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Financial services companies have long struggled to make inclusive decisions for small businesses and for low- and moderate-income consumers. One key reason: to make accurate predictions of the financial risks associated with those customers’ accounts requires lenders to rely on a wider variety of data than a credit score alone. To accurately assess risk, expanded Fair Credit Reporting Act regulated data is helpful – including rental data, trended data, enhanced public records, alternative financial services data and more. This expanded FCRA data is one key to financial inclusion. Without that data, lenders risk rejecting potentially profitable customers, including so-called credit invisibles and thin file consumers. In fact, The Federal Reserve, along with four important financial services regulators, highlighted the consumer benefits of alternative data in their December 2019 interagency statement. That statement also highlighted the increased importance of managing compliance when firms use alternative data in credit underwriting. With hundreds of data sources available to help with important tasks such as verifying identity, checking credit, and assessing the value of automotive and real-estate collateral, why have some lenders been slow to use the most appropriate data attributes when making credit decisions? One reason is a matter of IT Architecture; another is priorities. Changing a business process to take advantage of new data requirements can be prohibitively lengthy and costly – ­in terms of both analytical and IT resources. This is especially true for older systems—which were seldom adapted to use Application Programming Interfaces (APIs) supporting modern data structures such as JSON. Furthermore, data access to older systems can require specific types of system connectivity such as VPNs or leased lines. Latency is important in this type of application: some of these tasks have to be done instantly in a digital-first or digital-only lending environment. So is time to market: lenders deploying analytics processes cannot wait for overtaxed IT teams to complete lengthy projects. Lenders’ analytics and IT teams have long known they need to be more agile and efficient, faster to market, and increasingly secure. Their answer, largely, has been a slow but steady migration of their systems to the cloud. A 2019 McKinsey survey revealed that CIOs were modernizing their infrastructures primarily to achieve four goals: agility and time to market, quality and reliability, cost, and security. There are other benefits as well. But if the business case for a cloud strategy was somewhat clear to IT and analytics leaders, it became crystal clear to the rest of the business in 2020. As companies shifted to at-home work using cloud-based collaboration tools, especially videoconferencing services, most companies conquered what was perhaps the final barrier to entry—the fear that the issues of data privacy and security were somehow more insurmountable with virtual machines, containers, and microservices than with on-premise infrastructure. Last quarter, the leading cloud providers ­Amazon Web Services, Google Cloud Platform, and Microsoft Azure ­reported incredible annual revenue growth: 29%, 45%, and 48% respectively. COVID-19 has proven to be the catalyst that greatly sped up the transition to cloud technologies. The jump to the cloud means that lenders are suddenly more capable than ever at making analytically sound – and therefore more financially inclusive ­decisions. The key to analytical decision-making is to use the right data and to make the most appropriate calculations (called attributes) as part of a business strategy or a mathematical model. With Experian programs such as Attribute Toolbox now available in the cloud, calculating those all-important attributes is as simple for the IT department as coding an API call. Lenders will soon be able just as easily to retrieve and process raw data from over 100 data sources, to recognize their native formats and to extract the desired information quickly enough for real-time and batch decisioning. The pandemic has brought economic distress to millions of Americans—it is unlike anything in our lifetimes. The growth of cloud computing promises to enable these consumers to obtain additional products as well as more favorable pricing and terms. It’s ironic that COVID has accelerated the adoption of the very technologies that will expand access to credit for many people who cannot currently access it from mainstream financial firms. To learn more about our Attribute Toolbox, click here. Learn More

New challenges created by the COVID-19 pandemic have made it imperative for utility providers to adapt strategies and processes that preserve positive customer relationships. At the same time, they must ensure proper individualized customer treatment by using industry-specific risk scores and modeled income options at the time of onboarding As part of our ongoing Q&A perspective series, Shawn Rife, Experian’s Director of Risk Scoring, sat down with us to discuss consumer trends and their potential impact on the onboarding process. Q: Several utility providers use credit scoring to identify which customers are required to pay a deposit. How does the credit scoring process work and do traditional credit scores differ from industry-specific scores? The goal for utility providers is to onboard as many consumers as possible without having to obtain security deposits. The use of traditional credit scoring can be key to maximizing consumer opportunities. To that end, credit can be used even for consumers with little or no past-payment history in order to prove their financial ability to take on utility payments. Q: How can the utilities industry use consumer income information to help identify consumers who are eligible for income assistance programs? Typically, income information is used to promote inclusion and maximize onboarding, rather than to decline/exclude consumers. A key use of income data within the utility space is to identify the eligibility for need-based financial aid programs and provide relief to the consumers who need it most. Q: Many utility providers stop the onboarding process and apply a larger deposit when they do not get a “hit” on a certain customer. Is there additional data available to score these “no hit” customers and turn a deposit into an approval? Yes, various additional data sources that can be leveraged to drive first or second chances that would otherwise be unattainable. These sources include, but are not limited to, alternative payment data, full-file public record information and other forms of consumer-permissioned payment data. Q: Have you noticed any employment trends due to the COVID-19 pandemic? How can those be applied at the time of onboarding? According to Experian’s latest State of the Economy Report, the U.S. labor market continues to have a slow recovery amidst the current COVID-19 crisis, with the unemployment rate at 7.9% in September. While the ongoing effects on unemployment are still unknown, there’s a good chance that several job/employment categories will be disproportionately affected long-term, which could have ramifications on employment rates and earnings. To that end, Experian has developed exclusive capabilities to help utility providers identify impacted consumers and target programs aimed at providing financial assistance. Ultimately, the usage of income and employment/unemployment data should increase in the future as it can be highly predictive of a consumer’s ability to pay For more insight on how to enhance your collection processes and capabilities, watch our Experian Symposium Series event on-demand. Watch now Learn more About our Experts: Shawn Rife, Director of Risk Scoring, Experian Consumer Information Services, North America Shawn manages Experian’s credit risk scoring models while empowering clients to maximize the scope and influence of their lending universe. He leads the implementation of alternative credit data within the lending environment, as well as key product implementation initiatives.

The global pandemic has created major shifts in the ways companies operate and innovate. For many organizations, a heavy reliance on cloud applications and cloud services has become the new normal, with cloud applications being praised as “an unsung hero” for accommodating a world in crisis, as stated in an article from the Channel Company. However, cloud computing isn’t just for consumers and employees working from home. In the last few years, cloud computing has changed the way organizations and businesses operate. Cloud-based solutions offer the flexibility, reduced operational costs and fast deployment that can transform the ways traditional companies operate. In fact, migrating services and software to the cloud has become one of the next steps to a successful digital transformation. What is cloud computing? Simply put – it’s the ability to run applications or software from remote servers, hosted by external providers, also known as infrastructure-as-a-service (IaaS). Data collected from cloud computing is stored online and is accessed via the Internet. According to a study by CommVault, more than 93% of business leaders say that they are moving at least some of their processes to the cloud, and a majority are already cloud-only or plan to completely migrate. In a recent Forrester blog titled ‘Troubled Times Test Traditional Tech Titans,’ Glenn O’Donnell, Vice President, Research Director at Forrester highlights that “as we saw in prior economic crises, the developments that carried business through the crisis remained in place. As many companies shift their infrastructure to cloud services through this pandemic, those migrated systems will almost certainly remain in the cloud.” In short, cloud computing is the new wave – now more than ever during a crisis. But what are the benefits of moving to the cloud? Flexibility Cloud computing offers the flexibility that companies need to adjust to fluctuating business environments. During periods of unexpected growth or slow growth, companies can expand to add or remove storage space, applications, or features and scale as needed. Businesses will only have to pay for the resources that they need. In a pandemic, having this flexibility and easy access is the key to adjusting to volatile market conditions. Reduced operational costs Companies (big or small) that want to reduce costs from running a data center will find that moving to the cloud is extremely cost-effective. Cloud computing eliminates the high cost of hardware, IT resources and maintaining internal and on-premise data systems. Cloud-based solutions can also help organizations modernize their IT infrastructures and automate their processes. By migrating to the cloud, companies will be able to save substantial capital costs and see a higher return on investment – while maintaining efficiency. Faster deployment With the cloud, companies get the ability to deploy and launch programs and applications quickly and seamlessly. Programs can be deployed in days as opposed to weeks – so that businesses can operate faster and more efficiently than ever. During a pandemic, faster deployment speeds can help organizations accommodate, make updates to software and pivot quickly to changing market conditions. Flexible, scalable, and cost-effective solutions will be the keys to thriving during and after a pandemic. That’s why we’ve enhanced a variety of our solutions to be cloud-based – to help your organization adapt to today’s changing customer needs. Solutions like our Attribute Toolbox are now officially on the cloud, to help your organizations make better, faster, and more effective decisions. Learn More