Innovation

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.

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!  

Retailers are already starting to display their Christmas decorations in stores and it’s only early November. Some might think they are putting the cart ahead of the horse, but as I see this happening, I’m reminded of the quote by the New York Yankee’s Yogi Berra who famously said, “It gets late early out there.” It may never be too early to get ready for the next big thing, especially when what’s coming might set the course for years to come. As 2019 comes to an end and we prepare for the excitement and challenges of a new decade, the same can be true for all of us working in the lending and credit space, especially when it comes to how we will approach the use of alternative data in the next decade. Over the last year, alternative data has been a hot topic of discussion. In fact if you typed “alternative data and credit” into a Google search today you would get more than 200 million results. That’s a lot of conversations, but while nearly everyone seems to be talking about alternative data, we may not have a clear view of how alternative data will be used in the credit economy. How we approach the use of alternative data in the coming decade is going to be one of the most important decisions the lending industry makes. Inaction is not an option, and the time for testing new approaches is starting to run out – like Yogi said, it’s getting late early. And here’s why: millennials. We already know that millennials tend to make up a significant percentage of consumers with so-called “thin-file” credit reports. They “grew up” during the Great Recession and that has had a profound impact on their financial behavior. Unlike their parents, they tend to have only one or two credit cards, they keep a majority of their savings in cash and, in general, they distrust financial institutions. However, they currently account for more than 21 percent of discretionary spend in the U.S. economy, and that percentage is going to expand exponentially in the coming decade. The recession fundamentally changed how lending happens, resulting in more regulation and a snowball effect of other economic challenges. As a result, millennials must work harder to catch up financially and are putting off major life milestones that past generations have historically done earlier in life, such as home ownership. They more often choose to rent and, while they pay their bills, rent and other factors such as utility and phone bill payments are traditionally not calculated in credit scores, ultimately leaving this generation thin-filed or worse, credit invisible. This is not a sustainable scenario as we enter the next decade. One of the biggest market dynamics we can expect to see over the next decade is consumer control. Consumers, especially millennials, want to be in the driver’s seat of their “credit journey” and play an active role in improving their financial situations. We are seeing a greater openness to providing data, which in turn enables lenders to make more informed decisions. This change is disrupting the status quo and bringing new, innovative solutions to the table. At Experian we have been testing how advanced analytics and machine learning can help accelerate the use of alternative data in credit and lending decisions. And we continue to work to make the process of analyzing this data as simple as possible, making it available to all lenders in all verticals. To help credit invisible and thin-file consumers gain access to fair and affordable credit, we’ve also recently announced Experian Lift, a new suite of credit score products that combines exclusive traditional credit, alternative credit and trended data assets to create a more holistic picture of consumer creditworthiness that will be available to lenders in early 2020. This new Experian credit score may improve access to credit for more than 40 million credit invisibles. There are more than 100 million consumers who are restricted by the traditional scoring methods used today. Experian Lift is another step in our commitment to helping improve financial health of consumers everywhere and empowers lenders to identify consumers who may otherwise be excluded from the traditional credit ecosystem. This isn’t just a trend in the United States. Brazil is using positive data to help drive financial inclusion, as are other around the world. Like I said, it’s getting late early. Things are moving fast. Already we are seeing technology companies playing a bigger role in the push for alternative data – often powered by fintech startups. At the same time there also has been a strong uptick in tech companies entering the banking space. Have you signed up for your Apple credit card yet? It will take all of 15 seconds to apply, and that’s expected to continue over the next decade. All of this is changing how the lending and credit industry must approach decision making, while also creating real-time frictionless experiences that empower the consumer. We saw this with the launch of Experian Boost earlier this year. The results speak for themselves: hundreds of thousands of previously thin-filed consumers have seen their credit scores instantly increase. We have also empowered millions of consumers to get more control of their credit by using Experian Boost to contribute new, positive phone, cable and utility payment histories. Through Experian Boost, we’re empowering consumers to play an active role in building their credit histories. And, with Experian Lift, we’re empowering lenders to identify consumers who may otherwise be excluded from the traditional credit ecosystem. That’s game changing. Disruptions like Experian Boost and newly announced Experian Lift are going to define the coming decade in credit and lending. Our industry needs to be ready because while it may seem early, it’s actually getting late.

At Experian we’re committed to creating a culture of continuous innovation, from the way we work to the solutions we create. This commitment 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. Justin Hastings, former Chief Human Resources Officer for Experian North America, recently wrote an article for the Forbes Human Resources Council which highlights the importance of creating an inclusive environment in the workplace -- and demonstrates how innovation, developing new products and services, and providing value are all crucial to a companies’ success. The article, “Deliver Innovation By Embracing Inclusion,” explores what it means to build a culture of innovation, and how to ensure employees feel comfortable bringing their different backgrounds and ideas to their role every day. This is the type of innovative culture we’re building at Experian, which celebrates these differences and works to make employees feel valued and empowered to be innovative and productive. Another concept Justin discusses in this article is “innovating to grow.” It’s important to make employees feel connected to their organization and involved in the creation of new products and services. This has a tremendous positive impact with employees providing valuable feedback, and also creating advocacy among team members. For example when developing Experian Boost, which has helped millions of people raise their credit scores, we first beta-tested and shared the innovation internally and were able to garner valuable feedback and support from employees. As a result, we’ve seen tremendous success since the launch of Experian Boost earlier this year. At Experian we truly believe that inclusion is the key to creating a culture of innovation. You can read the full article here.  

At Experian, we know a credit score is the gatekeeper to better financial opportunities, which is why we are committed to developing products and services that support consumers in their financial journey. Six months ago, we hit a major milestone in bringing this commitment to life with the launch of Experian Boost. This innovative tool gave consumers the ability to add positive telecom and utility payment history directly to their credit file for an opportunity to instantly increase their credit scores for the first time. When we launched Experian Boost, we knew there were more than 100 million Americans who didn’t have fair access to credit because of a limited credit history or a subprime score. We also knew these consumers were often forced to pay higher interest rates and fees for financial services. Today, as we look at our Experian Boost results, we know we’re helping to change that. To date, for consumers who’ve used Experian Boost, we’ve seen: More than 11 million cumulative FICO Score points boosted FICO Scores increased for 2 out of 3 users with an average increase of more than 10 points Of those who boosted their credit scores, an average of 13% moved up a credit tier and of those in the “poor” credit tier, 24% moved to a “fair” tier Approximately 90% of “thin” file consumers who improve their credit scores saw an average increase of 19 points California, Texas and Florida rank 1-2-3 in number of consumers who have boosted their scores and total points boosted To say we’re pleased with the positive feedback we’ve received about Experian Boost to date would be an understatement, but we’re not surprised. For years, lenders have been seeking new means to identify creditworthy consumers. At the same time, consumers have been asking for more control of their data and credit where credit is due. This is exactly what we’re providing with Experian Boost. We’re helping to level the playing field and reward positive behavior and it’s not going unnoticed. Members of the credit counseling and advocacy community have reached out with excitement about Experian Boost. This solution is giving many of their clients a tangible way to impact their credit scores and improve their financial lives. Improving consumer financial health is a core part of our sense of purpose and we’re just getting started. We’ll continue to enhance Experian Boost and develop new products and solutions to improve financial access to for more consumers. To find out more about the Experian Boost, please visit www.experian.com/boost.  

Eva lets out a deeply frustrated exhale as she navigates moving boxes in her new apartment towards a nearby chair. She was just trying to update her address online and take care of some online banking money transfers. Now her accounts are frozen, and she has received a message to call the bank's fraud department. How could she be a fraudster? She was only guilty of taking a job and moving to Chicago. Maybe it's time to start thinking about changing banks... Meanwhile, in the bank's Texas-based fraud department, Robert spots Eva's case in his fraud investigations list. He noticed some suspicious activities and leaves Eva a voicemail, wanting to ask her a few questions to verify her identity or otherwise confirm this is in fact a fraudster infiltrating Eva's account. To prevent this potential risk of fraud from escalating, Robert decides it is better to freeze Eva's accounts while he confirms that it's actually Eva who is trying to change her address and not a fraudster using a stolen password. As both Robert and Eva work to connect and clear up this mix-up, Robert isn't getting to spend his time finding actual fraud and protecting his bank from any potential losses. Fraud hubs bring together advanced authentication technology and risk mitigation systems into a single platform As fraud attacks grow more frequent and complex, new technologies have sprung up to help meet the challenge, using a variety of tactics and tools to detect fraud. This is the case of device recognition, malware detection, identity verification, behavioural biometrics, and document verification, just to name a few. Regardless of their choice of tools and techniques, businesses across banking, retail, telecommunications, healthcare, and services industries need to know that the person interacting with them online is who they say they are. Combating fraud with layered tools strengthens businesses' defenses. But without an intelligent approach to connecting those tools, businesses catch too many good customers (like Eva) in their fraud-mitigation nets. By bringing together different types of fraud mitigation and risk management systems on a single technology platform, fraud hubs provide a solid solution to this challenge. How do fraud hubs like CrossCore help both businesses and consumers? CrossCore brings together into a single platform best-in-class tools and services such as advanced analytics, data consortium, device recognition, endpoint malware, and bot detection, behavioural biometrics, and document verification. Experian has also been named by Gartner as a representative vendor in online fraud detection in their April 2019 Market Guide for Online Fraud Detection, for its CrossCore solution.* Our flagship identity and fraud hub connects various functionalities together in a smart, orchestrated way, leveraging machine learning-driven decisioning to deliver a single fraud decision across multiple tools and enabling businesses worldwide to improve their fraud detection capabilities. CrossCore equips businesses with the most applicable tools to combat the specific fraud threats they face in their organisation. The 100 million cumulative transactions we have run on CrossCore to date show us that while one client may need additional protection against synthetic identity fraud, another may face frequent bot attacks in their account opening application, therefore requiring different approaches. It also means that if one tool can't validate a user's identity, another system can provide evidence that this is, in fact, a real customer. It's precisely the advanced analytics underpinning data modeling what gives our clients greater confidence in their identity and fraud decisions. But let's go back to Eva. In her case, CrossCore's fraud risk engine would have fired rules when she was making a change of address, as this action elevates the potential for fraud. But CrossCore's device intelligence would have shown that Eva was logging in from a known mobile phone. She was also using her phone to type information in a way that a normal user (non-fraudster) would do. In that case, CrossCore would have asked for a step-up authentication where Eva is prompted to take a selfie for biometric authentication. Now, Eva can continue to do her banking and access her accounts as she would normally do. This is a relief as Eva checks off more moving-related tasks and can enjoy her new life in a new city. Back in the bank's fraud investigation office, Robert and his colleagues would have never seen a case for their customer, Eva. Instead, they would have been able to focus their energies on high-risk cases, mitigating any emerging fraud threats. They would have also treated Eva as the good, valued customer she is and helped ensure her business in the long run. Whether it's an automotive client in South Africa, a healthcare organisation in the U.S., an insurance company in the UK, a fintech in Australia or a bank in Brazil, CrossCore is helping to solve one of the greatest challenges in decision analytics today: identifying good customers, while reducing fraud. Download the 2019 Global Identity & Fraud Report. *Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.  

As a member of the Forbes Technology Council, I get to publish articles on some of the latest technology trends and best practices. A recent piece, entitled “Are we comfortable with machines having the final say?”, deals with the sensitive issue of decisions being made by complex algorithms and how it impacts all areas of our lives. The article takes a closer look at high-impact decisions, such as loan determinations and health diagnosis, where the lack of understanding how algorithms may be used is becoming of increasing concern. In this context, it raises the importance of Explainable AI (XAI). This is a concept where technology and science are being used to explain how an algorithm or machine reaches a decision and tries to do this in a way that is transparent to users. However, this approach is still being tested and is only used in certain limited circumstances. As humans, we are taught to explain our decisions but we all know how difficult it is - and science has repeatedly shown how easily biased we are. XAI still has some way to go, but we can inspect, test and pick machines apart in a way we can never do with the human mind. So perhaps one day we will find a way to truly explain a machine’s decision. Whether that would make us comfortable with the machines having the final say, is still to be seen. Check out the full article here.

Phishing attacks have become more sophisticated and personal. We are all busy with life – work, family, commute, and dinner plans, along with keeping up on the latest news cycle. Virtually anyone could be inclined to quickly click on a link stating there is an issue with their recent order. But there's more to phishing attacks than just baiting businesses and consumers. During a recent #ExperianLive event, Mike Gross, Head of Global Identity and Fraud Product Innovation, discussed what businesses can do to protect themselves and their customers. ​ Q: You say that phishers would make good digital marketers. What do you mean by that? Mike: Like a great marketer, a good phisher understands people and their tendencies; they know how to get people to take action on their message. Take my most recent “almost phishing" incident. During the holidays, I received an email from a top online retailer stating there was a “problem with my recent order." I knew that any delay would jeopardize my holiday gift delivery. I was just about to click the “Login" button and then stopped. Thankfully, I double-checked the sender and it wasn't my favorite shopping site after all – just a really good fake email from a "phishy" sender. Like a digital marketer, phishers understand how to specifically target the things that people care about. This is why phishing attempts focused around the holidays, tax season, natural disasters, and hot news topics are often so successful. Q: Are phishers counting on the relationship and roles people have in an organization? Mike: Yes. That's the whole nature behind one of the biggest phishing attacks over the past several years – business email compromises. As a phisher, I'm sending you an email that looks like I work with you, say a vendor with a message that reads, “I changed the account that you use to pay me; please update your payment to this new account." If there is urgency behind it, it is taken seriously - for example, to avoid being late on paying a vendor. Human nature is being helpful and reacting, especially in this fast-paced, hyper-connected world – and that's why these scams continue to work. Q: What other phishing trends are you seeing? Mike: They've evolved over time. Take the simple phishing email; it's not so simple anymore. Nowadays, attacks are personalized to both the business and specific person – and phishers are taking advantage of automation and targeting tools so they can get the most reward for their effort. “Smishing" is variant of phishing focused on the phone channel, where attackers target victims with an SMS-based attack; you've probably seen them. You get a text and link from what you think is your friend saying something like “Check out this funny video!" But it isn't legitimate; it's a fraudster that is spoofing your friend's phone number. Then there is “vishing" which is a voice-based attack. This is where a fraudster pretends to be someone they're not (like a consumer's financial institution) and tries to obtain personal information or take over an existing account. Q: Wow! Phishing fraud is sophisticated. What has led to that? Mike: We've seen a tremendous leap in technology used. There is a great example of that last year with a U.K. bank. Their customers expect that if there is an out-of-place transaction, the bank will call them. In this particular vishing scheme, vishers used compromised accountholder usernames and passwords to log into customer accounts and set up money transfers. Knowing that this would alert accountholders to the attempted transfer using the SMS one-time passcode, phishers called legitimate customers, impersonated the bank, and stated that since the customer was a recent fraud attack victim, the bank needed confirmation that they were the accountholder. The vishers told customers they would receive a passcode. While the customer confirmed the code, the vishers submitted the fraudulent transfer. Q: What trends and techniques are you seeing? Mike: Two of the big trends we're seeing is around Artificial Intelligence (AI), machine learning, and SMS to find victims. A big part of phishing is what we call “spear phishing." This targets individuals with access to an organization's financial accounts or internal systems. Another term is “whaling" which targets a specific high-profile individual. The phishers are no longer just sending out blanket lottery scam and Nigerian prince emails with misspellings to millions of people. It's very focused – and phishers can easily do this using machine learning and AI. Q: Do you notice any seasonality, or spikes in phishing based on a certain time of year? Mike: The holidays are one because so many people go to their favorite shopping sites and buy items that are completely out of pattern based on what they usually do online. Another good example is tax season. We saw phishers impersonate top tax and financial management software providers, allowing consumers to “quickly and easily submit their tax forms online." What's worse is that phishers use the knowledge you have about phishing against you. Things like “How do you protect yourself? Click on this link to learn more" or “Click this link to download software and protect your devices." Also, fraudsters pay attention to the news, so whether it's a natural disaster or the cathedral fire that happened in Paris last April, phishers see those as opportunities to prey on victims simply trying to donate to a worthy cause. Q: What advice do you have for businesses and consumers to protect themselves against phishing attacks? Mike: My advice for businesses is to focus on technology and training. Strong technology solutions must be in place at all businesses to block phishing emails that are coming from suspicious sites – and for the most part, large organizations do a great job of that. Smaller businesses can also take advantage of technology solutions from their internet providers. Businesses can implement web blocking software for less secure Internet sites and filter what types of content employees can have access to on business devices. A lot of companies hire outside consultants to talk about the different types of phishing attacks with employees. These are helpful, but the key is to not allow training to become static because attackers evolve so quickly. Both businesses and consumers can use the email filtering option that is available through nearly every email provider. Don't click on any attachments that even remotely look suspicious - especially if they've been texted to you from someone you either don't know or the message appears out of character for someone you know. Q: What activities is your group taking on that will help businesses and their customers fight phishing attacks? Mike: There are several things we're doing that impact businesses and consumers offline and digitally. We help businesses recognize their customers and authenticate them, whether that's helping customers with a new bank account, enabling easy checkout at a favorite retailer app, or protecting account logins. 99% of people trying to access accounts are the legitimate account holder; it's that 1% though that causes a lot of friction for good customers. So, we're trying to make it easier for those consumers to quickly pass through all of the controls so authentication is easier. That translates into consumer loyalty for brands. Q: And that's what it's really all about? Mike: It is. We help businesses recognize their customers and also ensure that they are catching fraudsters on the back end. But we also strive to make that recognition or user experience as seamless as possible, with the right scrutiny for the risk level of that business. Mike Gross leads product innovation strategy for Global Identity and Fraud at Experian. Check out the entire podcast and video on how to protect your business from phishing here.

Across the globe, fraud risks continue to grow and businesses continue to invest more to combat potential threats. According to Experian's 2019 Global Fraud and Identity Report, which was published this past January, more than half of businesses across the world have increased their fraud management budget in the past twelve months. I recently had the opportunity to discuss this very topic with Forbes.com. In the article I raised the issue of whether businesses are investing in the right places. Our research shows that businesses may sometimes be investing in the wrong capabilities or point solutions that are materially less effective than if they were to take a layered approach to fraud detection. To provide consumers with both security and convenient online experiences, companies must have a complete understanding by looking at the problem holistically. By layering multiple approaches such as digital risk assessments leveraging device intelligence, behavioural biometrics together with more traditional measures – businesses can focus their resources where it matters most – providing a safe yet convenient online environment for their customers. The Forbes article also looked at the issue of trust. The anonymous nature of digital interactions makes creating trusted and meaningful relationships with digital consumers difficult. Unlike face-to-face interactions where people rely on visual cues, and relationships developed over time, businesses must find other ways to quickly recognize their customers online and deliver personalized experiences. At Experian, we believe trust is extremely important. In fact, the report found that nearly eighty percent of consumers say the more transparent a business is about the use of their information, the greater trust they have in that business. And fifty-six percent of businesses plan to invest more in transparency-inspired programs such as educating consumers, communicating terms more concisely and helping consumers be in control of their data. There is no doubt about it, businesses who want to continue to thrive and lead in the digital economy will find ways to offer their customers both security and convenience whilst building trust with their audience. Learn more the state of fraud and how trust plays a role by downloading our 2019 report: Consumer trust: Building meaningful relationships online.