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As businesses, we want to know our consumers and their habits so we can offer the best customer experience possible, whether in store or online. This should include providing the right security measures that will protect consumers and businesses from fraud, without compromising that consumer experience. In research published earlier this year, our Global Fraud and Identity report cites two-thirds (66 percent) of consumers surveyed said they appreciate security protocols when transacting online. Younger consumers (42 percent) said they are more likely to engage online if there weren’t as many security hurdles, versus 30 percent of those who are 35 and older. It’s evident that businesses need to provide a good balance between providing consumers with a positive experience while having efficient security protocols in place. With 90 percent of consumers using digital channels for banking and shopping, consumers and businesses need to be protected from fraudulent transactions. The varying degree of tolerance toward security presents a bit of a challenge, in that it’s hard to find a one-size-fits-all solution for everyone. Millennials are accustomed to speed and convenience, having grown up with mobile phones and the Internet. This is evident in their preference toward pre-filled login credentials when conducting financial transactions online. Older generations, by contrast, had to navigate the (often very painful) evolution to the digital world. Therefore, it’s not surprising that there’s a difference in overall tolerance toward security measures in place. Both age groups agree that passwords enhance the online experience, but fewer millennials believe passwords alone are the best way to protect their information. On the business side, our research shows that most organizations prioritize convenience over security, however they still use passwords as their top form of authentication. Business owners don’t necessarily think it’s the safest method to prevent fraud, but it’s a well-understood security precaution. Ironically, one-quarter of consumers have forgotten a username or password within the past six months, causing significant consumer frustration. While businesses have come to terms with acceptable levels of fraud losses, we encourage a change in mindset: to invest in a solution that can help prevent fraud and reduce loss more efficiently. Experian CrossCoreTM, for example, is the first smart, open, plug-and-play platform for fraud and identity services that helps businesses catch fraud faster, improve compliance, and enhance customer experience. We’ve helped our clients screen more than 15 billion fraud events in just one year, and won’t stop there. When you have the right solution in place, that’s when you know that effective security and great customer experience are not mutually exclusive, for older generations and millennials alike; they go hand-in-hand.
The world in 2018 is defined by data. Vast quantities of information flow through our lives like threads across an elaborate tapestry. On a micro level, these threads bind the business world together. But they also come together to weave a picture of the economy that is colourful, detailed, and uniquely fascinating. At Experian, we process more than 1.5 billion records per year, making us specialists in the processing and understanding of this data – and in making sure it is used for the benefit of consumers and businesses. To share our unique perspective, we’ve created our first ever Spending Power Index. The index looks at the UK’s income and spending habits, including both a detailed view of the present, and insight into longer term trends and the nation’s changing preferences. Giving businesses the bigger picture Stepping back from day-to-day business to look at the whole economy is a chance to identify new opportunities and work out the best ways of adapting to new challenges. The insights we’re providing through the Spending Power Index are designed to fuel that process by offering a view of existing and emerging trends across all demographic segments of the UK economy. What is the Spending Power Index? We’ve defined ‘Spending Power’ as a combination of key factors: Average income growth over time Levels of spending for one demographic group when compared to another Levels of spending as a proportion of incomes These combined factors reveal a wealth of hidden information about income and spending. All these insights have been drawn from Experian’s modelled data using secondary sources such as our ‘Financial Strategy Segmentation’ (FSS) tool. The data for this comes from a range of publicly and commercially available sources, such as the edited Electoral Roll, the UK Census and permission-based market research data taken, for example, from the lifestyle questionnaires many of us complete. New insights and confirming market trends Some of the insights revealed by the index have been surprising, while others fit into social trends that are already well understood. We found some areas of significant shift, such as the movement away from owning possessions and towards spending on life experiences. But we also confirmed some new and fascinating trends such as the emergence of Generation X’s forty somethings as the biggest earners and spenders in the UK economy. Find out more by reading the full Spending Power Index report here.
In our increasingly digital world, there’s a growing expectation among consumers to only receive personal and relevant content from brands. However, with the proliferation of devices, delivering on this expectation is becoming more of a challenge. It’s more difficult than ever for advertisers to understand their audience and reach them across all marketing channels. But, Experian is here to help. We recently announced our activation partners program – a natural next step in our commitment to helping brands uncover the right audience segments and deliver advertising campaigns that resonate with consumers. We’re teaming up with marketing technology leaders such as 4C, Adaptly, Brand Networks, Kenshoo, SocialCode and Unified to help brands deliver relevant content. Through the activation partners program, marketers can leverage their own first-party data, third-party data from Experian’s ConsumerViewSM marketing database, or a combination of the two, to build audience segments and optimize campaigns. Then, they can work with any of the marketing technology partners to deliver personalized advertisements to people across any marketing channel — including social media, television and mobile, as well as all major media organizations. This program helps brands unlock the power of data and technology to make the right marketing decisions and better connect with individuals. And with more than 30 years in the advertising business, consumer privacy is at the heart of what we do and the way we work. We remain vigilant when it comes to data security and integrity, including our own commitment to strict standards regarding permissible uses of data. Ultimately, partnerships like this help move the industry forward. We know the advertising industry is evolving and we see this as an opportunity for continuous innovation. As always, our goal is to bring that innovation and power to brands through the solutions—and partnerships—we create.
Today, we stand at the forefront of a digital revolution that is reshaping the financial services industry. And, against this backdrop, financial institutions are at vastly different levels of maturity; the world’s biggest banks are managing large-scale infrastructure migrations and making significant investments in AI while regional banks and credit unions are putting plans in place for modernization strategies, and fintechs are purpose-built and cloud native. To explore this more, I recently had the privilege of attending the annual Reuters NEXT live event in New York City. The event gathers globally recognized leaders across business, finance, technology, and government to tackle some of today’s most pressing issues. On the World Stage, I joined Del Irani, a talented anchor and broadcast journalist, to discuss the future of lending and the pivotal role of data and AI in building a more inclusive financial system. Improving financial access Our discussion highlighted the lack of access to traditional financial systems, and the impact it has on nearly 100 million people in North America alone. Globally, the problem affects over one billion people. These people, who are credit invisible, unscoreable, or have subprime credit scores, are unable to secure everyday financial products that many of us take for granted. What many don’t realize is, this is not a fringe subset of the population. Most of us, myself included, know someone who has faced the challenges of financial exclusion. Everyday Americans, including young people who are just starting out, new immigrants and people from diverse communities, often lack access to mainstream financial products. We discussed how traditional lending has a limited view of a consumer. Like looking through a keyhole, the lender’s understanding of the person in view is often incomplete and obstructed. However, with expanded data, technology, and advanced analytics, there is an opportunity to better understand the whole person, and as a result have a more inclusive financial system. At Experian, we have a unique ability to connect the power of traditional credit with alternative data, bringing a more holistic understanding of consumers and their behaviors. We are dedicated to leveraging our rich history in data and our expertise in technology to create the future of credit and ultimately bring financial power to everyone. The future of lending After spending two days with over 700 industry leaders from around the world, one thing is abundantly clear: much like the early days of the internet, today, we are at the cutting-edge of a technical revolution. Reflecting on my time at Reuters NEXT, I am particularly excited by the collective commitment to drive innovative, and smarter ways of working. We are only beginning to scratch the surface of how data and technology can transform financial services, and Experian is positioned to play a significant role. As we look to the future, I am excited about the ways we will create new opportunities for businesses and consumers alike.
We believe that financial literacy leads to empowerment. That is why Experian supports initiatives and partners with community organizations to deliver financial education. We also develop products and services that give more control to consumers over their credit profile and financial health. As part of advancing our mission of Financial Power to All®, we are proud to announce we are helping more than 5,000 Hispanic individuals nationwide by relieving $10 million dollars of consumer debt. To provide families with this boost, we joined forces with ForgiveCo, a Public Benefit Corporation (PBC), to administer the acquisition and cancellation of qualifying consumer debt for the selected recipients. Beneficiaries will also receive a one-year premium Experian membership for free that offers access to their Experian credit report in English and Spanish[i], FICO® Score[ii], bilingual educational content, and other financial resources. We hope this effort helps raise awareness of the importance of financial literacy for everyone, and that Experian has resources to help individuals reach their financial dreams. To amplify the message, we collaborated with multi-platinum, award-winning singer and songwriter Prince Royce and you can see his video here. In fact, we have been making a concerted effort the last several years to evolve our educational resources and products to better support all underserved communities. Some of our other activities include the creation of the B.A.L.L. for Life initiative that connects African American and Hispanic youth with financial education, supporting scholarships for Asian Americans through the Ascend organization, providing custom resources for Out & Equal and Born This Way Foundation for the LGBTQ+ community, supporting the NextGen Innovation Lab for Disability:IN, and sponsoring credit counseling for the military community with Operation HOPE. For resources in Spanish, Experian offers a credit e-book and consumers can access a full suite of articles at the Ask Experian blog here. [i] Only Experian credit reports are available in Spanish. All other services associated with an Experian membership are available in English only. English fluency is required for full access to Experian’s products. [ii] Credit score calculated based on FICO® Score 8 model. Your lender or insurer may use a different FICO® Score than FICO® Score 8, or another type of credit score altogether. Learn more.
Amid some of the financial challenges that underserved communities experience, members across the financial services community remain committed to championing initiatives and programs that drive greater financial inclusion. In fact, collaboration has led to the inclusion of non-debt related payment information on consumers’ credit profiles, as well as digital services that make it easier to manage money. These efforts have helped to broaden access to fair and affordable financial resources for more individuals. While significant progress has been made, there is still more work to do. However, some of the misconceptions and myths about the financial services community are hindering further advancement. Debunking these myths will accelerate progress by building trust between the financial services community and consumers. Person withdrawing money from ATM contactless Myth #1: “Financial institutions have no interest in underserved consumers or credit invisibles.” The truth is, banks and credit unions want to say “yes” to more prospective borrowers, including individuals and families from underserved communities. Beyond being the right thing to do, it’s an opportunity to potentially build lifelong relationships with a relatively untapped market. A show of good faith to communities who have largely been ignored by the financial system could lead to customer loyalty that may extend to their family and friends. That’s why participants across the financial ecosystem have been proponents of including expanded data sources—such as on-time telecom, utility and video streaming service payments—on to consumer credit reports, as well as exploring other Fair Credit Reporting Act (FCRA)-regulated data sources, including payment data on short-term small dollar loans and expanded public records data. Making this data more accessible to lenders provides a more comprehensive view of a consumer’s ability and willingness to repay outstanding debt—an actionable solution to extending credit to consumers without lenders taking on additional risk. Myth #2: “There is a lack of trustworthy financial education resources.” The financial services community and affiliated organizations recognize that empowering people with financial knowledge and skillset are critical to consumers’ financial success. In fact, banks and credit unions are partnering with nonprofits and non-governmental organizations to better understand the unique challenges and opportunities within specific communities and provide relevant tools and resources. For example, Experian’s B.A.L.L. for Life (Be A Legacy Leader) program, launched in partnership with the National Urban League, serves as a catalyst for engaging with Black communities and low-income youth through live events and digital financial education. Subject matter experts, professional athletes, celebrities, and other influencers share their experiences and expertise, covering topics such as banking, credit, financial management and investing. In addition, to help people improve their financial management, Experian partners with the National Foundation for Credit Counseling (NFCC). The NFCC connects consumers with certified financial counselors to help them address various pain points, including debt management, homeownership, student loans or small business cash flow issues. Myth #3: “Underserved communities have few opportunities to build credit and enter the mainstream financial system.” People from underserved communities, as well as younger consumers and recent immigrants are often excluded from the mainstream financial system because they lack an extensive credit history. Historically, it’s created a vicious cycle; in order to get credit, you have to have credit. Fortunately, there has been a sea change in innovative solutions to address the specific needs of these populations. These include new credit scoring models and microfinancing which provide financial services to individuals who may have been excluded from traditional banking systems. In addition, by incorporating expanded data sources, such as telecom, utility and residential rental payments onto credit reports, lenders have more visibility into consumers who may have been excluded by traditional credit scoring methods.These programs help individuals and families from underserved communities establish and build a credit history that could enable loans, or the ability to rent an apartment or open their dream business. An example is Experian Boost®, a free feature that allows Experian members to contribute their history of making utility, cellphone, insurance, residential rent and video streaming service payments directly into their Experian credit profile. By incorporating nontraditional credit data like paying utility bills on time, online banking transactions, rental payments and verified income data, more people can establish a credit profile that can potentially qualify them for a loan. More Inclusion, Fewer Myths It’s encouraging that community organizations and banks are beginning to see the economic and social benefits of aligning on financial literacy and inclusion. As more initiatives come online, underserved populations will be able to establish a better financial foundation. Then, we can declare the myths to be history.