Market Trends

So many insights and learnings to report after the first full day of 2017 Vision sessions. From the musings shared by tech engineer and pioneer Steve Wozniak, to a panel of technology thought leaders, to countless breakout sessions on a wide array of business topics … here’s a look at our top 10 from the day. A mortgage process for the digital age. At last. In his opening remarks, Experian President of Credit Services Alex Lintner asked the audience to imagine a world when applying for a mortgage simply required a few clicks or swipes. Instead of being sent home to collect a hundred pieces of paper to verify employment, income and assets, a consumer could click on a link and provide a few credentials to verify everything digitally. Finally, lenders can make this a reality, and soon it will be the only way consumers expect to go through the mortgage process. The global and U.S. economies are stable. In fact, they are strong. As Experian Vice President of Analytics Michele Raneri notes, “the fundamentals and technicals look really solid across the countries.” While many were worried a year ago that Brexit would turn the economy upside down, it appears everything is good. Consumer confidence is high. The Dow Jones Index is high. The U.S. unemployment rate is at 4.7%. Home prices are up year-over-year. While there has been a great deal of change in the world – politically and beyond – the economy is holding strong. The rise of the micropreneur. This term is not officially in the dictionary … but it will be. What is it? A micropreneur is a business with 0 to 4 employees bringing in no more than $200k in annual revenue. But the real story is that numbers show microbusiness are improving on many fronts when it comes to contribution to the economy and overall performance compared to other small businesses. Keep an eye on these budding business people. Fraud is running fierce. Synthetic identity losses are estimated in the hundreds of millions annually, with 50% year-over year growth. Criminals are now trying to use credit cleaners to get tradelines removed from used Synthetic IDs. Oh, and it is essential for businesses to ready themselves for “Dark Web” threats. Experts advise to harden your defenses (and play offense) to keep pace with the criminal underground. As soon as you think you’ve protected everything, the criminals will find a gap. The cloud is cool and so are APIs. A panel of thought leaders took to the main stage to discuss the latest trends in tech. Experian Global CIO Barry Libenson said, “The cloud has changed the way we deliver services to our customers and clients, making it seamless and elastic.” Combine that with API, and the goal is to ultimately make all Experian data available to its customers. Experian President of Decision Analytics Steve Platt added, “We are enabling you to tap into what you need, when you need it.” No need to “rip and replace” all your tech. Expect more regulation – and less. A panel of regulatory experts addressed the fast-changing regulatory environment. With the new Trump administration settling in, and calls for change to Dodd-Frank and the Consumer Financial Protection Bureau (CFPB), it’s too soon to tell what will unfold in 2017. CFPB Director Richard Cordray may be making a run for governor of Ohio, so he could be transitioning out sooner than the scheduled close of his July 2018 term. The auto market continues to cruise. Experian’s auto expert, Malinda Zabritski, revealed the latest and greatest stats pertaining to the auto market. A few numbers to blow your mind … U.S. passenger cars and light trucks surpassed 17 million units for the second consecutive year Most new vehicle buyers in the U.S. are 45 years of age or older Crossover and sport utility vehicles remain popular, accounting for 40% of the market in 2016 – this is also driving up finance payments since these vehicles are more expensive. There are signs the auto market is beginning to soften, but interest rates are still low, and leasing is hot. Defining alternative data. As more in the industry discuss the need for alternative data to decision, it often gets labeled as something radical. But in reality, alternative data should be simple. Experian Sr. Director of Government Affairs Liz Oesterle defined it as “getting more financial data in the system that is predicted, validated and can be disputed.” #DeathtoPasswords – could it be a reality? It’s no secret we live in a digital world where we are increasingly relying on apps and websites to manage our lives, but let’s throw out some numbers to quantify the shift. In 2013, the average U.S. consumer had 26 online accounts. By 2015, that number increased to 118 online accounts. By 2020, the average person will have 207 online accounts. When you think about this number, and the passwords associated with these accounts, it is clear a change needs to be made to managing our lives online. Experian Vice President David Britton addressed his session, introducing the concept of creating an “ultimate consumer identity profile,” where multi-source data will be brought together to identify someone. It’s coming, and all of us managing dozens of passwords can’t wait. “The Woz.” I guess you needed to be there, but let’s just say he was honest, opinionated and notes that while he loves tech, he loves it even more when it enables us to live in the “human world.” Too much wonderful content to share, but more to come tomorrow …

Knowing where e-commerce fraud takes place matters We recently hosted a Webinar with Mike Gross, Risk Strategy Director at Experian and  Julie Conroy, Research Director  at Aite Research Group, looking at the current state of card-not-present fraud, and what to prepare for in the coming year. Our biannual analysis of fraud attacks, served as a backdrop for the trends we’ve been seeing. I wanted to share some observations from the Webinar. Of course, if you prefer to hear it firsthand, you can download the archive recording here. I’ll start with the current landscape of card-not-present fraud. Julie shared 5 key trends her firm has identified regarding e-commerce fraud: Rising account take-over fraud Loyalty points targeted Increasingly global transactions Frustrating false declines Increasingly mobile consumers One particularly interesting note that Julie made was regarding consumer frustration levels towards forgotten passwords. While consumers are more frustrated when they’re locked out of access to their banking accounts (makes sense, it’s their money), forgotten passwords are more detrimental to e-commerce retailers since consumers are likely to go to another site. This equates to a frustrated consumer, and lost revenue for the business. Next, Mike went through the findings from our 2016 e-commerce fraud attack analysis. Fraud attack rates show the attempted fraudulent e-commerce transactions against the population of overall e-commerce orders. Overall, e-commerce attack rates spiked 33% in 2016. The biggest trends we saw included: Increased EMV adoption is driving a shift from counterfeit to card-not-present fraud 2B breached records disclosed in 2016, more than 3x any previous year Consumers reporting credit card fraud jumped from 15% in 2015 to over 32% in 2016 Attackers shifting locations slightly and international orders rely on freight forwarders 10 states saw an increase of over 100% in fraudulent orders Over 70 of the top 100 riskiest postal codes were not in last year’s list So, what will 2017 bring? Be prepared for more attacks, more global rings, more losses for businesses, and the emergence of IoT fraud. Businesses need to anticipate an increase of fraud over time and to be prepared. The value of employing a multi-layered approach to fraud prevention especially when it comes to authenticating consumers to validate transactions cannot be understated. By looking at all the points of the customer journey, businesses can better protect themselves from fraud, while maintaining a good consumer experience. Most importantly, having the right fraud solution in place can help businesses prevent losses both in dollars and reputation.

The U.S. Senate declared April to be Financial Literacy Month back in 2004. Fast forward 13 years and one has to question if we’ve moved the needle on educating Americans about personal finance and money management. There is still no national standard or common curriculum to teach our kids the basics in schools, and only five states require high school students to take one semester of personal finance in order to graduate. I read an interesting stat years back that high school seniors spend more time shopping for their prom attire than they do researching financial education options for college. No wonder there is sticker shock post-graduation when those first student loan bills coming. The lack of investment shows. In a 2016 Mintel study, very few consumers gave themselves high grades for their knowledge of personal finance, and the situation was worse among women, with twice as many assigning themselves a “C” as an “A.” Having worked in the financial services industry for more than a decade, I can say with certainty I’m a bit of a personal finance geek. Learning about the latest products and economic shifts has been rolled into my job, and I’ve sadly seen the consequences of what happens to consumers when they make poor financial decisions. Slumping credit scores. Delinquent payments. Repossessed vehicles. Hard times. The good news? There are plenty of resources to help Americans learn. The challenge? Finding the right ways to capture mind share via the right mediums at the right time. There is obviously a benefit to the consumer to be more financially literate, but financial institutions benefit as well when consumers are money smart. Individuals who understand financial products and how they can use them to achieve their goals are more likely to purchase those products throughout their financial lives. So how can financial institutions help close the financial literacy gap? Make online education and resources readily available. Research shows more consumers would like to get information about finance through the use of online resources rather than seminars. This preference is likely due to the fact that online resources can be accessed on one’s own schedule and gives the user more control over the topics s/he wants to explore. Provide parents resources to launch smart money talks with their kids. Study after study reveals parents are one of the most powerful teachers in their kids’ lives – and this includes providing an education and modeling strong money management skills. Consider adding online education for kids – or partnering with a provider who has already built a money app for youngsters. Additionally, educate parents about when it might be time to help a child establish their first savings account. Advise them on ways to finance college. Talk about co-signing on vehicles. Explain the power of saving. Train up your next wave of customers and they will likely remain loyal to you. Offer one-on-one credit education sessions. A high-touch solution is sometimes the perfect opportunity to grow a customer in the right financial direction. Perhaps a low credit score prevents an individual from securing an ideal interest rate for an auto or home loan. Each person’s financial situation is different, and a one-on-one session with a trained agent can help them understand what is specifically contributing to their low score. With a few insights, a customer can determine if they need to pay down some debt, address a few late payments, or reduce their number of credit lines. Knowledge is power, and consumers will appreciate this service and personable touch. --- Lenders have a vested interest to close the financial literacy gap, and while they can’t solve for everything, they can certainly make a difference with some basic steps and investments. If nothing else, April seems like a perfect time to evaluate what you’re doing and what resolutions you can make for the year ahead. Just as every saved penny counts, so does every effort to educate Americans on manning their money more effectively.

Pay your bills on time, have cash set aside for emergencies, and invest your money for the future. These are the rules financial pros say people should follow if they want to build wealth. Straightforward advice, but for many people these milestones can seem out of reach. A recent financial literacy study by Mintel shows that many Americans are struggling with money management and lack confidence in their financial knowledge, with just 19 percent of respondents giving themselves an “A” grade on financial knowledge. The survey and other reports released recently shed light on how well Americans are handling their money. Here are some of the prevailing trends: Young people are struggling. The Mintel study revealed less than 30 percent of Americans have an emergency savings account that equals 3-6 months of household income. Of that total number, 19 percent of iGeneration has saved for a rainy day, followed by Millennials (20 percent), Gen Xers (28 percent), Baby Boomers (37 percent) and World War II/Swing Generation (40 percent). Not surprisingly, people who make more money save a bigger percentage of their pay. People in the bottom 90 percent of the income scale save close to none of their pay each year, while those in the top 10 percent save close to 15 percent. Most are not planning for the future. The majority of people are not doing everything they can to prepare for retirement, including meeting with a financial adviser to devise a plan, researching Social Security or even talking to friends or family about planning. Even more, 21 percent of Americans are “not at all confident” they will be able to reach their financial goals. Parents plan more than non-parents. People with children have many demands on their money, and as a result think ahead and follow budgets, contribute to retirement accounts and hire a financial adviser to help them create plans and budgets. Consumers who don’t have children don’t have as many competing demands, but aren’t as sensible about following a financial plan. In Mintel’s study, just 10 percent of non-parents have a written financial plan and 26 percent contribute regularly to a retirement account. Most people have a budget. Nearly one in three Americans prepare a detailed written or computerized household budget each month that tracks their income and expenses, but a large majority do not. Those with at least some college education, conservatives, Republicans, independents, and those making $75,000 a year or more are slightly more likely to prepare a detailed household budget than are their counterparts, according to Gallup. The good news is, the majority of Americans are open to more financial education. April—which is Financial Literacy Month—is a great time to look at education efforts for your customers. Financial literacy won’t change overnight, nor in a year. Yet initiatives taken in schools, workplaces, and in communities add up. What are you doing for your customers to build financial literacy?

Newest technology doesn’t mean best when it comes to stopping fraud I recently attended the Merchant Risk Conference in Las Vegas, which brings together online merchants and industry vendors including payment service providers and fraud detection solution providers. The conference continues to grow year to year – similar to the fraud and risk challenges within the industry. In fact, we just released analysis, that we’ve seen fraud rates spike to 33% in the past year. This year, the exhibit hall was full of new names on the scene – evidence that there is a growing market for controlling risk and fraud in the e-commerce space. I heard from a few merchants at the conference that there were some “cool” new technologies out to help combat fraud. Things like machine learning, selfies and other two-factor authentication tools were all discussed as the latest in the fight against fraud. The problem is, many of these “cool” new technologies aren’t yet efficient enough at identifying and stopping fraud. Cool, yes.  Effective, no.  Sure, you can ask your customer to take a selfie and send it to you for facial recognition scanning. But, can you imagine your mother-in-law trying to manage this process? Machine Learning, while very promising, still has some room to grow in truly identifying fraud while minimizing the false positives. Many of these “anomaly detection” systems look for just that – anomalies. The problem is, we’re fighting motivated and creative fraudsters who are experts at avoiding detection and can beat anomaly detection. I do not doubt that you can stop fraud if you introduce some of these new technologies. The problem is, at what cost? The trick is stopping fraud with efficiency – to stop the fraud and not disrupt the customer experience. Companies, now more than ever, are competing based on customer experience. Adding any amount of friction to the buying process puts your revenue at risk. Consider these tips when evaluating and deploying fraud detection solutions for your online business. Evaluate solutions based on all metrics What is the fraud detection rate? What impact will it have on approvals? What is the false positive rate and impact on investigations? Does the attack rate decline after implementing the solution? Is the process detectable by fraudsters? What friction is introduced to the process? Use all available data at your disposal to make a decision Does the consumer exist? Can we validate the person’s identity? Is the web-session and user-entered data consistent with this consumer? Step up authentication but limit customer friction Is the technology appropriate for your audience (i.e. a selfie, text-messaging, document verification, etc...)? Are you using jargon in your process? In the end, any solution can stop 100% of the fraud – but at what cost. It’s a balance - a balance between detection and friction. Think about customer friction and the impact on customer satisfaction and revenue.

Experian recently acquired a minority stake in Finicity, a leading financial data aggregator enabling innovation in the FinTech industry through its modern RESTful API and Finicity Aggregation Platform. Steve Smith—chairman, CEO and co-founder of Finicity—has a passion and experience in developing innovative and disruptive technology, products and services that leads to efficiency for markets and, ultimately, improvements for consumers. Here he shares his thoughts about disruptive technology in the lending space and its benefits to lenders and consumers. Q: Finicity has said its objective is to take a loan application approval from weeks to minutes using its technology. That sounds pretty great, but how is that possible? How does this play out behind the scenes? A: Well, we’re living in a world where we, as consumers, expect very user-friendly experiences and we expect things to happen at digital speeds. The loan process is no exception. To deliver the experience consumers are expecting requires us to leverage the technology trends of digitization, mobility and big data. Finicity plays a foundational role by leveraging thousands of digital connections across financial institutions to aggregate consumer-permissioned account data. Once we have this data, we’re able to deliver real-time insights into an individual's financial health. This financial health assessment includes income and assets, two critical components to the loan approval process. All that’s required is the borrower to permission use of the data. Once that’s done, we’re able to gather all appropriate data across multiple accounts, rapidly analyze it and send a verification report to the lender. No papers. No multiple requests. No questions on the validity of the data. All done in minutes, not weeks. Q: This is very disruptive technology. What are the benefits for lenders? Consumers? A: Well, as we discussed, one of the major benefits is the speed to a loan. Furthermore, this reduces cost for the lender by maximizing loan officer’s time, while also freeing up loan capital as they can move through loans more quickly with a higher quality assessment. Another benefit for lenders is reduced fraud. Our information on income and assets is coming from real-time bank validated information. This eliminates the possibility of altered data. For consumers, it’s a dramatically simplified process. No need to chase down multiple documents. There are virtually no second requests for information, which we often see in the process. And they’re always in control of their information. All in all, it’s a dramatically better experience for both the lender and the borrower. Q: What sets this solution apart from others in the market? A: A few things set Finicity apart in delivering the quality of insights required. First, we are an industry leader in the number of financial institutions we connect with, ensuring broader access for more customers. Second, 95 percent of our integrations provide access to formatted data, something that’s critical to credit decisioning solutions. In these cases, we’re not screen scraping. This enhances our ability to collect bank validated transactions; we provide the financial institution transaction ID. This provides assurance of data quality. Finally, is our ability to categorize and analyze the transactions. This allows us to identify income streams and assets. Through this process, we’re also able to flag unusual transactions, like large deposits, that may skew actual assets. Q: The future of financial technology is still evolving. What lies ahead? A: We’re very excited about the future of financial technology and the impact that aggregation will have. Whether it’s financial management, digital payments or credit decisioning, real-time data will improve the experiences and the outcomes. As we’re talking about lending, this is one of the spaces that could see significant disruption. Our ability to generate a richer view of an individual’s or organization’s financial health will more accurately determine their ability to repay a loan. This will be a great benefit for those that have thin file or no credit history. We see a world where suitability for a loan will be driven by their actual financial life independent of their use of credit. One of the largest markets in the US is millennials. However, for consumers under 30, two-thirds have subprime or non-prime credit scores and one-third of millennials don't have any credit history. This is just one group underserved because legacy models don’t leverage the full extent of data available. Q: Is there anything else you can tell us about Finicity and its role changing customer experiences across financial service? A: For us, it all comes down to one thing: enabling individuals and organizations to have the information and insights they need to make smarter financial decisions. The data is there. We’re helping to unlock the potential of that data by working with innovative partners like Experian. To learn more about Experian and Finicity's account aggregation solutions, visit www.experian.com/finicity

Direct mail is not dead, but it's 2017. Financial services companies need to acknowledge there might be other ways to deliver credit offers and capture consumer eyeballs. There are multiple screens competing for our attention, including one of the originals - TV. Advertising and TV have been married forever, but addressable TV allows marketers to target on a much more sophisticated level. Welcome to credit marketing in the digital age. To help financial services companies understand the addressable TV channel, Experian marketing expert Brienna Pinnow answered the following questions in a short interview. What is addressable TV? Addressable TV is an amazing 1-to-1 direct marketing capability. To put it simply, addressable TV is the ability for an advertiser to deliver a TV ad to a specific household. From a consumer perspective, that means even if you and your next door neighbor are watching the latest episode of The Voice, you may see an ad for a mini-van while your neighbor sees an ad for upcoming one-day sale from their favorite retailer. With addressable TV, brands can define their target audience based on 1st, 2nd or 3rd party data (like Experian’s). With the help of satellite and cable companies, they can deliver a personalized, measurable experience. This is an exciting departure from the way that TV advertising has been planned and targeted for nearly 70 years. Instead of focusing on the program, marketers can now focus on the person. Addressable TV makes reaching a precise audience – the same way you would with a direct mail piece or an email – a marketing reality.  How long have marketers been leveraging addressable TV? Experian has been an pivotal player in the development of the addressable TV space. Since the first addressable TV trials back in 2004, nearly 13 years ago, Experian has provided the audience targeting data and privacy-compliant matching capabilities that make addressable TV possible. The past 3 years, however, have demonstrated unprecedented, hockey-stick growth in addressable TV. In 2016 alone, the volume of addressable campaigns doubled from the previous year accounting for nearly $300 million spend.  That trajectory remains the same in 2017 and beyond. So why are we seeing this growth now? Here are a few reasons addressable TV is continuing to grow… Scale: Millions of households can now be targeted using addressable technology, and the footprint continues to grow with smart TVs and additional cable operators. Data: As organizations put data at the heart of their business, addressable TV enables them to infuse their most important customer information into the targeting. Education: Agencies, data providers, and TV providers have invested time educating brands on the process and power of addressable TV. And now, advertisers are becoming more experienced at making this a consistent part of their marketing plan. Accountability: You’ll be hard pressed to find a marketer that doesn’t have to demonstrate ROI on their marketing campaigns. The measurement capabilities that addressable TV provides adds a layer of accountability and insight that was not previously possible. Technology: Experian has developed an audience management platform, the Audience Engine, which makes addressable TV possible in a matter of clicks. In the past year alone, our platform has distributed over 1,800 audiences for addressable advertising campaigns. What types of companies have been utilizing addressable TV? Have you seen many financial services companies test this channel? The early adopters of addressable TV were primarily automotive advertisers. Compared to other verticals, auto advertisers still spend the largest proportion of their budgets across TV. For that reason, they know it’s a necessity to see if their dollars are actually driving sales for their big-ticket items. Addressable TV solves that problem for auto advertisers. In a DIRECTV campaign leveraging Experian’s automotive data for audience targeting and post-campaign sales reporting, one major auto OEM saw a 26.2%  lift in sales for the advertised model compared to the control group. In the past few years, Experian has worked closely with advertisers across verticals – from retail to travel to finance – to launch addressable campaigns. Financial services clients particularly find Experian’s financial related segments, such as income or net worth, to be accurate and powerful in creating qualified target audiences that improve campaign performance. I’ve read that millennials are abandoning cable and TV providers in favor of services like Hulu and Netflix. Does this mean the market for addressable TV will shrink in the coming years? There is a segment of consumers who are abandoning traditional cable services. However, this doesn’t mean they are abandoning content. In fact, content consumption is at an all-time high with offerings from Roku, Hulu, Netflix, Sling TV, CBS, and beyond. All this shift in behavior means is that the definition of TV is becoming more fluid. “TV” doesn’t have to be a big screen sitting in your living room; it can be a laptop on a red-eye flight. And from a marketing perspective, the concept of addressable, 1-to-1 targeting is already moving into some of these products and services. The footprint of addressable TV will only continue to rise as consumers stay connected to the content they love. How can companies measure the success of utilizing addressable TV as a channel? Not only does addressable TV provide laser-targeted ad delivery, but it also opens up measurement capabilities that were never possible for TV advertisers in the past. Traditionally, TV audience measurement has focused simply on eyeballs and not revenue impact, with little insight into how TV advertising converts into sales. The primary source for audience measurement in the TV world has been program ratings and expensive brand studies. With addressable TV, that story is changing. With companies that collect second-by-second viewership data linked to households, marketers now have the ability to tie this data back to their online and offline sales. Experian is pivotal in making closed-loop TV reporting possible. As a data and matching safe-haven, we link together the viewing information from the target audience with the sales data provided by the advertiser. The end result is a privacy compliant report that clearly demonstrates the impact of the campaign on the target audience. Did the targeted audience visit a bank location? Email customer service? Sign up for a new account? Spend a certain amount? These are all questions our TV attribution reporting answers for clients. If a company wants to begin marketing in addressable TV, what is required in terms of set-up? Addressable TV may sound new, exciting or even complex. But it doesn’t have to be. Getting started is as simple as defining the target audience. Decide whether you would like to leverage your own CRM data, a custom model, third-party data or a combination of these data sources. If you’re still not sure where to start, ask yourself a very simple question, “Who am I sending a direct mail piece or email to in the next month?” There’s your audience. Better yet, you will be amplifying your message, reaching the customer with a consistent message and meeting them wherever they are. After you’ve determined who you want to target, a matching partner like Experian can work with you to show you the reach of your audience across TV providers. You’ll finalize your budget, creative and media plan while Experian distributes your audience to the selected media destinations. Before you know it, your campaign will be live, and reaching your target audience whether they’re watching Shark Tank or Sharknado. When the campaign wraps, you’ll be on your way to measuring results like never before. Are there any additional trends you see emerging in the addressable TV space? The future of addressable TV is related to both the targeting and measurement capabilities. More advertisers are working with Experian, for example, to launch coordinated campaigns. That doesn’t just mean launching a digital campaign and TV campaign at the same time. It really means targeting the same exact people for the digital and TV campaign. We like to consider this a "surround sound" approach where the customer or prospect experiences a consistent message across channels. As for measurement, Experian is working closely with advertisers to explore the power of mobile data. Recently, Experian partnered with Ninth Decimal and DIRECTV to incorporate mobile location data into the post-campaign measurement process for Toyota.  The results proved a 19% lift in dealership visits for those exposed to the campaign. This is an exciting development because this approach can translate well for any other advertiser who wants to measure metrics like location visitation. If you’d like to learn more, check out our Addressable TV whitepaper.

Good job, check. Shared interests, check. Chemistry, check. He seems like a perfect 10. Both of you enjoy your first date and while getting ready for the second, you dare to imagine that turning into another and another, and possibly happily ever after. Then one decidedly unromantic question comes to mind: What is his credit score? Reviewing a potential partner’s credit score and report is important to many singles who are looking for lasting love. According to Bankrate.com, 42 percent of Millennials said that knowing someone’s credit score would affect their desire to date them, slightly more than 40 percent of Gen Xers and 41 percent of Baby Boomers. They may be on to something. Research shows that knowing someone’s credit history and sense of financial responsibility could save people time – and potential heartache. A UCLA study about money and love shows a very strong link between high credit scores and long-lasting relationships. People with drastically different credit scores may experience more financial stress down the road, placing a burden on a relationship. An Experian report reveals 60 percent of people believe it’s important for their future spouse to have a good credit score, and 25 percent of people from the UCLA study were willing to leave a partner with poor credit before marriage so they aren’t held back. While that three-digit number doesn't tell a person’s whole financial story, it can reveal financial habits that could impact your life. Banks are wary of making loans to borrowers with tarnished scores, typically 660 and below. A low score could quash dreams of buying a home, and result in steep interest rates, up to 29 percent, for credit cards, car financing and other unsecured loans. A mid-range credit score can also hurt an application for an apartment and drive up the cost of mobile phone plans and auto insurance. Eight states have passed laws limiting employers’ ability to use credit checks when assessing job candidates, yet 13 percent of employers surveyed by the Society of Human Resource Management performed credit checks on all job applicants. Talking spending styles and revealing credit scores sooner rather than later in a relationship isn’t necessarily comfortable. But it may help you decide whether you have compatible financial outlooks and practices.

There has been a lot of discussion around the auto loan market regarding delinquency rates in the past year. It is a topic Experian is asked about frequently from clients in regard to what particular economic market behaviors mean for the overall consumer lending. To understand this issue more clearly, I ran a deeper dive on the data from our Q3 Experian-Oliver Wyman Market Intelligence report. There are some interesting, and perhaps concerning, trends in the data for automotive loans and leases. Want Insights on the latest consumer credit trends? Register for our 2016 year-end review webinar. Register now Auto loan delinquency rates are at their highest mark since 2008 The findings indicate that the performance of the most recent loans opened from Q4 2015 are now performing as poorly as the loans from the credit crisis back in 2008. In fact, you have to go back to 2008, and in some cases, 2007, to see loan default rates as poorly as the Q4 2015 auto loans originated in the last year. Below we have the auto loan vintage performance for loans originated in Q4 of the last 8 years — going back to 2008. The lines on the chart each represent 60 days late or more (60+) delinquency rates over specific time period grades. For these charts, I analyzed the first three, six, and nine months from the loan origination date. As you can see, the rates of delinquency have steadily increased in recent years, with the increase in the Q4 2015 loans opened equaling or even surpassing 2008 levels. The above chart reflects all credit grades, so one might think that this change is a result of the change in the credit origination mix. By digging a little deeper into the data, we can control for the VantageScore® credit score at the loan opening, or origination date, and review performance by looking at two different score segments separately. Is there concern for Superprime and Prime consumers auto loans? In the chart immediately below, the same analysis as above has been conducted, but only for trades originated by Superprime and Prime consumers at the time of origination. You can see that although the trend is not as pronounced as when all grades are considered, even these tiers of consumers are showing significant increases in their 60+ days past due (DPD) rates in recent vintages. Separately, looking at the Subprime and Deep Subprime segments, you can really see the dramatic changes that have occurred in the performance of recent auto vintages. Holding score segments constant, the data indicates a rate of credit deterioration in the Subprime and Deep Subprime segments that we have not observed since at least 2008 — back to when we started tracking this data. What’s concerning here is not only the absolute values of the vintage delinquencies but also the trend, which is moving upward for all three time periods. Where does the risk fall? Now that we see the evidence of the deterioration of credit performance across the credit spectrum, one might ask – who is bearing the risk in these recent vintages? Taking a closer look at the chart below, you can see the significant increase in the volumes of loans across lender type, but particularly interesting to me is the increase in 2016 for the Captive Auto lenders and Credit Unions, who are hitting highs in their lending volumes in recent quarters. If the above trend holds and the trajectory continues, this suggests exposure issues for those lenders with higher volumes in recent months. What does this mean for your business? Speak to Experian's global consulting practice to learn more. Learn more Just to be thorough, let's continue and look at the relative amounts of loans going to the different score segments by each of the lender types. Comparing the lender type and the score segments (below) reveals that finance lenders have a greater than average exposure to the Subprime and Deep Subprime segments. To summarize, although auto lending has recently been viewed as a segment where loan performance is good, relative to historical levels, I believe, the above data signals a striking change in that perspective. Recent loan performance has weakened to a point where comparing the 2008 vintage with 2015 vintage, one might not be able to distinguish between the two. // <![CDATA[ var elems={'winWidth':window.innerWidth,'winTol':600,'rotTol':800,'hgtTol':1500}, updRes=function(){var xAxislabelSize=function(){if(elems.winWidth<elems.winTol){return'12px'}else{return'14px'}},xAxislabelRotation=function(){if(elems.winWidth<elems.rotTol){return-90}else{return 0}},seriesLabelSize=function(){if(elems.winWidth<elems.winTol){return'12px'}else{return'16px'}},legenLabelSize=function(){if(elems.winWidth<elems.winTol){return'12px'}else{return'16px'}},chartHeight=function(){if(elems.winWidth<elems.rotTol){return 600}else{return 400}},labelInside=function(){if(elems.winWidth<elems.rotTol){return false}else{return true}},chartStack=function(){if(elems.winWidth<elems.rotTol){return null}else{return'normal'}};this.sourceRef=function(){return['Source: Experian.com']};this.seriesColor=function(){return['#982881','#0d6eb6','#26478D','#d72b80','#575756','#b02383']};this.chartFontFamily=function(){return'"Roboto",Helvetica,Arial,sans-serif'};this.xAxislabelSize=function(){return xAxislabelSize()};this.xAxislabelOverflow=function(){return'none'};this.xAxislabelRotation=function(){return xAxislabelRotation()};this.seriesLabelSize=function(){return seriesLabelSize()};this.legenLabelSize=function(){return legenLabelSize()};this.chartHeight=function(){return chartHeight()};this.labelInside=function(){return labelInside()};this.chartStack=function(){return chartStack()}}(), updY=function(chart){var points=chart.series[0].points;for(var i=0;i elems.rotTol){if(thisWidth<20){var y=points[i].dataLabel.y;y-=10;points[i].dataLabel.css({color:'#575756'}).attr({y:y-thisWidth})}}}},updX=function(chart){var points=chart.series[0].points;for(var i=0;i elems.rotTol){if(thisWidth

Big changes for the new year 2017 is expected to bring some big changes. But what do those changes mean for the financial services space? Here are 3 trends and twists Experian expects to occur over the next 12 months: Trump and the Republican-controlled Congress will move forward with a deregulatory agenda. Recognizing and scoring more previously invisible consumers through alternative data sources will be emphasized. Personalized credit offers delivered via multiple digital channels in a sequenced, trackable manner. What are your predictions for 2017? Only time will tell, but we’re certain that regulations and advancements in digital will be huuuge. >>More 2017 trends

The holidays can be a stressful time for consumers — and an important time for lenders to anticipate the aftermath of big credit card spending. According to our recent study with Edelman Intelligence: 56% of respondents said holiday shopping puts a strain on their finances. 43% said the stress of holiday shopping makes it difficult to enjoy the season. With the holiday shopping season over, those hefty credit card statements are coming soon. Now is the time for lenders to prepare for the January and February consolidations. Want to know more?

Experian shares five trends and twists coming over the next 12 months, that could push new boundaries and in many cases improve the customer experience as it pertains to the world of credit and finance.

You know what I love getting in the mail? Holiday cards, magazines, the occasional picturesque catalog. What I don’t open? Credit card offers, invitations to apply for loans and other financial advertisements. Sorry lenders, but these generally go straight into my shredder. Your well-intentioned efforts were a waste in postage, printing and fulfillment costs, and I’m guessing my mail consumption habits are likely shared by millions of other Americans. I’m a cusper, straddling the X and Millennial generations, and it’s no secret people like me have grown accustomed to living on our mobile devices, shopping online and managing our financial lives digitally. While many retailers have wised up to the trends and shifted marketing dollars heavily into the digital space, the financial services industry has been slow to follow. I’m hoping 2017 will be the year they adapt, because solutions are emerging to help lenders deliver firm offers of credit via email, display, retargeting and even social media platforms. There are multiple reasons to make the shift to digital credit marketing. It’s trackable. The beauty of digital marketing is that it can be tracked much more efficiently over direct mail efforts. You can see if offer emails are opened, if banners are clicked, if forms are completed and how quickly all of this takes place. In short, there are more touchpoints to measure and track, and more insights made available to help with marketing and offer optimization. It’s efficient. A solid digital campaign means you now have more flexibility. And once those assets start to deploy and you begin tracking the results, you can additionally optimize on the fly. Subject line not getting the open rate you want? Test a new one. Banners not getting clicked? Change the creative. A portion of your target audience not responding? Capture that feedback sooner rather than later, and strategize again. With direct mail, the lag time is long. With digital, the intelligence gathering begins immediately. It’s what many consumers want. They are spending 25% of their time on mobile devices. Research has found they check their phones and average 46 times per day. They are bouncing from screen to screen, engaging on desktops, tablets, smartphones, wearables and smart TVs. If you want to capture the eyeballs and mindshare of consumers, financial marketers must embrace the delivery of digital offers. Consumer behaviors have evolved, so must lenders. Sure, there is still a place for direct mail efforts, but it would be wasteful to not embrace the world of digital credit marketing and find the right balance between offline and online. It’s a digital world. It’s time financial institutions join the masses and communicate accordingly.

Regardless of personal political affiliation or opinion, the presidential election is over, and the focus has shifted from debate to the impact the new administration will have on the regulatory landscape for banks. While many questions remain regarding the policy direction of a Trump administration, one thing is near certain: change is on the horizon. While on the campaign trail, Trump took aim at banking regulation: “Dodd-Frank has made it impossible for bankers to function. It makes it very hard for bankers to loan money…for people with businesses to create jobs. And that has to stop.” And in his first post-election interview, Trump outlined named financial industry deregulation to allow “banks to lend again” as a priority. Before Election Day, Experian surveyed members of the financial community about their thoughts on regulatory affairs. An overwhelming majority—85 percent—believed the election outcome would impact the current environment. Most surveyed are also feeling the weight of financial regulations established by the Obama administration in the wake of the severe financial crisis of 2008. Five out of six respondents feel current regulations have placed an undue burden on financial institutions. Three-quarters believe the regulations reduce the availability of credit. And less than half believe the regulations are positive for consumers. According to our survey, complying with Dodd-Frank and other regulations has a financial impact for most, with 76 percent realizing a significant increase in spend since 2008. Personnel and technology spend top the list, with an increase of 78 percent and 76 percent, respectively. Top regulations that require the most resources to ensure compliance: the Dodd-Frank Act (70 percent), Fair Lending Act (55), Bank Secrecy Act/Anti-Money Laundering (47) and Fair Credit Reporting Act (42). Specifically, the Dodd Frank and TILA-RESPA Integrated Disclosure were the two most frequently mentioned regulations requiring additional investment, followed by the Military Lending Act and Bank Secrecy Act/Anti-Money Laundering. What lies ahead? It’s difficult to determine how the Trump administration will tackle banking regulations and policy, but change is in the air.

Technology sharing can unlock a more effective strategy in fighting fraud. Experian’s multi-layered and risk-based approach to fraud management is discussed as many businesses are learning that combining data and technology to strengthen their fraud risk strategies can help reduce losses. Evolving fraud schemes, changes in regulatory requirements and the advent of new digital initiatives make it difficult for businesses to manage all of the tools needed to keep up with the relentless pace of change.