Tag: fintech

Financial inclusion is a challenge, that, while not new, has become ever more apparent over the last year. The inequities and inequalities in our society, exasperated by the COVID-19 pandemic, which disproportionately affected underserved populations, have amplified the challenge lenders and others in the financial services industry face in fostering financial inclusion. As a result, there is an increased focus and importance on diversity, equity and inclusion (DEI) and having the ability to assess creditworthiness of overlooked and ‘invisible’ consumers. In a recent webinar, we sat down with Sarah Davies, Head of Data Analytics at Nova Credit, and a panel of Experian experts including Wil Lewis, Chief Diversity, Equity and Inclusion Officer, Alpa Lally, Vice President of Product Management, and Greg Wright, Product Chief Officer, to explore the topic of DEI, what best practices exist to break down financial inclusion barriers and move financial access forward for all, and real-takeaway strategies and capabilities designed for fintechs and other financial institutions to leverage for lending deeper. Below are a few key perspectives from our speakers: What barriers to access are there for credit across different groups of people? [WL]: There are many barriers to financial inclusion, especially for underserved communities. The first of which is lack of awareness and lack of education about credit and how it impacts financial access – from obtaining loans, buying a first home, a new car and more. Not every American has someone in their life to teach and provide coaching on credit responsibility and how to be financially literate. [AL]: Historically, credit, wealth and health inequalities have all contributed to financial disparities, and as a result, have created an underrepresentation of marginalized communities in the current credit ecosystem. That’s compounded by today’s ecosystem where consumer underwriting favors those with established thick-file credit histories with minimal delinquencies, particularly in the last 24 months. So, all things being equal, additional points distributed to elevate scores are given to consumers that are maintaining low revolving debt. This poses credit barriers for those starting out new to credit, or even to immigrants coming into a new country who don’t have an established credit history.   What role could the credit industry play in healing the financial disparities created by the COVID-19 pandemic? [WL]: Our opportunity lies in meeting consumers where they are today. COVID-19 has spotlighted economic and social disparities in a way it hasn’t been done before. At the same time, it illustrated how the inability of some groups to access financial services requires meaningful solutions, quickly. Historically, organizations have been known to look at this in a traditional way: meaning “we are the organization, consumers come to us and we can tell you what you can and can’t do.” We need to shift our focus to how we can provide consumers with tools, technology and machine learning (ML) that are available to empower them. [SD]: One of the lessons we’ve learned from COVID, is that we need to be able to get to the marketplace fast in order to respond to the economic conditions. Fintechs have been very effective at this and it has shown through the approach they’ve taken towards immediacy in identifying, developing and distributing solutions. With consumers in a stressed position, it’s incumbent upon us, as the industry, to deliver consumer-centric options and opportunities in an efficient manner rather than having our consumers sit around waiting for them.   Are there solutions to help ensure we are lending deeper and serving thin-filed consumers? [AL]: At its core, data – not limited to only traditional credit data – that can be decisioned on, can help enrich financial inclusion. Alternative data, or expanded FCRA data, means that the data is displayable, disputable and correctable by the consumer. We recognize that traditional credit is still an effective way to assess a consumer’s credit worthiness. However, expanded FCRA data includes data points from rental, video streaming, all other industry sectors to help provide a 360 view of the consumer with additional insights - whether you are a thick-file consumer, thin-file consumer, or credit invisible. Through these different various data assets paired with advanced analytics and ML, we now have a mechanism to make sure consumers go from credit invisible to visible – and scorable. Leveraging Experian Boost and Experian Lift scores can do just that. [SD]: Expanded FCRA data is powerful and vital for helping the consumer. In addition, we are now in a place where the consumer can take on the responsibility and accountability for giving permission to include their data in the credit score. You’re putting the consumers in the driver seat, and with that, we are dissolving the psychological barriers that consumers may have had previously around their credit score being out of their control. As a player in the financial services space, we can put out as much data as we want, but it’s about engaging the consumer, sharing with them how it’s safe to share their data, and what the benefits of doing so are.   Are there tangible and intangible benefits of DEI that companies can realize when they have formal DEI programs in place? [WL]: Often times, when we think of lending, we talk about it from the standpoint of our business – ‘what are we doing for our customers, how are we helping consumers who are going to a institution for a loan.’ What we typically forget about is our own backyard. Every organization has employees who are at different points in their credit journey. How often do we talk directly to our employees and give them tools and details that may help them, their family member, or neighbor? As I think about DEI, it’s about involving folks inside your company to continue moving financial inclusion forward. As for an intangible benefit, when doing work in DEI and driving impact, you’re also reducing negative reputational risk. Reputable brands are invaluable, as you begin to make and show an impact, consumers begin to trust you. [AL]: Brand and reputation is huge in today’s world. We are starting to see a shift in consumers selecting certain institutions to work with, not just because of the services provided, but because it’s based on the brand and what they stand for. You as an institution are doing financial inclusion and you’re living up to it. You are truly embarking internally and externally on this initiative and it adds weights on the products and solutions that you sell. For consumers, that may be very important.   What does the future look like relative to financial inclusion? [WL]: It’s a world where all of us play a role in - no matter where you are in the organization. It’s all of our jobs and responsibility to talk about it to our fellow neighbor, consumer, and direct them to tools that will help them. [SD]: We no longer need to justify why financial inclusion is necessary. We’ve got all the data we need. Tools and mechanisms for organizations and consumers are almost universally available. The go-forward view requires all ‘players’ within the space to aggressively embrace these tools and data and start sharing and applying them across all markets and verticals. There’s no longer a reason not to be able to underwrite somebody with a thin file or marginal set of data. We have everything in place at this point. [AL]: It’s all our jobs. I think we have to put a lot of importance on our younger leaders and colleagues to carry our initiatives forward, so we are truly inclusive. We have just started taking the initial steps and we’ve made good progress, but we need to continue to make progress. In the future, I hope to see all that are younger take this forward and drive financial inclusion for all across the spectrum. Watch the full session to hear more of the engaging and timely discussion. Access the recording To learn more about how Experian is committed to advancing financial inclusion, please visit Experian’s Inclusion Forward resources page. For Fintechs looking to partner with Experian on marketplace lending solutions, explore our solutions here.

If it looks like a bank and acts like a bank, there’s a good chance the company behind that financial services transaction may not actually be a bank – but a fintech. Born out of Silicon Valley, New York and tech hubs in between, fintechs have been categorically unfettered from regulation and driven by a focus on customer acquisition and revenue growth. Today, the fintech market represents hundreds of billions of dollars globally and has been disrupting financial services with the goal of delightful customer experiences and democratizing access to credit and banking. Their success has led many fintechs to update their strategy and growth targets and set their sites outside of core banking to other sectors including payments, alternative lending, insurance, capital markets, personal wealth management, alternative lending and others. Depending on the strategy, many are seeking a bank charter, or a partnership with a chartered financial institution to accomplish their new growth goals. Meanwhile, all this disruption has caught the attention of banks and credit unions who are keen to work with these marketplace lenders to grow deposits and increase fee-revenue streams. Historically, obtaining a bank charter was an onerous process, which led many fintechs to actively seek out partnerships with financial institutions in order to leverage their chartered status without the regulatory hurdles of becoming a bank. In fact, fintech and FI partnerships have boomed in the last few years, growing more than five times over the past decade. Gone are the days of the zero-sum game that benefits solely the bank or the fintech. Today, there are more than 30 partner banks representing hundreds of fintech relationships and financial services. These partnerships vary in size and scope from household names like Goldman Sachs, which powers the Apple credit card, to Hatch Bank, which has $68 million in assets and started with a single fintech partner, HM Bradley.[1] But which scenario is right for your fintech? Much of that depends on which markets and lines of business round out your growth strategy and revenue goals. Regardless of what framework you determine is right for your fintech, you need to work with partners who have access to the freshest data and models and a firm handle on the regulatory and compliance landscape. Experian can help you navigate the fintech regulatory environment and think through if partnering with a bank or seeking your own fintech charter is the best match for your growth plan. In the meantime, check out this new eBook for more information on the bank charter process and benefits, fintech-FI partnerships and the implications of the Office of the Comptroller of the Currency (OCC) new fintech charter. Read now Explore Fintech solutions   [1] https://a16z.com/2020/06/11/the-partner-bank-boom/

Premier Awards Program Recognizes Breakthrough Financial Technology Products and Companies Experian’s Ascend Intelligence Services was selected as a winner of the “Consumer Lending Innovation Award” category in the fifth annual Fintech Breakthrough Awards conducted by Fintech Breakthrough, an independent market intelligence organization that recognizes the top companies, technologies and products in the global fintech market today. The Fintech Breakthrough Awards is the premier awards program founded to recognize the fintech innovators, leaders and visionaries from around the world in a range of categories, including digital banking, personal finance, lending, payments, investments, RegTech, InsurTech and many more. The 2021 Fintech Breakthrough Awards attracted more than 3,850 nominations from across the globe. One of the latest developments on Experian's trusted, award-winning Ascend platform, Ascend Intelligence Services empowers financial services firms with Experian’s revolutionary managed analytics solutions and services, delivered on a modern-tech AI platform. Ascend Intelligence Services includes rapid model development, seamless deployment, optimized decision strategies, ongoing performance monitoring and continuous retraining. The technology-enabled service uses a secure cloud-based AI platform to harness the power of machine learning, and deliver unique capabilities covering the entire credit lifecycle, through an easy-to-use web portal. “To stay ahead of the latest economic conditions, fintechs need high-quality analytical models running on large and varied data sets that empower them to act quickly and decisively. The breakthrough Ascend Intelligence Services platform answers this immediate market need,” said James Johnson, Managing Director, Fintech Breakthrough. “Congratulations to Experian and the Ascend team on winning our ‘Consumer Lending Innovation Award’ for 2021 with this game-changing solution.” “Data scientists are spending too much time on manual, repetitive and low value-add tasks, and organizations cannot afford to do this is in a state of constant change,” said Srikanth Geedipalli, Experian’s SVP Global Analytics/AI Products. “While building and deploying high-quality analytical models can be time-consuming and expensive, Ascend Intelligence Services streamlines this process by harnessing the power of machine learning and Experian’s rich data assets to drive better, faster and smarter decisions. We have been able to deliver analytical solutions to clients up to 4X faster, significantly improving decision automation rates and increasing approval rates by double digits. We are proud that Ascend Intelligence Services is being recognized as a breakthrough solution in the 2021 Fintech Breakthrough Awards program,” he said. Ascend Intelligence Services is comprised of four modules: Ascend Intelligence Services Challenger™ is a powerful, dynamic and collaborative model development service that enables Experian to rapidly build a model and quantify the benefit to business. Businesses can review, comment on and approve the model, all from within the web portal, while it’s being built. The resulting score is available for testing through an API endpoint and can be deployed in production with a few easy steps. Reports are customizable, downloadable and regulatory compliant. Ascend Intelligence Services Pulse™ is a proactive model monitoring and validation service, which aids companies in monitoring the health of models that drive their business decisions. Pulse, provides convenient dashboards that include a model health index, performance summary, stress-testing results, model risk management reporting, model health alerts and more. Additionally, Pulse automatically builds challengers for champion models, providing an estimated performance lift and financial benefit. Ascend Intelligence Services Strategy Advance™ is a powerful business strategy development service, enabling clients to make optimal lending decisions on their applicants. Strategy Advance uses Experian’s powerful optimization engine to build the right credit policy for clients, including sophisticated decision rules, model overlays and client specified knock-out rules. The resulting decision is available for testing through an API endpoint and can be deployed in production with a few easy steps. Ascend Intelligence Services Limit™ is a credit limit optimization service, enabling clients to make the right credit limit decisions at account origination and during account management. Limit uses Experian’s data, predictive risk and balance models and our powerful optimization engine to design the right credit limit strategy that maximizes product usage, while keeping losses low. The limit decision is available for testing through an API endpoint and can be deployed in production with a few easy steps. To learn more about how Ascend Intelligence Services can support your business, please explore our solutions page. Learn more For a list of all award winners selected for the Fintech Breakthrough Awards, read the full press release here.

Fintechs have been an enormously disruptive force of change in financial services over the past 10 years. From digital payments, lending, insurance, digital banks, to personal finance and many other subsectors in between, fintechs have rapidly transformed everything from business and operating models to customer expectations. It’s this innovative drive that is celebrated and fostered each year at LendIt Fintech - a conference that brings together the fintech and financial services community to connect and reimagine the future of finance. And there may not be another year on record that called for the reimagining of finance more than 2020. Last year, the financial services industry – from consumers, fintechs and other subdivisions across the globe – endured many changes and challenges due to the COVID-19 pandemic. But it also brought accelerated innovations; and with them, increased customer expectations and a focus on financial equity and inclusion. As consumer credit scores and demand for credit continue to rise, fintechs have an opportunity to re-examine what credit looks like in a post-COVID lending environment, and explore opportunities for growth in 2021. Experian’s Chief Product Officer Greg Wright tackled this topic at the recent Lendit Fintech conference, alongside Ibo Dusi of Happy Money, Myles Reaz of Upgrade and the Garry Reeder with the American Fintech Council. Watch the full panel discussion in the video below and hear more about: How panelists define data, alternative data and how it factors in their lending How alternative data can help drive financial inclusion and get to a ‘yes’ more often with consumers Using data to make the consumer experience more frictionless and seamless For more information about how Experian can help fintech organizations of all sizes reach their business and lending goals, visit our fintech solutions page. Explore Experian's Fintech Solutions

Experian is proud to announce, for the second year in a row, we have been named to the global Fintech Leaders list, placing in the top 20 for 2021. The list and adjoining report are released annually by international research organization, the Center for Financial Professionals (CeFPro). In addition to placing 19th on the list, Experian also placed in the Credit Risk category. The Center for Financial Professionals’ Fintech Leaders 2021 Report is one of the most rigorous programs that rank fintech industry leaders. The report’s coverage includes evaluating top fintech companies, solution providers, and vendors. The results are usually based on gathered surveys from end-users, practitioners, and subject matter experts. CeFPro’s report comes from the group’s market analysis and original research, which are backed by an advisory board that consists of 60 international industry professionals. Andreas Simou, CeFPro’s Managing Director, shared that the CeFPro board and voting members recognized Experian within the fintech survey as leaders for their data, decisioning and analytical capabilities. Simou said, "Experian cements its place on the Fintech Leaders List, and has once again been very highly regarded, as a leading player within credit risk, most notably for their subject-matter expertise and excelling within the areas of data management and modelling,” he said. “We are honored to once again be recognized as a Fintech Leader by CeFPro and the global Fintech marketplace,” said Jon Bailey, Vice President for Fintech at Experian. “We are committed to supporting the Fintech community and we will continue to invest and innovate to help our clients solve problems, create opportunities, and promote financial inclusion,” Bailey said.

With 2020 firmly behind us and multiple COVID-19 vaccines being dispersed across the globe, many of us are entering 2021 with a bit of, dare we say it, optimism. But with consumer spending and consumer confidence dipping at the end of the year, along with an inversely proportional spike in coronavirus cases, it’s apparent there’s still some uncertainty to come. This leaves businesses and consumers alike, along with fintechs and their peer financial institutions, wondering when the world’s largest economy will truly rebound.   But based on the most recent numbers available from Experian, fintechs have many reasons to be bullish. In this unprecedented year, marked by a global pandemic and a number of economic and personal challenges for both businesses and consumers, Americans are maintaining healthy credit profiles and responsible spending habits. While growth expectedly slowed towards the end of the year, Q4 of 2020 saw solid job gains in the US labor market, with 883,000 jobs added through November and the US unemployment rate falling to 6.7%. Promisingly, one of the sectors hit hardest by the pandemic, the leisure and hospitality industry added back the most jobs of all sectors in October: 271,000. Additionally, US home sales hit a 14-year high fueled by record low mortgage rates. And finally, consumer sentiment rose to the highest level (81.4%) since March 2020. Not only are these promising signs of continued recovery, they illustrate there are ample market opportunities now for fintechs and other financial institutions.   “It’s been encouraging to see many of our fintech partners getting back to their pre-COVID marketing levels,” said Experian Account Executive for Fintech Neil Conway. “Perhaps more promising, these fintechs are telling me that not only are response rates up but so is the credit quality of those applicants,” he said.  More plainly, if your company isn’t in the market now, you’re missing out. Here are the four steps fintechs should take to reenter the lending marketing intelligently, while mitigating as much risk as possible.   Re-do Your Portfolio Review Periodic portfolio reviews are standard practice for financial institutions. But the health crisis has posted unique challenges that necessitate increased focus on the health and performance of your credit portfolio. If you haven’t done so already, doing an analysis of your current lending portfolio is imperative to ensure you are minimizing risk and maximizing profitability. It’s important to understand if your portfolio is overexposed to customers in a particularly hard-hit industry, i.e. entertainment, or bars and restaurants. At the account level there may be opportunities to reevaluate customers based on a different risk appetite or credit criteria and a portfolio review will help identify which of your customers could benefit from second chance opportunities they may not have otherwise been able to receive. Retool Your Data, Analytics and Models As the pandemic has raged on, fintechs have realized many of the traditional data inputs that informed credit models and underwriting may not be giving the complete picture of a consumer. Essentially, a 720 in June 2020 may not mean the same as it does today and forbearance periods have made payment history and delinquency less predictive of future ability to pay. To stay competitive, fintechs must make sure they have access to the freshest, most predictive data. This means adding alternative data and attributes to your data-driven decisioning strategies as much as possible. Alternative data, like income and employment data, works to enhance your ability to see a consumer’s entire credit portfolio, which gives lenders the confidence to continue to lend – as well as the ability to track and monitor a consumer’s historical performance (which is a good indicator of whether or not a consumer has both the intention and ability to repay a loan). Re-Model Your Lending Criteria  One of the many things the global health crisis has affirmed is the ongoing need for the freshest, most predictable data inputs. But even with the right data, analytics can still be tedious, prolonging deployment when time is of the essence. Traditional models are too slow to develop and deploy, and they underperform during sudden economic upheavals. To stay ahead in times recovery or growth, fintechs need high-quality analytics models, running on large and varied data sets that they can deploy quickly and decisively. Unlike many banks and traditional financial institutions, fintechs are positioned to nimbly take advantage of market opportunities. Once your models are performing well, they should be deployed into the market to actualize on credit-worthy current and future borrowers. Advertising/Prescreening for Intentional Acquisition As fintechs look to re-enter the market or ramp up their prescreen volumes to pre-COVID levels, it’s imperative to reach the right prospects, with the right offer, based on where and how they’re browsing. More consumers than ever are relying on their phones for browsing and mobile banking, but aligning messaging and offers across devices and platforms is still important. Here’s where data-driven advertising becomes imperative to create a more relevant experience for consumers, while protecting privacy.   As 2021 rolls forward, there will be ample chance for fintechs to capitalize on new market opportunities. Through up-to-date analysis of your portfolio, ensuring you have the freshest, predictive data, adjusting your lending criteria and tweaking your approach to advertising and prescreen, you can be ready for the opportunities brought on by the economic recovery. How is your fintech gearing up to re-enter the market? Learn more

Experian recently announced the new members named to its Fintech Advisory Board. The board and its members provide Experian with valuable insights and key perspectives into the unique and quickly evolving needs of the fintech industry. “For years Experian has been committed to partnering with innovators in the fintech industry to bring better opportunities to businesses and consumers alike,” said Experian North American CEO Craig Boundy. “We appreciate the thought leadership we get from our Fintech Advisory Board members and the challenge and the push that comes along with it,” he said. The board met virtually last month, welcoming representatives from across the fintech ecosystem representing payments, personal and secured loan lenders, credit card issuers, investors and others. “This was my first board meeting with Experian, and I’m very pleased to see the investment Experian has put into being the best of the three major bureaus in having the best technology to enable us to turnaround our models more quickly, and better data and alternative data sources like Boost,” said one of the new executives appointed to the board. “We are delighted to gather this group of innovators together to ensure we are consistently meeting the needs of our fintech partners,” said Experian Vice President Jon Bailey, who oversees the fintech vertical.  “Now more than ever it’s important that we work alongside them in shaping the industry and helping them meet their goals for the future,” he said. Experian’s fintech vertical provides leading-edge solutions and data across the credit lifecycle specifically designed to impact Fintech and marketplace lending companies and their customers. For more information on Experian’s fintech services or the advisory board, click here.

The financial services industry is not always synonymous with innovation and forward-thinking. While there are some exceptions with top-10 banks and some savvy regionals, as a whole, the sector tends to fall on the latter half of the diffusion of innovation curve, usually slotting in the late majority or laggard phase. Conversely, the opposite is true for fintechs who have been an enormously disruptive force of change in financial services over the past 10 years.   For many businesses, the pandemic has created uncertainty and an inability to conduct or generate business. However, the silver lining with COVID-19 might just be that it’s driving digital innovation across industries. Andreesen Horowitz, a venture capital firm, estimates businesses of all kinds are experiencing at least two years’ worth of digitization compressed into the last six months. And while they have been significantly impacted, for fintechs who were already pushing the envelope and challenging existing business models, COVID-19 suddenly accelerated financial services innovation into overdrive. Here are three challenges fintechs are answering in the wake of the COVID-19 health crisis. Digital Banking   The first lockdowns flipped the digital switch in financial services. Seemingly overnight, banking moved digital. In April, new mobile banking registrations increased 200%, while mobile banking traffic rose 85%. Likewise, Deloitte reported online banking activity has increased 35% since the pandemic started. Being mobile-first or digital-only has allowed many fintechs to win in offering presentment, activation, underwriting, and a contextual digital interface, all capabilities that will only become more relevant as the pandemic stretches on. At Square, direct deposit volumes grew by three times from March to April, up to $1.3 billion; Chime saw record signups. Continued social distancing will only serve to accelerate customers’ use of mobile and online platforms to manage their finances.  Contactless Payments  Similar to digital banking as a whole, the health crisis has accelerated the necessity for contactless payments. Whereas convenience and a seamless customer experience may have been drivers for payments innovation in the past, now, many customers may view it as a life or death health concern. Phones, wearables and even connected vehicles are empowering customers to participate in commerce while avoiding handling cash or coming in contact with an infected surface. Through their adoption of IOT-powered contactless payments, fintechs are accelerating this area of financial services to keep customers safe.  Financial Inclusion and Speeding Economic Relief  Any disaster disproportionally affects the underbanked and those living at the poverty line, and COVID-19 is no different. While it will undoubtedly contribute to an increase in unbanked households, the pandemic may also provide an opportunity to innovate through this problem. Financial inclusion was already a focus for many fintechs, who’ve made it their mission to bring equity by offering basic financial services in a transparent way. Unencumbered by legacy systems and business models, fintechs are well positioned to work across the financial ecosystem, from financial services, retail and government to efficiently and more quickly distribute benefits to at-risk groups and impacted businesses.   From their ability to quickly ingest new and novel data sources, to a focus on using a digital-first approach to delight customers, fintechs will continue to harness their strengths to disrupt financial services, even during the pandemic. How is your fintech driving innovation and customer experience during the health crisis?   Learn more

There are more than 100 million people in the United States who don’t have a fair chance at access to credit. These people are forced to rely on high-interest credit cards and loans for things most of us take for granted, like financing a family car or getting an apartment. At Experian, we have a fundamental mission to be a champion for the consumer. Our commitment to increasing financial inclusion and helping consumers gain access to the financial services they need is one of the reasons we have been selected as a Fintech Breakthrough Award winner for the third consecutive year. The Fintech Breakthrough Awards is the premier awards program founded to recognize the fintech innovators, leaders and visionaries from around the world. The 2020 Fintech Breakthrough Award program attracted more than 3,750 nominations from across the globe. Last year, Experian took home the award for Best Overall Analytics Platform for our Ascend Analytical Sandbox™, a first-to-market analytics environment that promised to move companies beyond just business intelligence and data visualization to data insights and answers they could use. The year prior, Experian won the Consumer Lending Innovation Award for our Text for Credit™ solution, a powerful tool for providing consumers the convenience to securely bypass the standard-length ‘pen & paper’ or keystroke intensive credit application process while helping lenders make smart, fraud protected lending decisions. This year, we are excited to announce that Experian has been selected once again as a winner in the Consumer Lending Innovation category for Experian Boost™. Experian Boost – with direct, active consumer consent – scans eligible accounts for ‘boostable’ positive payment data (e.g., utility and telecom payments) and provides the means for consumers to add that data to their Experian credit reports. Now, for the very first time, millions of consumers benefit from payments they’ve been making for years but were never reflected on their credit reports. Since launching in March 2019, cumulatively, more than 18 million points have been added to FICO® Scores via Experian Boost. Two-thirds of consumers who completed the Experian Boost process increased their FICO Score and among these, the average score increase has been more than 13 points, and 12% have moved up in credit score category. “Like many fintechs, our goal is to help more consumers gain access to the financial services they need,” said Alex Lintner, Group President of Experian Consumer Information Services. “Experian Boost is an example of our mission brought to life. It is the first and only service to truly put consumers in control of their credit. We’re proud of this recognition from Fintech Breakthrough and the momentum we’ve seen with Experian Boost to date.” Contributing consumer payment history to an Experian credit file allows fintech lenders to make more informed decisions when examining prospective borrowers. Only positive payment histories are aggregated through the platform and consumers can remove the new data at any time. There is no limit to how many times one can use Experian Boost to contribute new data. For more information, visit Experian.com/Boost.  

It’s December, and if you’re like most credit union leaders, your strategic plan is distributed, and the 2020 budget is approved. Before you know it, you and your team will be off and running to pursue the New Year’s goals. Another thing most of us have in common is a strategic membership growth priority. New members are needed to help us take loan and deposit growth to the next level. Specifically, who are you looking for? It’s surprising how many credit union leaders have a difficult time clarifying their ideal member(s). They usually come up short after they have called out younger borrowers, active checking account users, prime credit, middle income, homeowners, etc. The reality is in today’s competitive market, these general audiences are not definitive enough. Many then go to market with a limited universe that is too generic to be highly effective. Savvy marketers have a much deeper understanding of who they are reaching and why. First, they have clearly defined the ideal member i.e. product profitability, relationship profitability, referrals, how they access the credit union, etc. Second, they use data, analytics and demographic segmenting to refine their search further to reveal the ideal member. They leverage information to understand what drives the potential members decision making. They understand that every potential member does not live the same type of life. They segment markets into groups to understand their shared values and life experiences. These segments include geographic, demographic, financial behavior, and motivation that includes psychographics and social values. Thus, armed with this information, they align the consumer’s needs with the credit union’s products, purpose and strategic goals. This clarity allows them to invest their marketing dollars for the best possible result. Most credit unions would identify “younger borrowers” as a desired member, so we’ve laid out two examples of just how different this member can look. Ambitious Singles – is a demographic segment comprised of younger cutting-edge singles living in mid-scale, metro areas that balance work and leisure lifestyles. Annual Median income $75k - $100K Highly educated First time home buyers Professionals, upwardly mobile Channel preferences for engaging with brands (and their offers) is while watching or streaming TV, listening to their favorite radio apps or while browsing the web on their phones. They are also quite email receptive (but subject lines must be compelling) Families Matter Most – This segment is comprised of young middle-class families in scenic suburbs, leading family focused lives. Annual Median income $75K - $99K Have children 4-6 yrs. old Educated Homeowners Child-related purchases Credit revolver and auto borrowers (larger vehicles) Go online for banking, telecommuting and shopping Both segments represent younger borrowers with similar incomes, but they have different loan needs, lifestyle priorities and preferences for engaging with a marketing offer. These are just two examples of the segmentation data that is available from Experian. The segmentation solution provides a framework to help credit unions identify the optimal customer investment strategy for each member segment. This framework helps the credit union optimize their marketing between differentiating segments. For some segments the investment may be directed toward finding the ideal member. Others may be made to find depositors. While many credit unions don’t have infinite marketing budgets or analytical resources, segmentation help marketers more efficiently and effectively pursue the best member or develop member personas to better resonate with existing members. The feedback we have heard from credit union leaders is that the solution is the best segmentation tool they have seen. Learn more about it here. What your team is up against Today, credit unions face national competitors that are using state-of-the-art data analytics, first-rate technology and in-depth market segmentation to promote very attractive offers to win new members, deposits, checking accounts and loans. Their offers have a look, feel, message and offer that are relevant to the person receiving the offer. Here are a few recent “offer” examples that we have heard of that should give you pause: Fintech companies, like the Lending Club offering auto loan refinances (the offer provides an estimate of refinance interest savings). The ad we saw had an estimated monthly payment of $80. PayPal Cashback Mastercard® – with a $300 early use cash bonus and 3% cash back on purchases. High limit personal loans that take minutes to apply and to be funded. Banks acting alone or in partnership with a fintech to offer online checking accounts with new account opening bonuses ranging from $300-$600. and of course, Quicken® Mortgage promoting low rates and fast and seamless origination. These are just a few recent examples from thousands of offers that are reaching your ideal member. Besides offering great rates, cash back, low fees and seamless service – these offers are guided by robust data analytics and consumer segmentation to reach and engage a well-defined, ideal consumer. Why it matters The 2020 race is on. Hopefully your team has clarity of the member(s) they want to reach, access to robust data analytics, in depth consumer insights, reliable credit resources and marketing tools they will need to compete in the toughest financial market any of us have likely ever seen. If you’re afraid that you can’t afford the right tools when it comes to marketing, consider what the dealer fee is for purchasing an indirect auto loan. What if the 2% or more fee was reallocated to finding organic loan growth with consumers you’re more likely to build a relationship with? Or consider the cost of consistently marketing to the wrong consumer segments with the wrong message, at the wrong time and in the wrong channels. What if you could increase your market engagement rate from 5% to 10%? Perhaps the best strategic question is can you afford NOT to have the best tools that support future membership growth? If you don’t win your ideal member, somebody else will. Learn More About Scott Butterfield, CUDE, CCUE Principal, Your Credit Union Partner Scott Butterfield is a trusted advisor to the leaders of more than 170 credit unions located throughout the United States. A respected veteran of the CU Movement, he understands the challenges and opportunities facing credit unions today. Scott believes that credit unions matter, and that consumers and small businesses need credit unions to now more than ever.

With the growing need for authentication and security, fintechs must manage risk with minimal impact to customer experience. When implementing tactical approaches for fraud risk strategy operations, keeping up with the pace of fraud is another critical consideration. How can fintechs be proactive about future-proofing fraud strategies to stay ahead of savvy fraudsters while maintaining customer expectations? I sat down with Chris Ryan, Senior Fraud Solutions Business Consultant with Experian Decision Analytics, to tap into some of his insights. Here’s what he had to say: How have changes in technology added to increased fraud risk for businesses operating in the online space? Technology introduces many risks in the online space. As it pertains to the fintech world, two stand out. First, the explosion in mobile technology. The same capabilities that make fintech products broadly accessible makes them vulnerable. Anyone with a mobile device can attempt to access a fintech and try their hand at committing fraud with very little risk of being caught or punished. Second, the evolution of an interconnected, digital ‘marketplace’ for stolen data. There’s an entire underground economy that’s focused on connecting the once-disparate pieces of information about a specific individual stolen from multiple, unrelated data breaches. Criminal misrepresentations are more complete and more convincing than ever before. What are the major market drivers and trends that have attributed to the increased risk of fraud? Ultimately, the major market drivers and trends that drive fraud risk for fintechs are customer convenience and growth. In terms of customer convenience, it’s a race to meet customer needs in real time, in a single online interaction, with a minimally invasive request for information. But, serving the demands of good customers opens opportunities for identity misuse. In terms of growth, the pressure to find new pockets of potential customers may lead fintechs into markets where consumer information is more limited, so naturally, there are some risks baked in. Are fintechs really more at risk for fraud? If so, how are fintechs responding to this dynamic threat? The challenge for many fintechs has been the prioritization of fraud as a risk that needs to be addressed. It’s understandable that fintech’s initial emphasis had to be the establishment of viable products that meet the needs of their customers. Obviously, without customers using a product, nothing else matters. Now that fintechs are hitting their stride in terms of attracting customers, they’re allocating more of their attention and innovative spirit to other areas, like fraud. With the right partner, it’s not hard for fintechs to protect themselves from fraud. They simply need to acquire reliable data that provides identity assurance without negatively impacting the customer experience. For example, fintechs can utilize data points that can be extracted from the communications channel, like device intelligence for example, or non-PII unique identifiers like phone and email account data. These are valuable risk indicators that can be collected and evaluated in real time without adding friction to the customer experience. What are the major fraud risks to fintechs and what are some of the strategies that Risk Managers can implement to protect their business? The trends we’ve talked about so far today have focused more on identity theft and other third-party fraud risks, but it’s equally important for fintechs to be mindful of first party fraud types where the owner of the identity is the culprit. There is no single solution, so the best strategy recommendation is to plan to be flexible. Fintechs demonstrate an incredible willingness to innovate, and they need to make sure the fraud platforms they pick are flexible enough to keep pace with their needs. From your perspective, what is the future of fraud and what should fintechs consider as they evolve their products? Fraud will continue to be a challenge whenever something of value is made available, particularly when the transaction is remote and the risk of any sort of prosecution is very low. Criminals will continue to revise their tactics to outwit the tools that fintechs are using, so the best long-term defense is flexibility. Being able to layer defenses, explore new data and analytics, and deploy flexible and dynamic strategies that allow highly tailored decisions is the best way for fintechs to protect themselves. Digital commerce and the online lending landscape will continue to grow at an increasing pace – hand-in-hand with the opportunities for fraud. To stay ahead of fraudsters, fintechs must be proactive about future-proofing their fraud strategies and toolkits. Experian can help. Our Fintech Digital Onboarding Bundle provides a solid baseline of cutting-edge fraud tools that protect fintechs against fraud in the digital space, via a seamless, low-friction customer experience. More importantly, the Fintech Digital Onboarding Bundle is delivered through Experian’s CrossCore platform—the premier platform in the industry recognized specifically for enabling the expansion of fraud tools across a wide range of Experian and third-party partner solutions. Click here to learn more or to speak with an Experian representative. Learn More About Chris Ryan:  Christopher Ryan is a Senior Fraud Solutions Business Consultant. He delivers expertise that helps clients make the most from data, technology and investigative resources to combat and mitigate fraud risks across the industries that Experian serves. Ryan provides clients with strategies that reduce losses attributable to fraudulent activity. He has an impressive track record of stopping fraud in retail banking, auto lending, deposits, consumer and student lending sectors, and government identity proofing. Ryan is a subject matter expert in consumer identity verification, fraud scoring and knowledge-based authentication. His expertise is his ability to understand fraud issues and how they impact customer acquisition, customer management and collections. He routinely helps clients review workflow processes, analyze redundancies and identify opportunities for process improvements. Ryan recognizes the importance of products and services that limit fraud losses, balancing expense and the customer impact that can result from trying to prevent fraud.

Fintech is quickly changing. The word itself is synonymous with constant innovation, agile technology structures and being on the cusp of the future of finance. The rapid rate at which fintech challengers are becoming established, is in turn, allowing for greater consumer awareness and adoption of fintech platforms. It would be easy to assume that fintech adoption is predominately driven by millennials. However, according to a recent market trend analysis by Experian, adoption is happening across multiple generational segments. That said, it’s important to note the generational segments that represent the largest adoption rates and growth opportunities for fintechs. Here are a few key stats: Members of Gen Y (between 24-37 years old) account for 34.9% of all fintech personal loans, compared to just 24.9% for traditional financial institutions. A similar trend is seen for Gen Z (between 18-23 years old). This group accounts for 5% of all fintech personal loans as compared to 3.1% for traditional Let’s take a closer look at these generational segments… Gen Y represents approximately 19% of the U.S. population. These consumers, often referred to as “millennials,” can be described as digital-centric, raised on the web and luxury shoppers. In total, millennials spend about $600 billion a year. This group has shown a strong desire to improve their credit standing and are continuously increasing their credit utilization. Gen Z represents approximately 26% of the U.S. population. These consumers can be described as digital centric, raised on the social web and frugal. The Gen Z credit universe is growing, presenting a large opportunity to lenders, as the youngest Gen Zers become credit eligible and the oldest start to enter homeownership. What about the underbanked as a fintech opportunity? The CFPB estimates that up to 45 million people, or 24.2 million households, are “thin-filed” or underbanked, meaning they manage their finances through cash transactions and not through financial services such as checking and savings accounts, credit cards or loans. According to Angela Strange, a general partner at Andreessen Horowitz, traditional financial institutions have done a poor job at serving underbanked consumers affordable products. This has, in turn, created a trillion-dollar market opportunity for fintechs offering low-cost, high-tech financial services. Why does all this matter? Fintechs have a unique opportunity to engage, nurture and grow these market segments early on. As the fintech marketplace heats up and the overall economy begins to soften, diversifying revenue streams, building loyalty and tapping into new markets is a strategic move. But what are the best practices for fintechs looking to build trust, engage and retain these unique consumer groups? Join us for a live webinar on November 12 at 10:00 a.m. PST to hear Experian experts discuss financial inclusion trends shaping the fintech industry and tactical tips to create, convert and extend the value of your ideal customers. Register now

It seems like artificial intelligence (AI) has been scaring the general public for years – think Terminator and SkyNet. It’s been a topic that’s all the more confounding and downright worrisome to financial institutions. But for the 30% of financial institutions that have successfully deployed AI into their operations, according to Deloitte, the results have been anything but intimidating. Not only are they seeing improved performance but also a more enhanced, positive customer experience and ultimately strong financial returns. For the 70% of financial institutions who haven’t started, are just beginning their journey or are in the middle of implementing AI into their operations, the task can be daunting. AI, machine learning, deep learning, neural networks—what do they all mean? How do they apply to you and how can they be useful to your business? It’s important to demystify the technology and explain how it can present opportunities to the financial industry as a whole. While AI seems to have only crept into mainstream culture and business vernacular in the last decade, it was first coined by John McCarthy in 1956. A researcher at Dartmouth, McCarthy thought that any aspect of learning or intelligence could be taught to a machine. Broadly, AI can be defined as a machine’s ability to perform cognitive functions we associate with humans, i.e. interacting with an environment, perceiving, learning and solving problems. Machine learning vs. AI Machine learning is not the same thing as AI. Machine learning is the application of systems or algorithms to AI to complete various tasks or solve problems. Machine learning algorithms can process data inputs and new experiences to detect patterns and learn how to make the best predictions and recommendations based on that learning, without explicit programming or directives. Moreover, the algorithms can take that learning and adapt and evolve responses and recommendations based on new inputs to improve performance over time. These algorithms provide organizations with a more efficient path to leveraging advanced analytics. Descriptive, predictive, and prescriptive analytics vary in complexity, sophistication, and their resulting capability. In simplistic terms, descriptive algorithms describe what happened, predictive algorithms anticipate what will happen, and prescriptive algorithms can provide recommendations on what to do based on set goals. The last two are the focus of machine learning initiatives used today. Machine learning components - supervised, unsupervised and reinforcement learning Machine learning can be broken down further into three main categories, in order of complexity: supervised, unsupervised and reinforcement learning. As the name might suggest, supervised learning involves human interaction, where data is loaded and defined and the relationship to inputs and outputs is defined. The algorithm is trained to find the relationship of the input data to the output variable. Once it delivers accurately, training is complete, and the algorithm is then applied to new data. In financial services, supervised learning algorithms have a litany of uses, from predicting likelihood of loan repayment to detecting customer churn. With unsupervised learning, there is no human engagement or defined output variable. The algorithm takes the input data and structures it by grouping it based on similar characteristics or behaviors, without a defined output variable. Unsupervised learning models (like K-means and hierarchical clustering) can be used to better segment or group customers by common characteristics, i.e. age, annual income or card loyalty program. Reinforcement learning allows the algorithm more autonomy in the environment. The algorithm learns to perform a task, i.e. optimizing a credit portfolio strategy, by trying to maximize available rewards. It makes decisions and receives a reward if those actions bring the machine closer to achieving the total available rewards, i.e. the highest acquisition rate in a customer category. Over time, the algorithm optimizes itself by correcting actions for the best outcomes. Even more sophisticated, deep learning is a category of machine learning that involves much more complex architecture where software-based calculators (called neurons) are layered together in a network, called a neural network. This framework allows for much broader, complex data ingestion where each layer of the neural network can learn progressively more complex elements of the data. Object classification is a classic example, where the machine ‘learns’ what a duck looks like and then is able to automatically identify and group images of ducks. As you might imagine, deep learning models have proved to be much more efficient and accurate at facial and voice recognition than traditional machine learning methods. Whether your financial institution is already seeing the returns for its AI transformation or is one of the 61% of companies investing in this data initiative in 2019, having a clear picture of what is available and how it can impact your business is imperative. How do you see AI and machine learning impacting your customer acquisition, underwriting and overall customer experience?

Last month, Kenneth Blanco, Director of the Financial Crimes Enforcement Network, warned that cybercriminals are stealing data from fintech platforms to create synthetic identities and commit fraud. These actions, in turn, are alleged to be responsible for exploiting fintech platforms’ integration with other financial institutions, putting banks and consumers at risk. According to Blanco, “by using stolen data to create fraudulent accounts on fintech platforms, cybercriminals can exploit the platforms’ integration with various financial services to initiate seemingly legitimate financial activity while creating a degree of separation from traditional fraud detection efforts.” Fintech executives were quick to respond, and while agreeing that synthetic IDs are a problem, they pushed back on the notion that cybercriminals specifically target fintech platforms. Innovation and technology have indeed opened new doors of possibility for financial institutions, however, the question remains as to whether it has also created an opportunity for criminals to implement more sophisticated fraud strategies. Currently, there appears to be little evidence pointing to an acute vulnerability of fintech firms, but one thing can be said for certain: synthetic ID fraud is the fastest-growing financial crime in the United States. Perhaps, in part, because it can be difficult to detect. Synthetic ID is a type of fraud carried out by criminals that have created fictitious identities. Truly savvy fraudsters can make these identities nearly indistinguishable from real ones. According to Kathleen Peters, Experian’s SVP, Head of Fraud and Identity, it typically takes fraudsters 12 to 18 months to create and nurture a synthetic identity before it’s ready to “bust out” – the act of building a credit history with the intent of maxing out all available credit and eventually disappearing. These types of fraud attacks are concerning to any company’s bottom line. Experian’s 2019 Global Fraud and Identity Report further details the financial impact of fraud, noting that 55% of businesses globally reported an increase in fraud-related losses over the past 12 months. Given the significant risk factor, organizations across the board need to make meaningful investments in fraud prevention strategies. In many circumstances, the pace of fraud is so fast that by the time organizations implement solutions, the shelf life may already be old. To stay ahead of fraudsters, companies must be proactive about future-proofing their fraud strategies and toolkits. And the advantage that many fintech companies have is their aptitude for being nimble and propensity for early adoption. Experian can help too. Our Synthetic Fraud Risk Level Indicator helps both fintechs and traditional financial institutions in identifying applicants likely to be associated with a synthetic identity based on a complex set of relationships and account conditions over time. This indicator is now available in our credit report, allowing organizations to reduce exposure to identity fraud through early detection. To learn more about Experian’s Synthetic Fraud Risk Level Indicator click here, or visit experian.com/fintech.

In today’s age of digital transformation, consumers have easy access to a variety of innovative financial products and services. From lending to payments to wealth management and more, there is no shortage in the breadth of financial products gaining popularity with consumers. But one market segment in particular – unsecured personal loans – has grown exceptionally fast. According to a recent Experian study, personal loan originations have increased 97% over the past four years, with fintech share rapidly increasing from 22.4% of total loans originated to 49.4%. Arguably, the rapid acceleration in personal loans is heavily driven by the rise in digital-first lending options, which have grown in popularity due to fintech challengers. Fintechs have earned their position in the market by leveraging data, advanced analytics and technology to disrupt existing financial models. Meanwhile, traditional financial institutions (FIs) have taken notice and are beginning to adopt some of the same methods and alternative credit approaches. With this evolution of technology fused with financial services, how are fintechs faring against traditional FIs? The below infographic uncovers industry trends and key metrics in unsecured personal installment loans: Still curious? Click here to download our latest eBook, which further uncovers emerging trends in personal loans through side-by-side comparisons of fintech and traditional FI market share, portfolio composition, customer profiles and more. Download now