All posts by Brittany Peterson
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.
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
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
Today is National Fintech Day – a day that recognizes the ever-important role that fintech companies play in revolutionizing the customer experience and altering the financial services landscape. Fintech. The word itself has become synonymous with constant innovation, agile technology structures and being on the cusp of the future of finance. Fintech challengers are disrupting existing financial models by leveraging data, advanced analytics and technology – both inspiring traditional financial institutions in their digital transformation strategies and giving consumers access to a variety of innovative financial products and services. But to us at Experian, National Fintech Day means more than just financial disruption. National Fintech Day represents the partnerships we have carefully fostered with our fintech clients to drive financial inclusion for millions of people around the globe and provide consumers with greater control and more opportunities to access the quality credit they deserve. “We are actively seeking out unresolved problems and creating products and technologies that will help transform the way businesses operate and consumers thrive in our society. But we know we can’t do it alone,” said Experian North American CEO, Craig Boundy in a recent blog article on Experian’s fintech partnerships. “That’s why over the last year, we have built out an entire team of account executives and other support staff that are fully dedicated to developing and supporting partnerships with leading fintech companies. We’ve made significant strides that will help us pave the way for the next generation of lending while improving the financial health of people around the world.” At Experian, we understand the challenges fintechs face – and our real-world solutions help fintech clients stay ahead of constantly changing market conditions and demands. “Experian’s pace of innovation is very impressive – we are helping both lenders and consumers by delivering technological solutions that make the lending ecosystem more efficient,” said Experian Senior Account Executive Warren Linde. “Financial technology is arguably the most important type of tech out there, it is an honor to be a part of Experian’s fintech team and help to create a better tomorrow.” If you’d like to learn more about Experian’s fintech solutions, visit us at Experian.com/Fintech.
Earlier this month, Experian joined FinovateSpring in San Francisco, CA to demonstrate innovations impacting financial health to over 1,000 attendees. The Finovate conference promotes real-world solutions while highlighting short-form demos and key insights from thought-leaders on digital lending, banking, payments, artificial intelligence and the customer experience. With more than 100 million Americans lacking fair access to credit, it\'s more important than ever for companies to work to improve the financial health of consumers. In addition to the show\'s abundance of fintech-centered content, Experian hosted an exclusive, cutting-edge breakout series demonstrating innovations that are positively impacting the financial health of consumers across the nation. Finovate Day One Overview While fintechs, banks, venture capitalist, entrepreneurs and industry analysts ascended on the general conference floor for a fast-paced day of demos, a select subset gathered for a luncheon presented by Experian North America CEO, Craig Boundy, and Group President, Alex Lintner. Attendees were given an in-depth look at new, alternative credit data streams and tools that are helping to increase financial access. Demos included: Experian Boost™: a free, groundbreaking online platform that allows consumers to instantly boost their credit scores by adding telecommunications and utility bill payments to their credit file. More than half a million consumers have leveraged Experian Boost, increasing their score by an average of 13 points. Cumulatively, Experian Boost has helped add more than 2.8 million points to consumers’ credit scores. Ascend Analytical Sandbox™: A first-of-its-kind data and analytics platform that gives companies instant access to more than 17 years of depersonalized credit data on more than 220 million U.S. consumers. It has been the most successful product launch in Experian’s history and recently earned the title of “Best Overall Analytics Platform” at this year’s Fintech Breakthrough Awards. Alternative Credit Data: Comprised of data from alternative credit sources, this data helps lenders make smarter and more informed lending decisions. Additionally, Experian’s Clear Data Platform is next-level credit data that adds supplemental FCRA-compliant credit data to enrich decisions across the entire credit spectrum. This new platform features alternative credit data, rental data, public records, consumer-permissioned data and more Upon conclusion of the luncheon, Alpa Lally, Experian’s Vice President of Data Business at Consumer Information Services, was interviewed for the HousingWire Podcast with Jacob Gaffney, HousingWire Editor in Chief, to discuss how new forms of data streams are helping improve consumers’ access to credit by giving lenders a clearer picture of their creditworthiness and risk. “Alternative credit data is different than traditional credit data and helps us paint a fuller picture of the consumer in terms of their ability to pay, willingness to pay and stability. It helps consumers get better access overall to the credit they deserve so that they can actively participate in the economy,” said Lally. Finovate Day Two Overview On the last day of the conference, expert speakers took to the main stage to analyze the latest fintech trends, opportunities and challenges. Alex Lintner and Sandeep Bhandari, Chief Strategy Officer and Chief Risk Officer at Affirm, participated in a fireside chat titled “Improving the Financial Health of America’s 100 Million Credit Underserved Consumers.” Moderated by David Penn, Finovate Analyst, the session explored the latest innovations, trends and technologies – from machine learning to alternative data – that are making a difference in positively impacting the financial health of Americans and expanding financial opportunities for underserved consumers. The panel discussed the efforts made to put financial health at the center of their business and the impact it’s had on their organizations. Following the fireside chat, Experian hosted a second lunch briefing, presented by Vijay Mehta, Chief Innovation Officer, and Greg Wright, EVP Chief Product Officer. The lunch included exclusive table discussions and open conversations to help attendees leave with a better understanding of the importance of prioritizing financial health to build trust, reach new customers and ultimately grow their business. \"We are actively seeking out unresolved problems and creating products and technologies that will help transform the way businesses operate and consumers thrive in our society. But we know we can\'t do it alone,\" Experian North American CEO, Craig Boundy said in a recent blog post on Experian\'s fintech partnerships and Finovate participation. \"That\'s why over the last year, we have built out an entire time of account executives and other support staff that are fully dedicated to developing and supporting partnerships with leading fintech companies. We\'ve made significant strides that will help us pave the way for the next generation of lending while improving the financial health of more people around the world.\" For more information on how Experian is partnering with fintechs, visit experian.com/fintech or read our recent blog article on consumer-permissioned data for an in-depth discussion on Experian BoostTM.
Earlier this month, Experian joined the nation’s largest community of online lenders at LendIt Fintech USA 2019 in San Francisco, CA to show over 5,000 attendees from 50 countries the ways consumer-permissioned data is changing the credit landscape. Experian Consumer Information Services Group President, Alex Lintner, and FICO Chief Executive Officer, Will Lansing, delivered a joint keynote on the topic of innovation around financial inclusion and credit access. The keynote addressed the analytical developments behind consumer-permissioned data and how it can be leveraged to responsibly and securely extend credit to more consumers. The session was moderated by personal finance expert, Lynnette Khalfani-Cox, from The Money Coach. “Consumer-permissioned data is not a new concept,” said Lintner. “All of us are on Facebook, Twitter, and LinkedIn. The information on these platforms is given by consumers. The way we are using consumer-permissioned data extends that concept to credit services.” During the keynote, both speakers highlighted recent company credit innovations. Lansing talked about UltraFICO™, a score that adds bank transaction data with consumer consent to recalibrate an existing FICO® Score, and Lintner discussed the newly launched Experian Boost™, a free, groundbreaking online platform that allows consumers to instantly boost their credit scores by adding telecommunications and utility bill payments to their credit file. “If a consumer feels that the information on their credit files is not complete and that they are not represented holistically as an applicant for a loan, then they can contribute their own data by giving access to tradelines, such as utility and cell phone payments,” explained Lintner. There are approximately 100 million people in America who do not have access to fair credit, because they are subprime, have thin credit files, or have no lending history. Subprime consumers will spend an additional $200,000 over their lifetime on the average loan portfolio. Credit innovations, such as Experian Boost and UltraFICO not only give consumers greater control and access to quality credit, but also expand the population that lenders can responsibly serve while providing a differentiated and competitive advantage. “Every day, our data is used in one million credit decisions; 350 million per year,” said Lintner. “When our data is being used, it represents the consumers’ credit reputation. It needs to be accurate, it needs to be timely and it needs to be complete.” Following the keynote, Experian, FICO, Finicity and Deserve joined forces in a breakout panel to dive deeper into the concept of consumer-permissioned data. Panel speakers included Greg Wright, Chief Product Officer at Experian’s Consumer Information Services; Dave Shellenberger, Vice President of Product Management at FICO; Nick Thomas, Co-Founder, President and Chief Technology Officer at Finicity, and Kalpesh Kapadia, Chief Executive Officer at Deserve. “As Alex described in today’s keynote, consumer-permissioned data is not a new concept,” said Greg Wright. “The difference here is that Experian, FICO and Finicity are applying this concept to credit services, working together to bring consumer-permissioned data to mass scale, so that lenders can reach more people while taking on less risk.” For an inside look at Experian and FICO’s joint keynote, watch the video below, or visit Experian.com and boost your own credit score.
At Experian, we know that fintechs don’t just need big data – they need the best data, and they need that data as quickly as possible. Successfully delivering on this need is one of the many reasons we’re proud to be selected as a Fintech Breakthrough Award winner for the second consecutive year. The Fintech Breakthrough Awards is the premier awards program founded to recognize fintech innovators, leaders and visionaries from around the world. The 2019 Fintech Breakthrough Award program received more than 3,500 nominations from across the globe. Last year, Experian took home 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’s Ascend Analytical Sandbox™ has been selected as winner in the Best Overall Analytics Platform category. “We are thrilled to be recognized by Fintech Breakthrough for the second year in a row and that our Ascend Analytical Sandbox has been recognized as the best overall analytics platform in 2019,” said Vijay Mehta, Experian’s Chief Innovation Officer. “We understand the challenges fintechs face - to stay ahead of constantly changing market conditions and customer demands,” said Mehta. “The Ascend Analytical Sandbox is the answer, giving financial institutions the fastest access to the freshest data so they can leverage the most out of their analytics and engage their customers with the best decisions.” Debuting in 2018, Experian’s Ascend Analytical Sandbox is a first-to-market analytics environment that moved companies beyond just business intelligence and data visualization to data insights and answers they could actually use. In addition to thousands of scores and attributes, the Ascend Analytical Sandbox offers users industry-standard analytics and data visualization tools like SAS, R Studio, Python, Hue and Tableau, all backed by a network of industry and support experts to drive the most answers and value out of their data and analytics. Less than a year post-launch, the groundbreaking solution is being used by 15 of the top financial institutions globally. Early Access Program Experian is committed to developing leading-edge solutions to power fintechs, knowing they are some of the best innovators in the marketplace. Fintechs are changing the industry, empowering consumers and driving customer engagement like never before. To connect fintechs with the competitive edge, Experian launched an Early Access Program, which fast-tracks onboarding to an exclusive market test of the Ascend Analytical Sandbox. In less than 10 days, our fintech partners can leverage the power, breadth and depth of Experian’s data, attributes and models. With endless use cases and easy delivery of portfolio monitoring, benchmarking, wallet share analysis, model development, and market entry, the Ascend Analytical Sandbox gives fintechs the fastest access to the freshest data so they can leverage the most out of their analytics and engage their customers with the best decisions. A Game Changer for the Industry In a recent IDC customer spotlight, OneMain Financial reported the Ascend Analytical Sandbox had helped them reduce their archive process from a few months to 1-2 weeks, a nearly 75% time savings. “Imagine having the ability to have access to every single tradeline for every single person in the United States for the past almost 20 years and have your own tradelines be identified among them. Imagine what that can do,” said OneMain Financial’s senior managing director and head of model development. For more information, download the Ascend Analytical Sandbox™ Early Access Program product sheet here, or visit Experian.com/Sandbox.
Although half of businesses globally report an increase in fraud management over the past 12 months, many still experience fraud losses and attacks. To help address these challenges, Experian held its first-ever Fintech Fraud & Identity Meetup on February 5 in San Francisco, Calif. The half-day event was aimed at offering insights on the main business drivers of fraud, market trends, challenges and technology advancements that impact identity management and fraud risk strategy operations. “We understand the digital landscape is changing – inevitably, with technology enhancements come increased fraud risk for businesses operating in the online space,” said Jon Bailey, Experian’s Vice President of Fintech. “Our focus today is on fraud and identity, and providing our fintech customers with the tools and insights needed to grow and thrive.” The meetup was attended by number of large fintech companies with services spanning across a broad spectrum of fintech offerings. To kick off the event, Tony Hadley, Experian’s Senior Vice President of Government & Regulatory Affairs, provided an update on the latest regulatory news and trends impacting data and the fintech space. Next followed a fraud and identity expert panel, which engaged seasoned professionals in an in-depth discussion around two main themes 1) fraud trends and risk mitigation; and 2) customer experience, convenience, and trust. Expert panelists included: David Britton, Experian’s Vice President of Industry Solutions; Travis Jarae, One World Identity’s Founder & CEO; George Kurtyka, Joust’s Co-Founder & COO; and Filip Verley, Airbnb’s Product Manager. “The pace of fraud is so fast, by the time companies implement solutions, the shelf-life may already be old,” Britton said. “That is the crux – how to stay ahead. The goal is to future-proof your fraud strategy and capabilities.” At the close of the expert panel, Kathleen Peters, Experian’s Senior Vice President Head of Fraud and Identity, demoed Experian’s CrossCore™ solution – the first smart, open, plug-and-play platform for fraud and identity services. Peters began by stating, “Fraud is constant. Over 60% of businesses report an increase in fraud-related losses over the past year, with the US leading the greatest level of concern. The best way to mitigate risk is to create a layered approach; that’s why Experian invented CrossCore.” With the sophistication of fraudsters, it’s no surprise that many businesses are not confident with the effectiveness of their fraud strategy. Learn more about how you can stay one step ahead of fraudsters and position yourself for success in the ever-changing fraud landscape; download Experian’s 2019 Global Identity and Fraud Report here. For an inside look at Experian’s Fintech Fraud & Identity Meetup, watch our video below.
2018 was a whirlwind of a year – though it was not surprising when Google’s 2018 “most-searched” list showed Fornite GIFs ruled the internet, Black Panther was the most-Googled movie, and the Keto diet was trending (particularly in late December and early January, go figure). But, while Google’s most-searched terms of 2018 present pure pop-culture entertainment, they miss the mark on the trends we find most meaningful being principals of the financial services industry. What about the latest news in fintech? According to Business Insider, fintech companies secured $57.9 billion in funding in the first half of 2018 alone, nearing the previous annual record of $62.5 billion set in 2015. Taking it a step further, CBInsights reports that 24 of 39 fintech unicorns are based in North America. We won’t blame Google for this oversight. Faced with the harsh reality that the “most-searched” results are based on raw-data, perhaps it’s possible that people really do find Fortnite more exciting than financial services trends – but not us at Experian. We have been closely following disruption in the financial services space all while leading the charge in data innovation. When competing in environments where financial institutions vie for customer acquisition and brand loyalty, digital experience is not enough. Today’s world demands finance redefined – and fintechs have answered the call. Fintechs are, by far, among the most innovative technology and data-driven companies in the financial services industry. That’s why we built a team of seasoned consultants, veteran account executives and other support staff that are 100% dedicated to supporting our fintech partners. With our expert team and a data accuracy rate of 99.9%, there isn’t a more reliable fintech source. Perhaps this is one financial services trend that Google can’t ignore (we see you Google)! For more information regarding Experian’s fintech solutions, check out our video below and visit Experian.com/fintech.
How can fintech companies ensure they’re one step ahead of fraudsters? Kathleen Peters discusses how fintechs can prepare for success in fraud prevention.
Picking up where we left off, online fintech lenders face the same challenges as other financial institutions; however, they continue to push the speed of evolution and are early adopters across the board. Here’s a continuation of my conversation with Gavin Harding, Senior Business Consultant at Experian. (Be sure to read part 1.) Part two of a two-part series: As with many new innovations, fintechs are early adopters of alternative data. How are these firms using alt data and what are the results that are being achieved? In a competitive market, alternative data can be the key to helping fintechs lend deeper and better reach underserved consumers. By augmenting traditional credit data, a lender has access to greater insights on how a thin-file consumer will perform over time, and can then make a credit decision based on the identified risk. This is an important point. While alternative data often helps lenders expand their universe, it can also provide quantitative risk measures that traditional data doesn’t necessarily provide. For example, alternative data can recognize that a consumer who changes residences more than once every two years presents a higher credit risk. Another way fintechs are using alternative data is to screen for fraud. Fraudsters are digitally savvy and are using technology to initiate fraud attacks on a broader array of lenders, in bigger volumes than ever before. If I am a consumer who wants to get a loan through an online fintech lender, the first thing the lender wants to know is that I am who I say I am. The lender will ask me a series of questions and use traditional data to validate. Alternative data takes authentication a step further and allows lenders to not only identify what device I am using to complete the application, but whether the device is connected to my personal account records – giving them greater confidence in validating my identity. A second example of using alternative data to screen for fraud has to do with the way an application is actually completed. Most individuals who complete an online application will do so in a logical, sequential order. Fraudsters fall outside of these norms – and identifying these patterns can help lenders increase fraud detection. Lastly, alternative data can help fintech lenders with servicing and collections by way of utilizing behavioral analytics. If a consumer has a history of making payments on time, a lender may be apt to approve more credit, at better terms. As the consumer begins to pay back the credit advance, the lender can see the internal re-payment history and recommend incremental line increases. From your perspective, what is the future of data and what should fintechs consider as they evolve their products? The most sophisticated, most successful “think tanks” have two things that are evolving rapidly together: Data: Fintechs want all possible data, from a quality source, as close to real-time as possible. The industry has moved from “data sets” to “data lakes” to “data oceans,” and now to “data universes.” Analytics: Fintechs are creating ever-more sophisticated analytics and are incorporating machine learning and artificial intelligence into their strategies. Fintechs will continue to look for data assets that will help them reach the consumer. And to the degree that there is a return on the data investment, they will continue to capitalize on innovative solutions – such as alternative data. In the competitive financial marketplace, insight is everything. Aite Group recently conducted a new report about alternative data that dives into new qualitative research collected by the firm. Join us to hear Aite Group’s findings about fintechs, banks, and credit unions at their webinar on December 4. Register today! Register for the Webinar Click here for more information about Experian’s Alternative Data solutions. Don’t forget to check out part one of this series here. About Gavin Harding With more than 20 years in banking and finance Gavin leverages his expertise to develop sophisticated data and analytical solutions to problem solve and define strategies across the customer lifecycle for banking and fintech clients. For more than half of his career Gavin held senior leadership positions with a large regional bank, gaining experience in commercial and small business strategy, SBA lending, credit and risk management and sales. Gavin has guided organizations through strategic change initiatives and regulatory and supervisory oversight issues. Previously Gavin worked in the business leasing, agricultural and construction equipment sectors in sales and credit management roles.
Fintechs seem to be the new Joneses. Everyone’s trying to keep up. I sat down with Gavin Harding, Senior Business Consultant with Experian Advisory Services, to tap into some of his insight on online fintech lenders. What are they doing to push the envelope when it comes to evolving the financial industry. How are they addressing the topics that all lenders have – including strategy, regulations, credit invisibles, etc.? Here’s what he had to say. Part one of a two-part series: Fintechs have their own way of doing things across the financial industry. How is alternative data defined in that space? There are many different definitions of “alt data.” Let’s start with the fundamentals. When we think about “traditional” or “mainstream” data, that typically includes the bureau data that we are all familiar with. Bureau data has been around for a long time and is used extensively throughout the credit and loan lifecycle. This data typically includes a consumer’s credit history, such as a summary of inquiries, tradelines, and balances. But, this information doesn’t necessarily provide a holistic consumer snapshot that allows lenders to fully assess credit and risk. What about the so-called “credit invisibles” with little to no credit history? This is what we mean when we talk about alternative data – within the consumer lending ecosystem, it is anything that is not traditional credit bureau data. Alternative data combined with traditional data allows lenders to expand their universe by reaching underserved markets – which means more access to more credit for more consumers. Let’s briefly discuss three examples: alternative financial services data, transactional data and rental data. Alternative financial services data provides insight into alternative sources of financing that are quickly becoming mainstream. This data set contains small-dollar installment loans, point-of-sale financing, rent-to-own, online installment loans and auto-title lending. Transactional data illustrates how a consumer uses their checking account, or in other words, how many deposits have been accumulated in a month, what is the average deposit, and what bills have been paid from the account. This type of data provides a better picture of a consumer’s financial health and ability to repay. Rental data can serve a similar purpose. Consistent and steady trends of a consumer making good on their rental payment month-after-month, year-after-year, speaks to their ability and intent to pay. If I am a thin-file consumer with limited credit history, alternative data – such as transactional data and rental data – gives the lender more information to make an informed credit decision. Compliance with regulatory requirements is a key concern for any financial institution. What should fintech lenders take into consideration when incorporating nontraditional data into their strategy? Users of alternative data – whether traditional financial institution or fintech – must ensure compliance with applicable lending regulations. To fall under the Fair Reporting Act (FCRA) compliant umbrella, alternative credit data must be displayable, disputable and correctable. Keep in mind, alternative data is often used to augment traditional data to get from a declined credit application, to an approved credit application. Simply put, alternative data is incremental data. As long as fintechs use it in a consistent and compliant way – it works. Always an advocate for new thought leadership, Experian recently sponsored a report conducted by Aite Group. This third-party report about alternative data dives into new qualitative research collected by the firm. Join us to hear Aite Group’s findings about fintechs, banks, and credit unions at their webinar on December 4. Register today! Register for the Webinar Stay tuned for part two of this series. And click here for more information about Experian’s Alternative Data solutions. About Gavin Harding With more than 20 years in banking and finance Gavin leverages his expertise to develop sophisticated data and analytical solutions to problem solve and define strategies across the customer lifecycle for banking and fintech clients. For more than half of his career Gavin held senior leadership positions with a large regional bank, gaining experience in commercial and small business strategy, SBA lending, credit and risk management and sales. Gavin has guided organizations through strategic change initiatives and regulatory and supervisory oversight issues. Previously Gavin worked in the business leasing, agricultural and construction equipment sectors in sales and credit management roles.
There’s no shortage of buzz around fintechs shifting from marketplace challengers to industry collaborators. Regardless of fintech’s general reputation as market disruptors, a case can certainly be made for building partnerships with traditional financial institutions by leveraging the individual strengths of each organization. According to the World FinTech Report 2018, 75.5% of fintechs surveyed selected “collaborate with traditional firms” as their main objective. Whereas fintechs have agility, a singular focus on the customer, and an absence of legacy systems, traditional Financial Institutions have embedded infrastructure, scale, reach, and are well-versed with regulatory requirements. By partnering together, fintechs and other Financial Institutions can combine strengths to generate real business results and impact the customer experience. New stories are emerging – stories that illustrate positive outcomes beyond efforts exerted by one side alone. A recent report sponsored by Experian and conducted by the Filene Research Institute further explores the results of fintech and traditional FI partnerships by examining the experiences of six organizations: The outcomes of these relationships are sure to encourage more collaborative partnerships. And while leveraging each organization’s strength is a critical component, there’s much more to consider when developing a strategic approach. In the fast-moving, disruptive world of fintech, just what are the key elements to building a successful collaboration with traditional Financial Institutions? Click here to learn more. More Info on Marketplace Lending Read the Filene Report
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