Tag: financial services

Scott Brown presents at Reuters Next “If I were to look into a crystal ball, traditional lending methodology and processes will not be replaced; they will be augmented by consumers connecting to banks via APIs, contributing the data they are comfortable with, and banks using that in conjunction with historical credit data to offer newer and better products they didn’t have access to before. The convergence of data, tech and AI leads to more financial inclusion and a more modern way of underwriting.”Scott Brown, Group President Financial Services, Experian North America Scott Brown, Group President of Financial Services for Experian North America, recently presented at Reuters Next discussing the transformative power of AI and data analytics in financial services. The session also covered the top challenges that financial institutions face today and how advances in technology are helping organizations overcome those challenges. This keynote presentation was a timely follow-up to Brown’s previous appearance at the Money20/20 conference in Las Vegas, where he revealed the details of Experian’s latest innovation in GenAI technology, Experian Assistant. Brown, in a conversation with TV writer, producer and anchor Del Irani, spoke about the ethical considerations of AI innovation, what the future of underwriting may look like, and how open banking can drive financial inclusion and have a significant positive impact on both businesses and consumers. “If you are extending a line of credit to a given consumer, how do you do so in a way that’s integrated into their everyday lives? That’s where the concept of embedded finance comes in, and how to embed finance into a consumer’s life, and not the other way around.”Scott Brown, Group President Financial Services, Experian North America By embedding finance into consumers’ lives, and not the other way around, organizations can develop better strategies to balance risk and generate more revenue. He also focused on three foundational steps to take advantage of the capabilities AI offers: data quality, transparency, and responsibility. Areas of focus for implementing AI As organizations rely on more sophisticated approaches, data quality inputs are more important than ever. Inaccurate data can lead to poor business decisions that can have a negative impact on organizations’ bottom line. Transparency is also a crucial component of implementing AI solutions. Companies should be able to explain how their models work and why the end results make sense while avoiding biases. Leveraging data with AI tools allows organizations to get a better view of the consumer, which is a goal of most banks and lending institutions. Using that consumer data responsibly is important for financial institutions to establish and maintain trust with the people who use their services. While incorporating AI solutions into everyday business operations is important for financial institutions to better serve their consumers and remain competitive in the industry, a lack of access to AI tools can prevent some organizations from doing so. A fragmented approach leads to higher costs, lower efficiency, and greater risk Until recently, financial institutions have had to rely on several different technology providers and tools to optimize customer experience and operational efficiency while protecting consumers from the risk of identity theft and fraud. This fragmented approach can result in increased costs for organizations and higher risk for consumers. Now, AI technology is solving this issue by integrating functionality into a single platform, such as the Experian Ascend Technology Platform™. This streamlined access to a comprehensive suite of tools can help accelerate time-to-value while also eliminating compliance risks. Full interview available now Brown’s full interview at Reuters Next reveals more details about how Experian is empowering organizations to better serve their consumers’ financial needs through AI innovation while also helping more than 100 million Americans who don’t have access to the mainstream credit ecosystem due to being credit invisible, unscoreable, or have a low credit score. Watch the full interview to learn more about how Experian is continuing to bring financial power to all through innovative technology. Watch the full interview now

In today's data-driven business landscape, leveraging advanced targeting techniques is crucial for effective consumer engagement, particularly in the financial services sector. Prescreen targeting solutions have evolved significantly, offering a competitive edge through more precise and impactful outreach strategies. The power of data analytics and predictive modeling At the heart of modern prescreen targeting solutions lies the integration of extensive data analytics and predictive modeling. These systems combine detailed consumer information, including purchasing behaviors and credit scores, with sophisticated algorithms to identify potential customers most likely to respond positively to specific promotional campaigns. This approach not only streamlines campaign efforts but also enhances the tactical effectiveness of each interaction. Direct mail: a proven channel for financial services In the competitive North American financial services market, direct mail has demonstrated distinct advantages as a targeting channel. Its tangible nature helps cut through digital noise, capturing consumer attention effectively. For credit products, direct mail typically achieves engagement rates of 0.2-2% for prime consumers and 1-3% for near-prime and subprime consumers[1]. Key advantages of prescreen targeting solutions Enhanced response rates Custom response models can significantly boost prospect response rates by targeting a well-defined, high-propensity audience. These models have the potential to improve average response rates of prescreen direct mail campaigns by 10-25%. Risk mitigation By focusing on well-defined, high-propensity audiences, prescreen targeting via direct mail aims to attract the right prospects, minimizing fraud and delinquency risks. This targeted approach can lead to substantial savings on underwriting costs. Improved customer engagement and retention Personalized direct mail strengthens customer relationships by making recipients feel valued, leading to higher engagement and loyalty – crucial factors for long-term business success. Regulatory compliance and security Prescreen solutions come equipped with compliance safeguards, simplifying adherence to industry regulations and consumer privacy standards. This is particularly critical in the highly regulated financial sector. The future of targeting and enhancement As markets continue to evolve, the strategic importance of precise and efficient marketing techniques will only grow. Financial institutions leveraging optimized prescreen targeting and enhancement solutions can gain a significant competitive advantage, achieving higher immediate returns and fostering long-term customer loyalty and brand strength. Future advancements in AI and machine learning are expected to further refine prescreen targeting capabilities, offering even more sophisticated tools for marketers to engage effectively with their target audiences. Ascend Intelligence Services™ Target Ascend Intelligence Services Target is a sophisticated prescreening solution that boosts direct mail response rates. It uses comprehensive trended and alternative data, capturing credit and behavior patterns to iterate through direct mail response models and mathematical optimization. This enhances the target strategy and maximizes campaign response, take-up rates, and ROI within business constraints. Visit our website to learn more [1] Experian Research, Data Science Team, July 2024 

This article was updated on February 23, 2024. First impressions are always important – whether it’s for a job interview, a first date or when pitching a client. The same goes for financial services onboarding as it’s an opportunity for organizations to foster lifetime loyalty with customers. As a result, financial institutions are on the hunt now more than ever for frictionless online identity verification methods to validate genuine customers and maintain positive experiences during the online onboarding process. In a predominantly digital-first world, financial companies are increasingly focused on the customer experience and creating the most seamless online onboarding process. However, according to Experian’s 2023 Identity and Fraud Report, more than half of U.S. consumers considered dropping out during account opening due to friction and a less-than positive experience. And as technology continues to advance, digital financial services onboarding, not surprisingly, increases the demand for fraud protection and authentication methods – namely with digital identity (ID) verification processes. According to Experian’s report, 64% of consumers are very or somewhat concerned with online security, with identity theft being their top concern. So how can financial institutions guarantee a frictionless online onboarding experience while executing proper authentication methods and maintaining security and fraud detection? The answer? While a “frictionless” experience can seem like a bit of a unicorn, there are some ways to get close: Utilizing better data - Digital devices offer an extensive amount of data that’s useful in determining risk. Characteristics that allow the identification of a specific device, the behaviors associated with the device and information about a device’s owner can be captured without adding friction for the user. Analytics – Once the data is collected, advanced analytics uses information based on behavioral data, digital intelligence, phone intelligence and email intelligence to analyze for risk. While there’s friction in the initial ask for the input data, the risk prediction improves with more data. Document verification and biometric identity verification – Real-time document verification used in conjunction with facial biometrics, behavioral biometrics and other physical characteristics allows for rapid onboarding and helps to maintain a low friction customer journey. Financial institutions can utilize document verification to replace manual long-form applications for rapid onboarding and immediately verify new data at the point of entry. Using their mobile phones, consumers can photograph and upload identity documents to pre-fill applications. Document authenticity can be verified in real-time. Biometrics, including facial, behavioral, or other physical characteristics (like fingerprints), are low-touch methods of customer authentication that can be used synchronously with document verification. Optimize your financial services onboarding process Experian understands how critical identity management and fraud protection is when it comes to the online onboarding process and identity verification. That’s why we created layered digital identity verification and risk segmentation solutions to help legitimize your customers with confidence while improving the customer experience. Our identity verification solutions use advanced technology and capabilities to correctly identify and verify real customers while mitigating fraud and maintaining frictionless customer experiences. Learn more

This article was updated on August 24, 2023. The continuous shift to digital has made a tremendous impact on consumer preferences and behaviors, with 81% thinking more highly of brands that offer multiple digital touchpoints. As a result, major credit card issuers are making creative pivots to their credit marketing strategies, from amplifying digital features in their card positioning to promoting partnerships and incentives on digital channels. But as effective as it is to reach consumers where they most frequent, credit card marketing will need to be more customer-centric to truly captivate and motivate audiences to engage.  So, what does this innovative period of credit marketing mean for financial institutions? How can these institutions stand out in a competitive, ever-changing market?  To target and acquire the right consumers, here are three credit card marketing strategies financial institutions should consider:  Maximize share of voice through targeted approaches  About half of consumers say personalization is the most important aspect of their online experience. Because today’s consumers are now expecting to engage digitally with brands, it’s important for financial institutions to not only be seen and mentioned on the right digital channels, but to deliver content that will resonate with their specific audiences. To do this, lenders must leverage fresh, comprehensive data sets to gain a more holistic view of consumers. This way, they can create targeted, customer-centric prescreen campaigns, allowing for enhanced personalization and increased response rates.  Seek new opportunities to provide value to customers  77% of Gen Zers believe having an established credit history is important to being less financially dependent on their parents. Changes in consumer needs and lifestyles provide great opportunities to deliver value to customers. For example, younger consumers starting their credit journeys may look for brands that offer financial education or tools to help them build credit. Financial institutions that are open to pivoting their strategies to adapt to these needs and behaviors are those that will succeed in attracting new customers and maintaining long-lasting relationships with existing ones.  Amplify points of differentiation in their products and marketing  Before buying a product, consumers likely want to know more about the items they are purchasing and how they compare to different players in the market. To help set their products apart from other offerings, financial institutions should clearly define their product’s key differentiators and convey them in a personalized and compelling manner.  Enhance your credit card marketing campaigns  From identifying the right prospects to saturating your targeting criteria with data-rich insights, Experian offers credit marketing solutions to help you level up your campaigns and stand out from the competition. Learn more

 With nearly seven billion credit card and personal loan acquisition mailers sent out last year, consumers are persistently targeted with pre-approved offers, making it critical for credit unions to deliver the right offer to the right person, at the right time. How WSECU is enhancing the lending experience As the second-largest credit union in the state of Washington, Washington State Employees Credit Union (WSECU) wanted to digitalize their credit decisioning and prequalification process through their new online banking platform, while also providing members with their individual, real-time credit score. WSECU implemented an instant credit decisioning solution delivered via Experian’s Decisioning as a ServiceSM environment, an integrated decisioning system that provides clients with access to data, attributes, scores and analytics to improve decisioning across the customer life cycle. Streamlined processes lead to upsurge in revenue growth   Within three months of leveraging Experian’s solution, WSECU saw more members beginning their lending journey through a digital channel than ever before, leading to a 25% increase in loan and credit applications. Additionally, member satisfaction increased with 90% of members finding the simplified process to be more efficient and requiring “low effort.” Read our case study for more insight on using our digital credit solutions to: Prequalify members in real-time at point of contact Match members to the right loan products Increase qualification, approval and take rates Lower operational and manual review costs Read case study

How businesses respond to economic uncertainty can determine whether they get ahead or fall behind. To better prepare for the coming months, you must remain up to date on the latest economic developments to better understand and evolve with changing consumer needs. With insight into critical macroeconomic and consumer trends, you can proactively manage your portfolio, enhance your decisioning and seize new opportunities. Grab a cup of coffee and join Experian's Shawn Rife, Client Executive, and Josee Farmer, Economic Analyst, during our fireside chat on February 16 @ 1 P.M. ET/10 A.M. PT. Our expert speakers will provide a view of the latest economic and market trends, their impact on consumers, and how financial institutions can survive and thrive. Highlights include: Macroeconomic and consumer credit trends Economic implications on consumer behavior How financial institutions can adapt Register now

More than seven million Americans who are unbanked cite high account fees, insufficient funds to meet minimum balances and a lack of needed products and services as the main reasons for not having a checking or savings account.1 Credit unions understand that being unbanked comes at a steep cost and have turned their focus to developing products and strategies that prioritize financial inclusion — a movement to combat inequities in banking and better serve the financial needs of marginalized communities. In 2022, the House passed Expanding Financial Access for Underserved Communities Act to allow federal credit unions to add underserved areas to their fields of membership as a means of improving financial inclusion. “We believe diversity, inclusion, equity, belonging and accessibility has to be weaved into the strategic fabric of an organization [and its] culture," says Max Villaronga, President and Chief Executive Officer of Raiz Federal Credit Union. “When we don't participate in [diversity, equity and inclusion], we are complicit in essentially keeping people out of the banking system." For credit unions, driving financial inclusion starts with setting a vision that will leave a lasting legacy that includes fostering financial empowerment, closing the credit gap and building generational wealth among the communities they serve. Here's a roadmap for getting started. Best practices for engagement Establishing a set of best practices is the essential starting point for improving financial inclusion. The process begins with the mission statement and extends to all aspects of operations from hiring procedures to sponsorships and donations. Villaronga advocates three strategies for engagement: Engage the leadership team Conversations about financial inclusion need to start at the top. The C-suite must be willing to be honest about the barriers and willing to adopt changes that will make credit unions more inclusive. “[T]hese systemic barriers will exist until somebody deliberately moves them out of the way," Villaronga says. “The people who are feeling those barriers are not in the position to do the moving it's up to [CEOs and CFOs] to decide to do something to make a difference." Making a difference starts with choosing a leadership team that reflects the demographics of local communities. Case in point: At Raiz Federal Credit Union in El Paso, Texas, senior management and the board have LGBTQIA+ representation and include members from diverse racial and ethnic identities. The board of directors has also prioritized creating a pipeline that will attract more diverse talent to the board. “Many of [our board members] come from underserved backgrounds in our border community," Villaronga says. “This is a very personal journey for them because they can see themselves in the lives of the people we're serving." Build trust in underserved communities According to an FDIC Survey, “unbanked" U.S. households listed a lack of trust in financial institutions as a top reason for not having a bank account. And lack of access to a checking or savings account is most prominent among racial and ethnic minorities and low-income communities.2 Actions speak louder than words, according to Villaronga. Raiz Federal Credit Union uses diverse images in its advertising and provides information in both English and Spanish. The credit union was also awarded the Juntos Avanzamos (Together We Advance) designation from Inclusiv for its commitment to serving and empowering Hispanic communities by providing safe, affordable and relevant financial services. Villaronga believes that a designation like Juntos Avanzamos sends the message to the community that the credit union is committed to improving general financial literacy and pre-loan education, as well as reducing higher charge-offs and other barriers to accessing financial services that exist in lending and serving underserved communities. Dispel financial inclusion myths Among traditional financial institutions, myths about financial inclusion are widespread and include falsehoods that pricing products for marginalized communities are too challenging, reaching out is not profitable, and providing financial products to underserved markets is too risky. “Credit unions were really built to extend credit [and] were also originally established to serve consumers that were being ignored by the existing systems that were in place but those consumers are still being ignored today," Villaronga says. “Are those communities too risky to serve? Some companies are serving them [and] they would not be doing so if it was not profitable." Raiz Federal Credit Union offers several affordable loan products — from credit builder loans to citizenship loans and payday lender payoff loans along with credit cards — that allow members to build their credit scores and establish positive credit histories. Rather than pricing loans based on what the competition is charging, Villaronga calculates the fixed and variable costs, failure fraction and target return on assets to get a floor pricing per unit. The approach, he adds, allowed Raiz Federal Credit Union to report earnings of over 150 basis points in 2021 while maintaining a 12 percent capital ratio, proving that financial inclusion is good for the bottom line. “THE IDEA THAT YOU CANNOT [ACHIEVE FINANCIAL INCLUSION] IN A WAY THAT'S SAFE AND SOUND AND SATISFIES THE [NATIONAL CREDIT UNION ADMINISTRATION] IS TRULY A MYTH." - Max Villaronga, President and CEO, Raiz Federal Credit Union Partner for Success For credit unions, an important part of achieving financial inclusion goals is identifying partners that can help. Raiz Federal Credit Union set a goal to increase automated lending from 20 percent to 60 percent, but using a traditional loan origination program was insufficient to hit that target. A partnership with Experian allowed the credit union to access tools that allowed it to better identify non-traditional risks and opportunities, as well as develop more robust lending and optimized decision strategies. Experian launched Inclusion ForwardTM, an initiative to help boost financial inclusion and close the wealth gap, and support financial institutions by enhancing their inclusion approach by leveraging FCRA-regulated data sources (otherwise known as alternative data).3 In addition to providing a deeper view of unbanked and underbanked consumers and reducing friction and speed of decisioning through increased automation, Experian Lift PremiumTM uses income and employer data, social security and financial management insights — transaction behaviors that were historically credit invisible or unscorable — to help credit unions meet the needs of underserved markets and increase opportunities for inclusion. “This automation also allows us to reduce our fixed cost per unit — [and] it's a really big deal because this is not by little, but a lot," Villaronga says. “This lower cost to produce [a loan] allows us to improve our interest rates to underserved members, further creating an appealing value proposition that's in line with our financial inclusion strategy." Access our case study to learn more about how Experian can help grow your business with a frictionless digital prequalification experience. Access now 1Federal Reserve Bank of Cleveland (May 2022). Unbanked in America: A Review of Literature 2 Federal Deposit Insurance Corporation (December 2021). American Banks: Household use of Banking and Financial Services 3When we refer to “Alternative Credit Data," this refers to the use of alternative data and its appropriate use in consumer credit lending decisions, as regulated by the Fair Credit Reporting Act. Hence, the term “Expanded FCRA Data" may also apply in this instance and both can be used interchangeably

Leasing has long been a popular choice among consumers who want to enjoy the latest vehicle models, but at a lower monthly payment. In fact, the average monthly lease payment was $127 less than a loan payment in Q2 2022. However, in recent quarters, we’ve seen leasing availability decline due to current market conditions. According to Experian’s State of the Automotive Finance Market Report: Q2 2022, leasing declined from 27.82% to 19.65% year-over-year, marking the lowest drop in quite some time. When analyzing previous data, leasing comprised 30.41% of all new vehicles in Q2 2018, decreasing to 30.04% in Q2 2019 and 26.58% in Q2 2020. There are likely a number of factors contributing to the decline of leasing over recent years, including the ongoing inventory shortages and OEMs not offering as many incentives, which may result in leasing opportunities becoming less common. Other scenarios can be consumers choosing to extend their lease, or purchase the vehicle once their lease has expired. In Q2 2022, the average monthly lease payment increased to $540, from $475 in Q2 2021. Though, the average monthly loan payment for a new vehicle surpassed $600 this quarter—coming in at $667, an $85 year-over-year increase. As automotive professionals continue to navigate through the inventory shortages and subsequent vehicle price increases, understanding the landscape and what options are available for consumers will be critical. One way to keep on top of the trends is analyzing the pricing options for the most popular leased models, which will enable more informed decisions in the months to come. Average monthly payment for top leased models As previously mentioned, there was an average payment difference of $127 between a lease and a loan in Q2 2022. However, that’s just an average, and these numbers can vary based on the vehicle type. For example, the average monthly lease payment for a Honda Civic was $363 in Q2 2022, as opposed to the average monthly loan payment of $476. In comparison, the average monthly lease payment for a Ford F-150 came in at $516 this quarter, compared to the average monthly loan payment of $832. While a pickup truck may typically have a higher average monthly lease payment than a sedan, consumers are continuing to choose larger vehicles, overall. In Q2 2022, there was only one sedan that made up the top leased vehicles—with the Ford F-150 having the highest leasing registration volume, comprising 2.3% this quarter. Rounding out the top five were Chevrolet Equinox (2.27%), Honda CR-V (2.16%), Honda Civic (2.09%), and Ram 1500 (1.81%). Despite the overall decline in leasing over the past year, it continues to be a financing option that consumers can consider amid vehicle prices increasing. Knowing what vehicles are most prevalent as well as their price points will allow professionals to create strategies that cater to the most current consumer financing preferences during their search for a vehicle that fits their needs. To learn more about leasing and other automotive finance trends, watch the entire State of the Automotive Finance Market: Q2 2022 presentation on demand.

According to Experian’s State of the Automotive Finance Market Report: Q1 2022, credit unions had their highest total share in five years

Many financial institutions have made inclusion a strategic priority to expand their reach and help more U.S. consumers access affordable financial services. To drive deeper understanding, Experian commissioned Forrester to do new research to identify key focal points for firms and how they are moving the needle. The study found that more than two-thirds of institutions had a strategy created and implemented while one-quarter reported they are already up and running with their inclusion plans.1 Tapping into the underserved The research examines the importance of engaging new audiences such as those that are new to credit, lower-income, thin file, unbanked and underbanked as well as small businesses. To tap into these areas, the study outlines the need to develop new products and services, adopt willingness to change policies and processes, and use more data to drive better decisions and reach.2 Expanded data for improved risk decisioning The research underlines the use of alternative data and emerging technologies to expand reach to new audiences and assist many who have been underserved. In fact, sixty-two percent of financial institutions surveyed reported they currently use or are planning to use expanded data to improve risk profiling and credit decisions, with focus on: Banking data Cash flow data Employment verification data Asset, investments, and wealth management data Alternative financial services data Telcom and utility data3 Join us to learn more at our free webinar “Reaching New Heights Together with Financial Inclusion” where detailed research and related tools will be shared featuring Forrester’s principal analyst on Tuesday, May 24 from 10 – 11 a.m. PT. Register here for more information. Find more financial inclusion resources at www.experian.com/inclusionforward. Register for webinar Visit us 1 Based on Forrester research 2 Ibid. 3 Ibid.

The State of the Automotive Finance Market: Q4 2021 report broke down alternative fuel financing trends—specifically how electric vehicle (EV) financing doubled year-over-year.

As more consumers apply for credit and increase their spending1, lenders and financial institutions have an opportunity to expand their portfolios and improve profitability. The challenge is ensuring they’re extending credit responsibly and inclusively. Millions of Americans, many of whom are creditworthy, lack access to mainstream credit options. This may be because they have limited or no credit history, negative information within their credit file, or are a part of a historically disadvantaged group. To say “yes” to consumers they otherwise couldn’t or wouldn’t lend to, lenders must gain a deeper understanding of an individual’s stability, ability and willingness to pay. That’s where expanded FCRA-regulated and trended data come in. While traditional credit data has long been the primary means of gauging creditworthiness, it doesn’t tell the full story of a consumer’s financial situation. Let’s explore how differentiated data can help lenders make more informed credit decisions. Using differentiated data for deeper lending Expanded FCRA-regulated data provides supplemental credit data to help lenders gain a more holistic view of their current and prospective customers. Some examples of expanded FCRA-regulated data include alternative financial services data from nontraditional lenders, consumer-permissioned account data, rental payments and full-file public records. Because this data drives greater visibility and transparency around inquiry and payment behaviors, lenders can more accurately determine a consumer’s ability to pay and distinguish between reliable and high-risk applicants. In turn, lenders can approve more creditworthy consumers, grow their portfolios and increase financial opportunities for underserved communities, all while preventing and mitigating risk. 89% of lenders agree that expanded FCRA-regulated data allows them to extend credit to more consumers. Trended data empowers lenders with predictive insights into consumers by providing key balance and payment data for the previous 24 months. This is important as lenders can determine if a consumer’s credit behavior has improved or deteriorated over time. In turn, lenders can: Identify creditworthy customers: Establish if a consumer has a demonstrated ability to pay, is consistently paying more than the minimum payment, or shows no signs of payment stress. Increase response rates: Match the right products with the right prospects. Determine upsell and cross-sell opportunities: Present relevant offers based on anticipated needs and behaviors. Limit loss exposure: Understand the direction and velocity of payment performance to effectively manage risk exposure. Trended data helps lenders better predict future behavior, manage portfolio risk and design the best marketing offers. Turning insights into action Together, trended and expanded FCRA-regulated data benefit lenders and consumers alike. With a more holistic view of their customers, lenders gain powerful insights to lend deeper, ultimately helping them to expand their portfolios and drive greater access to credit for underserved communities. Learn more 1 The Recovery of Credit Applications to Pre-Pandemic Levels, Consumer Financial Protection Bureau, 2021.

Lenders are under pressure to improve access to financial services, but can it also be a vehicle for driving growth? With the global pandemic and social justice movements exposing societal issues of equity, financial institutions are being called upon to do their part to address these problems, too. Lenders are increasingly under pressure to improve access to the financial system and help close the wealth gap in America.  Specifically, there are calls to improve financial inclusion – the process of ensuring financial products and services are accessible and affordable to everyone. Financial inclusion seeks to remove barriers to accessing credit, which can ultimately help individuals and businesses create wealth and elevate communities. Activists and regulators have singled out the current credit scoring system as a significant obstacle for a large portion of U.S. consumers.  From an equity standpoint, tackling financial inclusion is a no-brainer: better access to credit allows more consumers to secure safer housing and better schools, which could lead to higher-paying jobs, as well as the ability to start businesses and get insurance. Being able to access credit in a regulated and transparent way underpins financial stability and prosperity for communities and is key to creating a stronger economic system. Beyond “doing the right thing," research shows that financial inclusion can also fuel business growth for lenders.  Get ahead of the game  There is mounting regulatory pressure to embrace financial inclusion, and financial institutions may soon need to comply with new mandates. Current lending practices overlook many marginalized communities and low-income consumers, and government agencies are seeking to change that.  Government agencies and organizations, such as the Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC), are requiring greater scrutiny and accountability of financial institutions, working to overhaul the credit reporting system to ensure fairness and equality.  As a lender, it makes good business sense to tackle this problem now. For starters, as more institutions embrace Corporate Social Responsibility (CSR) mandates—something that's increasingly demanded by shareholders and customers alike—financial inclusion is a natural place to start. It demonstrates a commitment to CSR principles and creates a positive brand built on equity.  Further, financial institutions that embrace these changes gain an early adopter advantage and can build a loyal customer base. As these consumers begin to build wealth and expand their use of financial products, lenders will be able to forge lifelong relationships with these customers.  Why not get a head start on making positive organizational change before the law compels it?  Grow your business (and profits)  To be sure, financial inclusion is a pressing moral imperative that financial institutions must address. But financial inclusion doesn't come at the expense of profit. It represents an enormous opportunity to do business with a large, untapped market without taking on additional risk. In many instances, unscorable and credit invisible consumers exhibit promising credit characteristics, which the conventional credit scoring system does not yet recognize.  Consider consumers coming to the U.S. from other countries. They may have good credit histories in their home countries but have not yet established a credit history here. Likewise, many young, emerging consumers haven't generated enough history to be categorized as creditworthy. And some consumers may simply not utilize traditional credit instruments, like credit cards or loans. Instead, they may be using non-bank credit instruments (like payday loans or buy-now-pay-later arrangements) but regularly make payments.  Ultimately, because of the way the credit system works, research shows that lenders are ignoring almost 20 percent of the U.S. population that don't have conventional credit scores as potential customers. These consumers may not be inherently riskier than scored consumers, but they often get labelled as such by the current credit scoring system. That's a major, missed opportunity!  Modern credit scoring tools can help fill the information gap and rectify this. They draw on wider data sources that include consumer activities (like rent, utility and non-bank loan payments) and provide holistic information to assist with more accurate decisioning. For example, Lift Premium™ can score 96 percent of Americans with this additional information—a vast improvement over the 81 percent who are currently scored with conventional credit data.1 By tapping into these tools, financial institutions can extend credit to underserved populations, foster consumer loyalty and grow their portfolio of profitable customers.  Do good for the economy  Research suggests that financial inclusion can provide better outcomes for both individuals and economies. Specifically, it can lead to greater investment in education and businesses, better health, lower inequality, and greater entrepreneurship.  For example, an entrepreneur who can access a small business loan due to an expanded credit scoring model is subsequently able to create jobs and generate taxable revenue. Small business owners spend money in their communities and add to the tax base – money that can be used to improve services and attract even more investment.  Of course, not every start-up is a success. But if even a portion of new businesses thrive, a system that allows more consumers to access opportunities to launch businesses will increase that possibility.  The last word  Financial inclusion promotes a stronger economy and thriving communities by opening the world of financial services to more people, which benefits everyone. It enables underserved populations to leverage credit to become homeowners, start businesses and use credit responsibly—all markers of financial health. That in turn creates generational wealth that goes a long way toward closing the wealth gap.  And widening the credit net also enables lenders to uncover new revenue sources by tapping new creditworthy consumers. Expanded data and advanced analytics allow lenders to get a fuller picture of credit invisible and unscorable consumers. Opening the door of credit will go a long way to establishing customer loyalty and creating opportunities for both consumers and lenders.  Learn more

With consumers having more banking options than ever before, loyalty has become the most valuable currency for financial institutions (FI). As fintechs and big tech companies continue to roll out innovative banking and payment options, traditional FIs must rethink their strategies to drive new business, retain existing customers and remain competitive. According to a recent Mintel report, rewards, transparency and customer service are the top three constants when it comes to building loyalty. Here’s how financial institutions can deliver on these fronts to create and maintain lasting customer relationships: Rewards programs and incentives Rewards have long been a key customer retention strategy, with 39% of consumers stating they would remain loyal to their financial service providers if they offered incentives and rewards. While traditional rewards programs that offer points or cash back on everyday purchases remain popular, many companies are expanding beyond the conventional rewards structure to attract new customers and stand out from the competition. For example, one California-based startup enables its cardholders to earn points at every winery, wine club or wine shop, while a health and wellness company rewards its cardholders with extra cash back when they meet their weekly fitness goals. To build and maintain customer loyalty, FIs can follow suit by incentivizing positive financial behavior, such as offering points to customers when their credit score increases or when they reach their monthly savings goal. Being rewarded for improving their financial health can encourage customers to continue making positive and responsible financial decisions. When customers see how much their financial institution invests in their financial well-being, they are more likely to remain loyal to the brand. Nurturing existing customers through rewards programs is also more cost-effective than acquiring new ones. Rewards program members spend 5-20% more than non-members on average, which not only covers operating costs but leads to increased sales and revenue. Transparency over fees Beyond rewards programs and incentives, many FIs have created innovative tools to help customers avoid overdraft fees, such as real-time alerts for low balances. To take it a step further, some have eliminated these fees altogether. While overdraft fees can be an easy source of revenue for financial institutions, they are a pain point for customers, especially for those who are financially vulnerable. Rather than continuing to be saddled with hefty penalties, customers are likely to switch to providers that are more upfront about their fees or have eliminated them outright. To avoid losing current and prospective customers to new competition, FIs need to be more transparent and work toward establishing fairer practices. Quick, friendly, and accessible customer service With today’s consumers having increased expectations for easy, convenient and accessible customer service, many FIs have refined their strategies by becoming digital-first. When customers have a question or concern, they can engage with financial institutions at any time through digital channels, including chat, email or social media. Being accessible at any hour of the day to assist their customers provides FIs with a great opportunity to build trust, loyalty and a positive reputation. By providing exceptional customer service, compelling rewards and being transparent, financial institutions have the power to create long-lasting customer relationships. Learn more about what you can do to retain your best customers or check out how to build lifetime loyalty with Gen Z. Learn more Build loyalty with Gen Z

Nearly 28 million American consumers are credit invisible, and another 21 million are unscorable.1 Without a credit report, lenders can’t verify their identity, making it hard for them to obtain mortgages, credit cards and other financial products and services. To top it off, these consumers are sometimes caught in cycles of predatory lending; they have trouble covering emergency expenses, are stuck with higher interest rates and must put down larger deposits. To further our mission of helping consumers gain access to fair and affordable credit, Experian recently launched Experian GOTM, a first-of-its-kind program aimed at helping credit invisibles take charge of their financial health. Supporting the underserved Experian Go makes it easy for credit invisibles and those with limited credit histories to establish, use and grow credit responsibly. After authenticating their identity, users will have their Experian credit report created and will receive educational guidance on improving their financial health, including adding bill payments (phone, utilities and streaming services) through Experian BoostTM. As of January 2022, U.S. consumers have raised their scores by over 87M total points with Boost.2 From there, they’ll receive personalized recommendations and can accept instant card offers. By leveraging Experian Go, disadvantaged consumers can quickly build credit and become scorable. Expanding your lending portfolio So, what does this mean for lenders? With the ability to increase their credit score (and access to financial literacy resources), thin-file consumers can more easily meet lending eligibility requirements. Applicants on the cusp of approval can move to higher score bands and qualify for better loan terms and conditions. The addition of expanded data can help you make a more accurate assessment of marginal consumers whose ability and willingness to pay aren’t wholly recognized by traditional data and scores. With a more holistic customer view, you can gain greater visibility and transparency around inquiry and payment behaviors to mitigate risk and improve profitability. Learn more Download white paper 1Data based on Oliver Wyman analysis using a random sample of consumers with Experian credit bureau records as of September 2020. Consumers are considered ‘credit invisible’ when they have no mainstream credit file at the credit bureaus and ‘unscorable’ when they have partial information in their mainstream credit file, but not enough to generate a conventional credit score. 2https://www.experian.com/consumer-products/score-boost.html