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Today, I’m pleased to share another strong set of Half Year results for our FY20 fiscal year. We have achieved 7% organic revenue growth, with total H1 growth of 8% when you include acquisitions. The performance reflects the continued success of our core business new product introductions, as well as rollout of our innovation agenda and the investments we have made in globally scalable products. At Experian we are helping our clients get better at acquiring, onboarding and managing their customers’ needs in the digital world. To do this, they are increasingly relying on data, combined with sophisticated analytics and decisioning capabilities, areas in which we excel. In addition, to helping businesses, we are continuing to expand our direct relationships with consumers. Over 70 million people across our three major markets now benefit from free Experian memberships, accessing information and tools to enable them to take control of their finances. A great example of this is Experian Boost in North America, where we enable consumers to voluntarily add payment histories for things like their mobile phone and utility bills to their credit profile. It’s been a successful year to date, but there is plenty more to come. With a continued focus on people, technology and innovation, we are revolutionising the way our industry operates – using the power of data, software and analytics to improve outcomes for everyone. To find out more, click here.
Veterans are an integral part of our freedom but did you also know that veterans are very successful small business owners? Veteran businesses can have a material economic impact in the regions where they are located. According to our Experian Veterans Study released this week, veterans are running strong businesses and veteran owned businesses have been consistently less risky overall when compared to non-veteran owned businesses for the past five years. The report also found that veterans have better consumer and commercial credit scores than non-veteran businesses. Veterans tend to own and operate businesses in more labor-intensive industries such as construction, manufacturing, wholesale trade and transportation. This may indicate that veteran business owners take the discipline and skills learned during their service and apply them in business as they create successful companies and drive significant economic impact. They also employ more individuals, which may be a result of the industry types of businesses they own such as construction and manufacturing. Our study showed that veterans across the country, are mostly well educated on credit and how to use it to grow their business. That engagement is important as it can have a positive impact on the economy through the creation of jobs. Veteran businesses also tend to have a lower probability of failure, a lower risk of serious delinquency within the next year and produce higher annual sales. Another interesting finding was that veteran businesses have better longevity and sustainability as inferred from their commercial credit when compared to non-veteran owned businesses. Overall across industries, veterans have a 67% longer credit history. Veteran business owners also have deep credit files with approximately 77% more tradelines overall. From a capital standpoint, veterans on average have approximately 192% more capital funding than non-veteran business owners. Veteran owned businesses touch a large network of business relationships as they tend to hire more employees, have more business to business relationships and utilize more commercial credit. This network drives positive economic impact through things like payroll, taxes, and vendor and supplier engagement. Entrepreneurship among U.S. veterans has been in decline since the late 70’s, but veteran business owners remain an important credit-successful source of job creation for our economy. There are countless ways we can thank our veterans for their service, another way to thank them is by supporting their businesses in our communities. Credit suppliers should continue to promote and bolster veteran business owners as a means of putting money to work in low risk economically influential businesses.
Today (Nov. 11) Americans celebrate Veterans Day to honor all of the men and women who have served our country in uniform and to thank those who are currently serving around the world. We also take time to welcome a new generation of veterans home from war. We remember our Gold Star families who have endured the loss of a family member making the ultimate sacrifice in service to their country. More than 25 million veterans are now home in America. They are our friends, our families, and our loved ones. Far too many have endured the shock and pain of a combat deployment, some have become disabled, and many have made the ultimate sacrifice. All who have served have given up some of themselves as well as some of the best years of their lives. Experian is proud to embrace our veteran community and allow the flexibility for our coworkers who continue to serve. Our Military, Veterans And Patriots Employee Resource Group continues to be involved in many opportunities across our local communities from building wheelchair ramps for disabled veterans to participating in endurance challenges such as Carry the Load National Relay road march and the Murph Challenge. We recently launched Experian IDnotify, a credit and identity protection service, at no cost for those who are on active duty. We are committed to serving those who are serving us. If you have a family member or friend serving on active duty, please share the link. This Veterans Day let us take a moment to remember the sacrifices of the courageous men and women who heroically fought for the freedom and honor of America to make it the greatest nation on earth!
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.