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If you asked me how I’d feel about taking a personal finance class in school when I was growing up in a small town near St. Louis, Missouri, I probably would’ve told you it sounds better than trigonometry and chemistry on the list of classes I had to take. They weren’t my best subjects. Now that I’m a few years older, and I hope a bit wiser, I can promise you I would answer that question a lot differently if asked today. I now know there are some instances in life where it makes sense to learn by making mistakes, but money is not one of them. Like many people, I had my first experience with credit and money management when I took out a student loan. I was the first person in my family to go to college, so we didn't know what we were getting ourselves into. Unfortunately, I learned the impact of poor borrowing habits and high interest rates the hard way – for many, many years. Learning about money, and especially credit, by making mistakes can lead to long term damage to your financial health, which is one of the many reasons I’m passionate about financial education in schools today. Effective financial education programs will help young adults be more successful older adults. We know that if a young person has a basic understanding of how credit works, they tend to be less likely to overextend their credit card use. It’s one of the reasons Experian was the first in its industry to invest in youth financial education, as a founding partner of the Jump$tart Coalition for Personal Financial Literacy two decades ago. Over that time, we’ve continued to support the organization. Eleven years ago, we launched the Jump$tart National Educator Conference that offers teachers around the country tools and information about personal finance to take back to their classrooms. Last year, more than 350 teachers attended the conference. This year alone they will teach more than 48,000 students across the country about personal finance. It's been a very powerful partnership. While we’ve made a lot of progress in educating our youth about personal finance, there is still a lot of work to do. As of this year, 21 states across the U.S. require high school students to take a personal finance course, an increase of 4 states since 2018, according to a recently released report from the Council for Economic Education. This report also reinforced the idea that students who receive financial education borrow more sensibly. They tend to look at low-cost over high-cost financing options and they are more likely to apply for aid, receive grants and accept federal loans, which all tend to be lower interest forms of borrowing. Applying for grants or low-cost financing options could have made a serious impact on my financial health as a young adult. Considering student loan debt has now reached $1.56 trillion, it’s time we all start paying more attention to the positive impact financial education can have on our young people as well as our economy. Not only is financial education in schools the right thing to do, we know it’s something students want. We recently surveyed a group of more than 500 high school graduates to learn what they want when it comes to finance and credit education. Some key findings include: 49% of Gen Z consumers surveyed said they found financial topics to be somewhat interesting or very interesting—and 11% of them even said they loved learning about them. Only about one-third—36%—of Gen Z consumers said they had taken a class on a financial topic, and among that group, many of them still had looming financial questions. Of the 64% that had never taken a financial education class, 43% reported wanting to learn to save money, 38% wanted to learn how to manage their expenses, and another 36% said they wanted to take a class that taught them how to file their taxes. A large majority—76%—of Gen Z consumers said that they thought their high school should have offered a class on managing finances. So, what can we do to help ensure our young people grow up to be financially healthy adults? If you’re a parent and want to find out if your children’s school offers financial education, head to https://checkyourschool.org/. If your school is not on the list, learn how you can become engaged in this initiative by working with JumpStart. In the meantime, you can also find free, educational resources on our website to help teach your children about personal finance and credit. We have prepared a simple lesson plan, presentations and online brochures that are free to download, and you can find answers to commonly asked questions about personal finance, credit, fraud, identity theft and more on our Ask Experian blog and our weekly Twitter Credit Chats.
At Experian, we value a workplace culture based on inclusion, innovation and the diversity of perspectives that each of our employees bring to work every day. In recognition of this commitment, we are extremely proud to be named to Fortune’s “100 Best Companies to Work for in 2020” list. Each year, Fortune recognizes the 100 best companies in the U.S. to work for and examines company programs as well as opportunities for innovation, among other factors. To determine the list, Great Place to Work oversaw the country’s largest ongoing annual workforce study. The organization analyzed the feedback from 4.3 million employees in the U.S. to more than 60 survey questions describing the extent to which their organization creates a “Great Place to Work For All.” The ranking accounted for the experiences of all employees including women, people of color, members of the LGBT community, older team members, and disabled employees. At Experian we aspire to have a truly diverse and inclusive workplace that fosters innovation, and have created a variety of different programs to achieve this goal. As part of this, we celebrate our diversity through a range of fun, engaging and informative cultural events, including those supported by our Employee Resource Groups (ERGs). Employees can also join one of our many social clubs to share interests with colleagues, or volunteer with nonprofit organizations to give back to the communities in which Experian operates. Our culture of inclusion is truly something to celebrate, and that’s because of every single person who makes up the Experian family and brings our brand to life every day. All of this is supported by our culture of continuous innovation; from the way we work to the solutions we create. This commitment to innovation has helped us create a workplace where our teams across the world have a desire to help change the lives of millions for the better. The diversity of thinking across Experian, and the way in which we harness it, helps fuel our innovation and ultimately our ongoing success as a business. This makes our work relevant to our consumers and clients, adding more value in their own lives – creating a better tomorrow for them. As a result, we continue to have a positive impact on consumers, businesses and the economy. We do this with our products, technology, and innovation — from finding breakthroughs around better utilizing data, to identifying ways we can make access to credit faster and simpler for millions around the world. At Experian, we are dedicated to making our workplace more just than a business. It’s a community that supports all our employees and promotes a culture where people can be comfortable being their authentic selves. And because of that commitment, we’re proud to join the ranks of Fortune’s “100 Best Companies to Work For in 2020.”
To quote The Rime of the Ancient Mariner, ‘water, water everywhere, / nor any drop to drink.’ I think the same can be true of data. While organizations have more data than ever before, very few are able to capitalize on this resource and actually leverage it for insight. There is no question on the value of data. It is viewed as a key competitive advantage, and in some instances, a strategic financial asset. However, translating data into meaningful insight is a completely different task to storing and managing it from a regulatory perspective. We see many companies investing in all sorts of data initiatives, like analytics, machine learning automation, data governance, customer insight, etc. Yet, most companies still report they are not sufficiently data driven. Each year we conduct a global study of data usage and data management practices. This year, we surveyed over 1,000 practitioners on how they want to leverage data. The research dug into some of the obstacles they face and why so few are able to leverage data for insight. We found three key areas emerge. First, there is a large degree of distrust in information. The average professional looking at data does not understand how that data got there, when it is useful, and what state it is in. While data can lead to increased agility and better decision making, a significant level of distrust often causes leaders to fall back on making decisions by gut instinct rather than by informed data insight. In fact, we have consistently seen over the past several years that people believe almost a third of their data is inaccurate. Second, we are seeing a rising level of data debt. Data debt is a lot like technical debt. You have a set of data assets that aren’t necessarily fit for purpose or have a high degree of inaccuracy. Unless you take the time to fix that information and govern it properly, you are always going to have a suboptimal data operation. In turn, poor quality means many companies are not fully seeing the ROI or expected benefit from some of the investments they are making. Finally, there is a data skills shortage. This doesn’t just mean data professionals, like data analysts, chief data officers (CDOs), and data scientists. There is also a general lack of understanding around data within the broader business. We see a growing number of companies talking about enabling wider usage of data across the business and wanting to do more with data insight, but very few people across organizations are truly data literate. Our survey results indicated a tide changing where now most companies report that data literacy needs to be a core competency of employees over the next five years. To generate the level of insight needed to fully leverage data as a valuable asset, organizations have to start to tackle issues around inaccuracy, trust, and certainly data skills. Without fixing these components, organizations will continue to be surrounded by all of this useful data that doesn’t actually provide them with what they need. To learn more about these challenges and our new study, please download the report at https://www.edq.com/resources/data-management-whitepapers/2020-Global-data-management-research/.
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.