of electricity.  One architect, Frank Bridgers, was so successful in using this technology that his building still continues to operate this way today.  In addition, many companies like Bell Labs, Western Electric, and the US Signal Corp Laboratories started to develop photovoltaic cells that power the panels that we use today. These early cells, operating at 7-11% efficiency (This is the measurement of how efficient the cell is at converting solar radiation to electricity), gave life to solar powered electronics, lights, and panels used by the burgeoning space program to power satellites orbiting earth.  In reaction to the growing possibilities and the broader oil crisis in the late 1970’s, the US Department of Energy created what would later become the National Renewable Energy Laboratory enabling the federal government to use its resources to help grow the industry and foster technological innovations to improve cell efficiency. Throughout the 1980’s, 90’s, and early 2000’s, the industry starts to take root with utilities and mainstream energy providers as they look to the sun to diversify their energy sources away from coal, gas, and oil.  This adoption leads to a push by the US Department of Energy to have “One million Solar Roofs” in the US so that individual home owners can realize the benefits of going solar.  Soon, retailers like Home Depot started selling panels in their stores for customers to install themselves for “off-grid” properties or other uses.  While this allowed a homeowner to use solar, costs are still so high that solar is only available to a select few and, as a result, not competitive with traditional methods of producing energy. In order to incent homeowners to invest in solar, the US Government created the Solar Investment Tax Credit in 2005.  This tax credit allows homeowners to get a credit of 30% of the fair market value of the system they have installed on their roof.  As a result of this and local incentives from municipalities and utility companies, residential solar installations have grown 1,600% over the last ten years, representing an annual CAGR of 76%.  In fact, through the first half of 2014, 53% of all new electric capacity is from solar, making it the fastest growing source of energy in the market.* Since this tax incentive is unlikely to be renewed after it expires, the industry set out to solve the cost issue in order to manufacture and produce highly efficient and durable panels for individual Consumers that could bring the costs to produce down to parity with traditional power.  In this endeavor, the manufactures have poured significant resources into research and development, pushed their manufacturing processes towards ever higher levels of efficiency, and used the latest technology to significantly reduce costs to produce panels that now range from 18-23% cell efficiency.  Since 2010 the average price of a panel has come down by 64% and the industry continues to push to find ways to make solar more affordable.  This is especially important given that the tax credit expires on December 31st of 2016. In the next blog in the series, I will talk about solar financing and the current industry trends.  Financing, as you would expect, has been and will continue to be critical to growth in this space so that more homeowners can afford to move to solar as their primary energy source.  As such, the methods used to acquire, originate, and serve these customers must evolve in order for the industry to sustain the impressive growth rates mentioned earlier in this blog. Solar Financing – The current and future catalyst behind the booming residential solar market (Part II)

By: Mike Horrocks Managing your portfolio can be a long and arduous process that ties up your internal resources but without it, there’s an increase of additional risk and potential losses. The key is to use loan automation to pull together data in a meaningful manner and go from a reactive to proactive process that can: Address the overall risks and opportunities within your loan portfolio ​Get a complete view of the credit and operational risk associated with a credit relationship or portfolio segment Monitor and track actionable steps by leveraging both internal and external data Watch how to avoid the 5 most common mistakes in loan portfolio management to help you reduce overall risk, but also identify cross sell and upsell opportunities. With a more automated process your lending staff can focus on bringing in new business rather than reacting to delinquencies and following up on credit issues. 

The availability and opportunities for customers to conduct business through mobile devices continues to multiply, challenging organizations to protect customers without impacting their experience. Our infographic highlights five challenges of customer authentication that businesses face and what customers feel in an increasingly mobile world. Personally Identifiable Information (PII) is more available, but less reliable, than ever before. 35% performance improvement using models built with attributes beyond simple identity element validation. More transactions are taking place in an omnichannel environment. 36% of organizations interact with their customer in five or more channels. Diversity of devices and technology complicates customer authentication. 85% of consumers use online or mobile to conduct business. 17% of consumers reported having an online transaction declined when device information was not available. Increased online transactions have multiplied fraud opportunities, resulting in more false positives. Of those surveyed who have had Card Not Present (CNP) transactions declined: 31% blame the merchant 38% blame the credit card network 83% felt embarassed or angry Stringent requirements change the way organizations interact with customers. 80% expect the focus on managing regulatory risk to be more than it is today Download our fraud prevention perspective paper to gain more insight on how you can prepare your business.  

Have a look ‘Inside Experian’ through this documentary on our global business explaining who we are, what we do and how we’re helping people and businesses around the world protect, manage and make the most of their data. This ‘Inside Experian’ video focuses on 41st Parameter, a leading provider of dedicated fraud prevention solutions. Their methodology and patented technologies are responsible for reductions in fraud losses and subsequent declining attack rates at some of the largest institutions in e-commerce, financial services, and travel services. Here are some highlights of 41st Parameter’s solutions: $25 trillion in e-commerce orders and financial services transactions scored for risk 500 million transactions processed each month with daily volumes exceeding 8 million transactions a day PCI Certified as a Level 1 Service Provider and ISO-27000, SAS-70 and Safe Harbour Compliant 600 million devices detected by their patented tagless device identification technology captures no PII 41st Parameter works to make the process of preventing and detecting fraud easier and more effective, reducing potential losses while protecting operating costs and the customer experience. Download our fraud prevention whitepaper to gain more insight on how you can prepare your business.

There are two sides to every coin and in banking the question is often to you want to chase the depositor of that coin, or lend it out? Well the Federal Reserve’s decision to hold interest rates at record lows since the economic downturn gave the banks’ in the United States loan portfolios a nice boost from 2010-2011, but the subsequent actions and banking environment resulted in deposit growth outpacing loans – leading to a marked reduction in loan-to-deposit ratios across banks since 2011. In fact currently there is almost $1.30 in deposits for every loan out there today.  This, in turn, has manifested itself as a reduction in net interest margins for all U.S. banks over the last three years – a situation unlikely to improve until the Fed hikes interest rates. Additionally, the banks’ have found that while they are now holding on to more of these deposits that additional regulations in the form of the CFPB looking to evaluate account origination processes,  Basel III Liquidity concerns, CCAR and CIP & KYP have all made the burden of holding these deposits more costly.   In fact the CFPB suggests four items they believe will improve financial institution’s checking account screening policies and practices: Increase the accuracy of data used from CRA’s Identify how institutions can incorporate risk screening tools while not excluding   potential accountholders unnecessarily Ensure consumers are aware and notified of information used to decision the account opening process Ensure consumers are informed of what account options exist and how they access products that align with their individual needs Lastly, to add to this already challenging environment, technology has switched the channel of choice to your smartphone and has introduced a barrage of risks associated with identity authentication – as well as operational opportunities. As leaders in retail banking and in addressing the needs of your customers, I would like to extend an invitation on behalf of Experian for you to participate in our latest survey on the changing landscape of DDA opportunities.  How are regulations changing your product set, what role does mobile play now and in the future, and what are your top priorities for 2015 and beyond?  These are just a few of the insights we would like to gain from experts such as you. To access our survey, please click here.  Our brief survey should take no more than seven minutes to complete and your insights will be highly valued as we look to better support you and your organization’s demand product needs.  Our survey period will close in three weeks, so please respond now. As a sign of our appreciation for your insights, we will send all participants an anonymous aggregation of the responses so that you can see how others view the retail banking marketplace. So take advantage of this chance to learn from your peers and participate in this industry study and don’t leave your strategy to a flip of a coin.

“Building a better mousetrap merely results in smarter mice” – Charles Darwin Credit card issuers in general have a good handle on fraud. They manage it under 10bps (i.e. losses of $0.10 or less per $100 of transactions) on transactions made with a "dumb" plastic card lacking any additional context. So Issuers wishing for Apple Pay fraud to fall between 2-3bps was not totally out of character, considering the protections in place by Apple and Networks to keep fraud away – including issuer support during provisioning, NFC, Tokenization, a tamper proof Secure Element and TouchID. But fraud seems to have followed a different trajectory here. About a month post-launch, it seems like fraud has come to Apple Pay. (in one case – as high as 600bps for an issuer that I cannot name). Though what follows was written in the context of Apple Pay, much of it translates to any other competitor – irrespective of origin, scale, intent, or patron saint. Apple Pay and the Yellow Path: All Apple Pay participating card issuers are required to build a “Yellow Path” for when card provisioning in to Apple Pay requires additional bank verification. Implementation of the “Yellow Path” and corresponding customer experience has varied per Card Issuer. Today, depending on your card issuer – you could expect much variance – such as being directed to their call center, being asked to authenticate via the bank’s mobile app, or an entirely other 2FA verification. As one can expect – each has varying levels of success and friction – with just a couple of banks opting to authenticate via their mobile apps, that would have provided a far easier and customer friendly provisioning experience. Where as, those that opted for call center verification traded efficiency for friction and by most reports – the corresponding experience has been subpar. In fact initially “Yellow Path” was marked optional for card issuers by Apple – which meant that only a couple of Issuers directed much focus at it. Apple reversed its decision and made it mandatory less than a month before launch – which led to issuers scrambling to build and provide this support. Why any bank would consider this optional is beyond me. Either way, Card issuer implementations of the Apple Pay Yellow Path have proved to be inadequate – as I am willing to bet that most of the fraud in Apple Pay came by stolen identities. For all the paranoia around elevating your phone to be the container for all your credit cards – fraud in Apple Pay has assumed more traditional and unsophisticated ways. No, iPhones weren’t stolen and then used for unauthorized purchases, TouchID was not compromised, Credentials weren’t ripped out of Apple’s tamper proof secure element – nor the much feared but rarely attempted MITM attacks(capture and relay an NFC transmission at a different terminal). Instead fraudsters bought stolen consumer identities complete with credit card information, and convinced both software and manual checks that they were indeed a legitimate customer. Fraud on Apple Pay is somewhat unique – as the Pay setup is one of the first things one would do upon getting their iPhone 6. At which point – the device will have little to no background or context with the bank. Further, the customer most likely haven’t had the time to install the bank app or login. It is no wonder then that a number of banks defaulted to “Call our call center” as the default Yellow path. In an earlier post on ISIS (Softcard) I did write how the vast retail network coupled with visibility in to customer identity positioned Carriers as a trusted partner for banks to do secure provisioning. But ISIS had other (yet unrealized) aspirations. For all the focus in protecting transactions and plastic – for e.g. via EMV and Tokenization – issuance and provisioning remains the soft underbelly – under protected and easily compromised. And this should concern all – because the strongest chain is only as good as its weakest link – and those with malice are almost always the first to find it. Fraud in Apple Pay will in time, come to be managed – but the fact that easily available PII can waylay best in class protection should give us all pause. Make sure to download our fraud prevention whitepaper to gain more insight on how you can prepare your business. This post originally appeared here. 

This season’s peak week, the Wednesday before Thanksgiving through the Tuesday after Cyber Monday, had an 18 percent increase in email volume, an 11 percent rise in transactions and a 7 percent increase in email revenue in comparison to peak week 2013. Cyber Monday provided 27 percent of total peak week revenue followed by Black Friday, which accounted for 18 percent of revenue. Marketers can design more successful holiday campaigns by staying on top of the latest email trends. View the December Holiday Hot Sheet

Experian's most recent State of Credit report analyzed the average credit scores for more than 100 metropolitan statistical areas (MSAs).

This is the second post in a three-part series. Imagine the circumstances of a traveler coming to a never before visited culture. The opportunity is the new sights, cuisine and cultural experiences. Among the risks is the not before experienced pathogens and the strength of the overall health services infrastructure. In a similar vein, all too frequently we see the following conflict within our client institutions. The internal demands of an ever-increasing competitive landscape drive businesses to seek more data; improved ease of accessibility and manipulation of data; and acceleration in creating new attributes supporting more complex analytic solutions. At the same time, requirements for good governance and heightened regulatory oversight are driving for improved documentation and controlled access, all with improved monitoring and documented and tested controls. As always, the traveler/businessman must respond to the environment, and the best medicine is to be well-informed of both the perils and the opportunities. The good news is that we have seen many institutions invest significantly in their audit and compliance functions over the past several years. This has provided the lender with both better insights into its current risk ecosystem and the improved skill set to continue to refine those insights. The opportunity is for the lender to leverage this new strength. For many lenders, this investment largely has been in response to broadening regulatory oversight to ensure there are proper protocols in place to confirm adherence to relevant rules and regulations and to identify issues of disparate impact. A list of the more high-profile regulations would include: Equal Credit Opportunity Act (ECOA) — to facilitate enforcement of fair lending laws and enable communities, governmental entities and creditors to identify business and community development needs and opportunities of women-owned, minority-owned and small businesses. Home Mortgage Disclosure Act (HMDA) — to require mortgage lenders to collect and report additional data fields. Truth in Lending Act (TLA) — to prohibit abusive or unfair lending practices that promote disparities among consumers of equal creditworthiness but of different race, ethnicity, gender or age. Consumer Financial Protection Bureau (CFPB) — evolving rules and regulations with a focus on perceptions of fairness and value through transparency and consumer education. Gramm-Leach-Bliley Act (GLBA) — requires companies to give consumers privacy notices that explain the institutions’ information-sharing practices. In turn, consumers have the right to limit some, but not all, sharing of their information. Fair Debt Collections Practices Act (FDCPA) — provides guidelines for collection agencies that are seeking to collect legitimate debts while providing protections and remedies for debtors. Recently, most lenders have focused their audit/compliance activities on the analytics, models and policies used to treat consumer/client accounts/relationships. This focus is understandable since it is these analytics and models that are central to the portfolio performance forecasts and Comprehensive Capital Analysis and Review (CCAR)–mandated stress-test exercises that have been of greater emphasis in responding to recent regulatory demands. Thus far at many lenders, this same rigor has not yet been applied to the data itself, which is the core component of these policies and frequently complex analytics. The strength of both the individual consumer–level treatments and the portfolio-level forecasts is negatively impacted if the data underlying these treatments is compromised. This data/attribute usage ecosystem demands clarity and consistency in attribute definition; extraction; and new attribute design, implementation to models and treatments, validation and audit. When a lender determines there is a need to enhance its data governance infrastructure, Experian® is a resource to be considered. Experian has this data governance discipline within our corporate DNA — and for good reason. Experian receives large and small files on a daily basis from tens of thousands of data providers. In order to be sure the data is of high quality so as not to contaminate the legacy data, rigorous audits of each file received are conducted and detailed reports are generated on issues of quality and exceptions. This information is shared with the data provider for a cycle of continuous improvement. To further enhance the predictive insights of the data, Experian then develops new attributes and complex analytics leveraging the base and developed attributes for analytic tools. This data and the analytic tools then are utilized by thousands of  authorized users/lenders, who manage broad-ranging relationships with millions of individuals and small businesses. These individuals and businesses then have rights to reproach Experian for error(s) both perceived and actual. This demanding cycle underscores the value of the data and the value of our rigorous data governance infrastructure. This very same process occurs at many lenders sites. Certainly, a similar level of data integrity born from a comprehensive data governance process also is warranted. In the next and final blog in this series, we will explore how a disciplined business review of an institution’s data governance process is conducted. Discover how a proven partner with rich experience in data governance, such as Experian, can provide the support your company needs to ensure a rigorous data governance ecosystem. Do more than comply. Succeed with an effective data governance program.