The consumer economy has evolved dramatically over the past few years. Credit data can be a powerful asset for FIs in this new environment.

2017 is expected to bring some big changes. But what do those changes mean for the financial services space? Here are 3 trends and twists Experian expects to occur over the next 12 months:

The market is inevitably changing, and while batch and daily alerts are still effective in tackling client and consumer challenges, you are probably seeing more real-time alerts. Perhaps you were at the auto dealership applying for a car loan and you got an instant alert on your mobile app revealing there was an inquiry pulled on your credit report.  Or maybe you applied for a credit card online and instead of waiting for weeks to see if you got approved, you receive notification on the spot. It’s official. We live in a world where we want immediate and instant feedback, communication, and decisions. From a client’s perspective, this means getting a credit-event alert on a customer now vs. 24 hours later. Delays can sometimes mean the difference of losing or retaining a customer. In a recent Experian survey, findings revealed consumers expect to be notified of changes to their credit profile as they occur in real time. In fact, 90 percent of Experian Members said they place a “high value on real-time alerts.” To meet these consumer expectations, clients can consider implementing a trigger solution to offer real-time notifications on inquiries, security alerts and consumer disputes. These triggering events are pushed in real-time as opposed to a 24- to 48-hour turnaround when using standard daily triggers. What are inquiry and security alert triggers? Inquiry triggers cover 13 different industries and also fraud, theft, and active-duty military alerts. They are designed specifically for financial institutions that wish to monitor their existing customer base for account management, and for consumers wanting immediate awareness, education, and protection of their credit. How do real-time triggers work in the consumer dispute process? Dispute updates can be pushed out to the consumer in real-time as opposed to the standard dispute process that takes up to 30 days to receive an update. These triggers also include freeze, thaw and lift alerts pushed in real-time as opposed to the typical 24- to 48-hour turnaround when using standard daily triggers. These alerts are designed specifically for consumers wanting immediate awareness, education, and protection of their credit. Other than the speed of delivery, are there any other differences between daily vs. real-time triggers? Instead of having the files run nightly with the trigger report being sent to the client every morning through a STS delivery method, the real-time events are pushed via Cloud or STS delivery method.  Clients can retrieve these events at their own pace. Implementation time takes around two weeks. Are there additional opportunities to utilize real-time triggers? In addition to real-time inquiry alerts designed for companies to monitor their existing customer base for retention purposes, Experian also offers real-time inquiry alerts for prospecting and marketing purposes. This means financial institutions can identify which consumers are shopping for new credit in real-time.  As a result, immediate firm offers of credit or cross-sell offers could be sent to consumers before it’s too late.

When you think of criteria for prescreen credit marketing, what comes to mind? Most people will immediately discuss the risk criteria used to ensure consumers receiving the mailing will qualify for the product offered. Others mention targeting criteria to increase response rates and ROI. But if this is all you’re looking at, chances are you’re not seeing the whole picture. When it comes to building campaigns, marketers should consider the entire customer lifecycle, not just response rates. Yes, response rates drive ROI and can usually be measured within a couple months of the campaign drop. But what happens after the accounts get booked? Traditionally, marketers view what happens after origination as the responsibility of other teams. Managing delinquencies, attrition, and loyalty are fringe issues for the marketing manager, not the main focus. But more and more, marketers must expand their role in the organization by taking a comprehensive approach to credit marketing. In fact, truly successful campaigns will target consumers that build lasting relationships with the institution by using the three pillars of comprehensive credit marketing. Pillar #1: Maximize Response Rates At any point in time, most consumers have no interest in your products. You don’t have to look far to prove this out. Many marketing campaigns are lucky to achieve greater than a 1% response rate. As a result, marketers frequently leverage propensity to open models to improve results. These scores are highly effective at identifying consumers who are most likely to be receptive to your offer, while saving those that are not for future efforts. However, many stop with this single dimension. The fact is no propensity tool can pick out 100% of responders. Layering just a couple credit attributes to a propensity score allows you to swap in new consumers. Simultaneously, credit attributes can identify consumers with high propensity scores that are actually unlikely to open a new account. The net effect is even higher response rates than can be achieved by using a propensity score alone. Pillar #2: Risk Expansion Credit criteria are usually set using a risk score with some additional attributes. For example, a lender may target consumers with a credit score greater than 700 and no derogatory or delinquent accounts reported in the past 12 months. But, most of this data is based on a “snapshot” of the credit profile and ignores trends in the consumer’s use of credit. Consider a consumer who currently has a 690 credit score and has spent the past six months paying down debt. During that time, utilization has dropped from 66% to 41%, they’ve paid off and closed two trades, and balances have reduced from $21,000 to $13,000. However, if you only target consumers with a score greater than 700, this consumer would never appear on your prescreen list. Trended data helps spot how consumers use data over time. Using swap set analysis, you can expand your approval criteria without taking on the incremental risk. Being there when a consumer needs you is the first step in building long-term relationships. Pillar #3: Customer profitability and early attrition There’s more to profitability than just originating loans. What happens to your profitability assumptions when a consumer opens a loan and closes it within a few months? According to recent research by Experian, as many as 26% of prime and super-prime consumers, and 38% of near-prime consumers had closed a personal loan trade within nine months of opening. Further, nearly 32% of consumers who closed a loan early opened a new personal loan trade within a few months. Segmentation can help identify consumers who are likely to close a personal loan early, giving account management teams a head start to try and retain them. As it turns out, many consumers use personal loans as a form of revolving debt. These consumers occasionally close existing trades and open new trades to get access to more cash. Anticipating who is likely to close a loan early allows your retention team to focus on understanding their needs. If you don’t, you’re competition will take advantage through their marketing efforts. Building the strategy Building a comprehensive strategy is an iterative process. It’s critical for organizations to understand each campaign is an opportunity to learn and refine the methodology. Consistently leveraging control and test groups and new data assets will allow the process to become more efficient over time. Importantly, marketers should work closely across the organization to understand broader objectives and pain points. Credit data can be used to predict a range of future behaviors. As such, marketing managers should play a greater role as the gatekeepers to the organization’s growth.

When it comes to credit marketing, there's no magic bullet. Still, consumers have changed, so lenders should mix it up. It's time to evolve beyond direct mail.

The holidays are behind us, the presents are unwrapped, resolutions have been made and may already be broken. For many, it’s the most depressing time of the year as the reality of holiday spending settles in. According to the American Consumer Credit Council the average American spends $935 on gifts each holiday season. A recent report by Mintel showed the average consumer held $16,000 in debt at the end of 2015. Now is the time to reach out to consumers who may be suffering from a financial hangover; an Experian study revealed consumers typically look to personal loans for help with credit card debt in the second quarter of each year. What’s the best way to reach these consumers? Direct mail is still one of the most successful paths. Here are four keys to securing new personal loan customers via direct mail marketing: Focus on education: Some of the most successful direct mail campaigns for personal loans in 2015 focused on educating consumers about personal loans first, and then showing options for debt consolidation. Consumers are weary of trusting new lenders, according to Mintel, with 50% viewing them as riskier than banks and credit unions. Marketplace and online lenders should take the extra step of introducing their brand and showing their product as a safe option. Highlight the use of the loan: Consumers generally have a negative attitude toward debt, with 72% feeling uncomfortable holding any type of debt. Stressing that personal loans are a responsible tool for consolidating debt is critical. Some effective campaigns listed the top three reasons to choose a personal loan, while others used customer testimonials to show how a personal loan was used and how they benefited. Provide a competitive comparison: Another way to highlight the benefits of personal loans is by comparing the fixed rates and payments of a personal loan to credit cards. Many consumers consolidate credit card debt to one card immediately after the holidays, according to the Experian study. Simply showing the long-term benefit of a personal loan versus credit card is often enough to trigger action. Personalize the offer: Lenders are delivering more personal, relevant offers that are tailored to the interests of each recipient through the use of the latest personalization technology. For example, highlight the recipient’s specific qualifying loan amount or the qualifying loan rate for which they are eligible. Unsecured loans have experienced growing popularity in the last several years, and originations are poised for a seasonal peak in the coming months. Are you ready?

Experian integrated Cloudera Enterprise onto its cloud environment so clients can make innovative decisions in milliseconds with data as the core technology.

Internet-connected devices provide endless possibilities, but they rely on technology and collected data to deliver on their promises.

The holidays can be a stressful time for consumers — and an important time for lenders to anticipate the aftermath of big credit card spending

With Detroit’s Motor City being the epicenter of the North American automotive manufacturing industry, that detail should come as no surprise. Furthermore, a recent analysis of Experian data showed that of the nearly 12.6 million consumers who returned to market to purchase a new vehicle, 60.9 percent remained loyal to their brand. Consumers going from a Certified Pre-Owned (CPO) vehicle to another CPO vehicle from the same original equipment manufacturer (OEM) showed even higher loyalty rates at 75 percent. Seeing as how pre-owned vehicle purchases are on the rise, and becoming more and more popular among consumers across all credit risk tiers, it isn’t unexpected to see higher loyalty rates in the CPO category. CPO vehicles are an attractive option for both auto manufacturers and consumers. Auto manufacturers continue to increase sales through higher rates of lease penetration, then channel these off-lease vehicles into certified pre-owned fleets. In essence, they are controlling both supply and demand of their off-lease used vehicles and building an amazingly loyal customer base. By understanding these loyalty rates, manufacturers, dealers and resellers are able to make smarter decisions that create more opportunities for themselves and in-market consumers. Buying a CPO vehicle can also give consumers an extra layer of confidence when making a purchasing decision because of the multi-point inspections included in the manufacturer’s program. Now, what about Michigan you ask? Well, if you are a Michiganian, you are 63 percent more likely to remain loyal to your particular brand of car. The analysis showed North Dakota (62.4 percent) and South Dakota (61.4 percent) round out the top three states with the most brand-loyal consumers. But, regardless of home state, which brands do consumers choose time and time again? Well, for overall brand loyalty including all purchase types, Tesla ranked highest, with 70.3 percent of Tesla owners choosing to buy another. Subaru was second, with 65.9 percent of its owners coming back, followed by Ford at 65 percent, Toyota at 63.5 percent and Mercedes-Benz at 63.1 percent. Other findings: CUV/SUV owners were most loyal when returning to market, with 69.6 percent returning to buy another CUV/SUV, followed by pickup owners (59.6 percent), sedan owners (58.4 percent), minivan owners (33.2 percent) and hatchback owners (29.4 percent). CPO owners choosing to purchase another CPO vehicle, were loyal to: Ford, 84.6% Mercedes-Benz, 82.8% Honda, 81.9% Toyota, 81.6% Lincoln, 78.1% CPO owners that chose to buy a new vehicle, were loyal to: Kia, 65% Ford, 63.5% Toyota, 63.1% Honda, 60.5% Chevrolet, 58.4% To find out more about Experian Automotive’s research into the automotive marketplace, visit https://www.experian.com/automotive/auto-industry-analysis.html.

Using digital technology like a big bank How was your holiday? Are the chargebacks rolling in yet? It’s no secret - digital technology like mobile device usage has increased significantly over the years, making it a breeding ground for fraudsters. As credit unions continue to grow their membership, their fraud security treatments need to grow as well. Bigger banks are constantly updating their fraud tools and strategies to fight against cybercrime and, therefore, fraudsters are setting their eyes on credit unions. Even as I write this, fraudsters are searching and targeting credit unions that don’t have their mobile channel secured. They attempt to capitalize on any weakness or opportunity: Registering stolen cards to mobile wallets Taking over an account via mobile banking apps Using a retailers’ mobile app to make fraudulent payments Disabling the SIM card in the victim’s phone and diverting the one-time password sent through text message to their own phones These are clever ways to commit fraud. But credit unions are becoming wise to these new threats and are serious about protecting their members. They are incorporating device intelligence with a solid identity authentication service. This multi-layered approach is essential to securing mobile channels, and protecting your Credit Union from chargebacks. To learn more about our fraud solutions, click here.

Experian shares five trends and twists coming over the next 12 months, that could push new boundaries and in many cases improve the customer experience as it pertains to the world of credit and finance.

Interesting things we learned about data quality in 2016. Our data quality report found some concerning statistics about companies and their data quality.

Fraud/cybersecurity are two of the biggest risks challenging organizations and economy. Fraud industry has $500B billion in estimated losses annually

Experian’s latest Market Trends and Loyalty report shows that for the first time in history, cars with four-cylinder engines have outpaced any other light-duty vehicle type on the road. That’s because the auto industry has been hard at work the past two decades improving both power and fuel efficiency of its engines. Auto manufacturers have been given aggressive fuel efficiency targets (54.5 mpg by 2025), but still need to meet consumer demand for performance. The net result is today’s average four-cylinder engine (188.1 hp) actually has more horsepower than the average V8 from 20 years ago (188 hp). It has helped four-cylinder engines become the most prominent engine type on the road, according to Experian Automotive Vehicles in Operation (VIO) database. Of the vehicles on the road, 37.7 percent are being powered by a four-cylinder engine, compared to 37.6 percent of six-cylinder engines. The top five vehicles at both the VIO and registration levels shows that all but one have four-cylinder engines. Top segments Total VIO Q3 vehicle registrations 1.       Full-size pickup 1.       Entry-level CUV 2.       Standard midrange car 2.       Full-size pickup 3.       Small economy car 3.       Small economy car 4.       Lower midrange car 4.       Standard midrange car 5.       Entry-level CUV 5.       Lower midrange car The four-cylinder VIO market share growth will continue in the future. In 2016, for example, four-cylinder engines accounted for 54.2 percent of all engines in new vehicles sold. It is the fifth consecutive year that four-cylinder engines had more than 50 percent market share. Market share for six-cylinder engines has dropped from 32.5 percent in 2012 to 29.7 percent in 2016, while eight-cylinder engines have dropped from 16.1 percent to 12.1 percent.