Market Trends

False declines are often unwarranted and occur due to lack of customer information Have you ever been shopping online, excited to get your hands on the latest tech gadget, only to be hit with the all-too-common disappointment of a credit card decline? Whom did you blame? The merchant? The issuer? The card associations? The answer is probably all of the above. False declines like the situation described above provoke an onslaught of consumer emotions ranging from shock and dismay to frustration and anger. Of course, consumers aren’t the only ones negatively impacted by false declines. Many times card issuers lose their coveted “top of wallet” position and/or retailers lose revenue when customers abandon the purchase altogether. False declines are unpleasant for everyone, yet consumers struggle with this problem every day — and fraud controls are only getting tighter. How does the industry mutually resolve this growing issue? The first step is to understand why it occurs. Most false declines happen when the merchant or issuer mistakenly declines a legitimate transaction due to perceived high risk. This misperception is usually the result of the merchant or issuer not having enough information to verify the authenticity of the cardholder confidently. For example, the consumer may be a first-time customer or the purchase may be a departure from the card holder’s normal pattern of transaction activity. Research shows that lack of a holistic view and no cross-industry transaction visibility result in approximately $40 billion of e-commerce declines annually. Think about this for a minute — $40 billion in preventable lost revenue due to lack of information. Merchants’ customer information is often limited to their first-hand information and experience with consumers. To solve this growing problem, Experian® developed TrustInsight™, a real-time engine to establish trusted online relationships over time among consumers, merchants and issuers. It works by anonymously leveraging transactional information that merchants and financial institutions already have about consumers to create a crowd-sourced TrustScore™. This score allows first-time online customers to get a VIP experience rather than a brand-damaging decline. Another common challenge for merchants is measuring the scope of the false declines problem. Proactively contacting consumers, directly capturing feedback and quickly verifying transaction details to recoup potential lost sales are best practices, but merchants are often in the dark as to how many good customers are being turned away. The solution — often involving substantial operational expense — is to hold higher-risk orders for manual review rather than outright declining them. With average industry review rates nearing 30 percent of all online orders (according to the latest CyberSource Annual Fraud Benchmark Report: A Balancing Act), this growing level of review is not sustainable. This is where industry collaboration via TrustInsight™ offers such compelling value. TrustInsight can reduce the review population significantly by leveraging consumers’ transactions across the network to establish trust between individuals and their devices to automate more approvals. Thankfully, the industry is taking note. There is a groundswell of focus on the issue of false declines and their impact on good customers. Traditional, operations-heavy approaches are no longer sufficient. A trust-based industry-consortium approach is essential to enhance visibility, recognize consumers and their devices holistically, and ensure that consumers are impacted only when a real threat is present.

James W. Paulsen, Chief Investment Strategist for Wells Capital Management, kicked off the second day of Experian’s Vision 2016, sharing his perspective on the state of the economy and what the future holds for consumers and businesses alike. Paulsen joked this has been “the most successful, disappointing recovery we’ve ever had.” While media and lenders project fear for a coming recession, Paulsen stated it is important to note we are in the 8th year of recovery in the U.S., the third longest in U.S. history, with all signs pointing to this recovery extending for years to come. Based on his indicators – leverage, restored household strength, housing, capital spending and better global growth – there is still capacity to grow. He places recession risk at 20 to 25 percent – and only quotes those numbers due the length of the recovery thus far. “What is the fascination with crisis policies when there is no crisis,” asks Paulsen. “I think we have a good chance of being in the longest recovery in U.S. history.” Other noteworthy topics of the day: Fraud prevention Fraud prevention continues to be a hot topic at this year’s conference. Whether it’s looking at current fraud challenges, such as call-center fraud, or looking to future-proof an organization’s fraud prevention techniques, the need for flexible and innovative strategies is clear. With fraudsters being quick, and regularly ahead of the technology fighting them, the need to easily implement new tools is fundamental for you to protect your businesses and customers. More on Regulatory The Military Lending Act has been enhanced over the past year to strengthen protections for military consumers, and lenders must be ready to meet updated regulations by fall 2016. With 1.46 million active personnel in the U.S., all lenders are working to update processes and documentation associated with how they serve this audience. Alternative Data What is it? How can it be used? And most importantly, can this data predict a consumer’s credit worthiness? Experian is an advocate for getting more entities to report different types of credit data including utility payments, mobile phone data, rental payments and cable payments. Additionally, alternative data can be sourced from prepaid data, liquid assets, full file public records, DDA data, bill payment, check cashing, education data, payroll data and subscription data. Collectively, lenders desire to assess someone’s stability, ability to pay and willingness to repay. If alternative data can answer those questions, it should be considered in order to score more of the U.S. population. Financial Health The Center for Financial Services Innovation revealed insights into the state of American’s financial health. According to a study they conducted, 57 percent of Americans are not financially healthy, which equates to about 138 million people. As they continue to place more metrics around defining financial health, the center has landed on four components: how people plan, spend, save and borrow. And if you think income is a primary factor, think again. One-third of Americans making more than $60k a year are not healthy, while one-third making less than $60k a year are healthy. --- Final Vision 2016 breakouts, as well as a keynote from entertainer Jay Leno, will be delivered on Wednesday.

It’s impossible to capture all of the insights and learnings of 36 breakout sessions and several keynote addresses in one post, but let’s summarize a few of the highlights from the first day of Vision 2016. 1. Who better to speak about the state of our country, specifically some of the threats we are facing than Leon Panetta, former Secretary of Defense and Director of the CIA. While we are at a critical crossroads in the United States, there is room for optimism and his hope that we can be an America in Renaissance. 2. Alex Lintner, Experian President of Consumer Information Services, conveyed how the consumer world has evolved, in large part due to technology: 67 percent of consumers made purchases across multiple channels in the last six months. More than 88M U.S. consumers use their smartphone to do some form of banking. 68 percent of Millennials believe within five years the way we access money will be totally different. 3. Peter Renton of Lend Academy spoke on the future of Online Marketplace Lending, revealing: Banks are recognizing that this industry provides them with a great opportunity and many are partnering with Online Marketplace Lenders to enter the space. Millennials are not the largest consumers in this space today, but they will be in the future. Sustained growth will be key for this industry. The largest platforms have everything they need in place to endure – even through an economic downturn.In other words, Online Marketplace Lenders are here to stay. 4. Tom King, Experian’s Chief Information Security Officer, addressed the crowds on how the world of information security is growing increasingly complex. There are 1.9 million records compromised every day, and sadly that number is expected to rise. What can businesses do?  “We need to make it easier to make the bad guys go somewhere else,” says King. 5. Look at how the housing market has changed from just a few years ago: Inventory continues to be extraordinarily lean. Why? New home building continues to run at recession levels. And, 8.5 percent of homeowners are still underwater on their mortgage, preventing them from placing it on the market. In the world of single-family home originations, 2016 projections show that there will be more purchases, less refinancing and less volume. We may see further growth in HELOC’s. With a dwindling number of mortgages benefiting from refinancing, and with rising interest rates, a HELOC may potentially be the cheapest and easiest way to tap equity. 6. As organizations balance business needs with increasing fraud threats, the important thing to remember is that the customer experience will trump everything else. Top fraud threats in 2015 included: Card Not Present (CNP) First Party Fraud/Synthetic ID Application Fraud Mobile Payment/Deposit Fraud Cross-Channel FraudSo what do the experts believe is essential to fraud prevention in the future? Big Data with smart analytics. 7. The need for Identity Relationship Management can be seen by the dichotomy of “99 percent of companies think having a clear picture of their customers is important for their business; yet only 24 percent actually think they achieve this ideal.” Connecting identities throughout the customer lifecycle is critical to bridging this gap. 8. New technologies continue to bring new challenges to fraud prevention. We’ve seen that post-EMV fraud is moving “upstream” as fraudsters: Apply for new credit cards using stolen ID’s. Provision stolen cards into mobile wallet. Gain access to accounts to make purchases.Then, fraudsters are open to use these new cards everywhere. 9. Several speakers addressed the ever-changing regulatory environment. The Telephone Consumer Protection Act (TCPA) litigation is up 30 percent since the last year. Regulators are increasingly taking notice of Online Marketplace Lenders. It’s critical to consider regulatory requirements when building risk models and implementing business policies. 10. Hispanics and Millennials are a force to be reckoned with, so pay attention: Millennials will be 81 million strong by 2036, and Hispanics are projected to be 133 million strong by 2050. Significant factors for home purchase likelihood for both groups include VantageScore® credit score, age, student debt, credit card debt, auto loans, income, marital status and housing prices. More great insights from Vision coming your way tomorrow!          

Television had its Twilight Zone, the Emmy-winning anthology series featuring tales rich in fantasy, morality and irony. Today's economy has its own Twilight Zone. It lies between the legitimate economy with its weekly paychecks, W2 forms and 401(K) plans, and the underground economy with its unreported, all-cash transactions. Call them "The Unbanked." Call them "The Credit Invisibles." Whatever label you choose, these men and women -- who number in the millions - want access to credit, but can’t be easily accessed with traditional credit models, and they lack a smooth on-ramp to grow in the credit universe. How a Worker Becomes "Credit Invisible" America's "credit invisibles" tend to be minimum- or low-wage workers. They exist in virtually every industry, although they tend to be concentrated in agriculture, food service, construction and manufacturing. Some work full-time for a single employer, while others work part-time or on a gig-by-gig basis. The FDIC estimates some 10 million Americans currently fit the definition of unbanked, while an additional 28.4 million are underbanked. Instead of traditional banks, this population tends to use the services of private check-cashing services and payday lenders for their financial services, which is not always advantageous for the consumer with these services’ sizeable expenses and transaction fees. The Payroll Card Alternative Recognizing the perils inherent in the current system, a number of companies have developed solutions to help those individuals who cannot and will not establish traditional checking and savings accounts. SOLE® Financial, a financial services company headquartered in Portland, Ore, offers the SOLE Visa® Payroll Card, allowing employees to enjoy the benefits associated with direct deposit checking accounts without the costs and restrictions traditional banks often impose. "From a payroll standpoint, paycards function just like bank accounts,” explained Taylor Ellsworth, content marketing manager for SOLE Financial. “The transfer happens on the exact same timeline as the paychecks that employers deposit to traditional bank accounts.” Additionally, any bill from a vendor that accepts electronic payments - either online or with a card number over the phone - can accept payments from the SOLE paycard. "For bills like rent, which sometimes can only be paid with a check or money order, cardholders can log in and use the bill pay option for $1 per bill to have a check issued to their landlord -- or any other recipient -- from their account,” said Ellsworth. Helping Credit Invisibles Build Personal Credit Files Another way companies are helping credit invisibles become visible is by considering non-retail payments, such as payments to utility companies, as part of a personal payment history. Traditionally payments to gas, electric, telephone, cable and other household service providers are generally not being reported unless the consumer is severely delinquent and thus on-time payment history is not included in credit scores. Experian recently investigated how including payments to energy utilities could affect men and women with "thin-file" credit portfolios. The subprime and nonprime consumers in the study received the greatest positive score impact, with 95 percent of subprime consumers and 75 percent of nonprime consumers experiencing a positive score change. A resounding 82 percent of subprime consumers in the study received a positive score impact of 11 points or more. The average VantageScore® credit score change for all participants was an increase of 28 points. Experian concluded, "positive energy-utility reporting presents an opportunity for energy companies to play a key role in helping their consumers build credit history. The ability for many of these consumers to become credit-scoreable, build a more robust credit file and potentially migrate to a better risk segment simply by paying their energy bills on time each month is powerful and represents an opportunity for positive change that should be not overlooked." Conclusion With income inequality growing, there is an increasing pressure to find ways to improve the prospects of the tens of millions of Americans who live on the farthest edges of the American economy. New technologies and ways of looking at credit can offer the unbanked and the under-banked ways to improve their economic situation and move closer to the mainstream. By bringing these millions into the light, those who issue and evaluate credit will create millions of new customers who can, in turn, add new energy to the American economy.

The numbers are staggering: more than $1.2 trillion in outstanding student loan debt, 40 million borrowers, and an average balance of $29,000. In fact, a recent Experian study revealed consumer debt is decreasing in every major consumer lending category with the exception of student loans. Student loans have increased by 84 percent since the recession (from 2008 to 2014) and surpassed home equity loans, home-equity lines of credit (HELOC), credit card debt and automotive debt. While the student loan issue has been looming for years, the magnitude is now taking center stage with each 2016 presidential candidate weighing in on solutions. In an effort to provide deeper insights into the student debt universe, Experian’s Kelley Motley and Holly Deason will share a new analysis at Vision 2016 in a session titled, Get educated – a study in the student lending marketplace. They will be joined by Gordon Cameron, executive vice president of PNC. Among the findings they will share include a snapshot of consumers with student loans from three time periods – Pre-recession (December 2007), Recession (December 2009) and Post-Recession/Current (December 2015). At each of these time periods, they will reveal trends around outstanding debt, delinquencies, originations, and also a compare how consumers with student loans rank when it comes to Vantage Score distribution. Finally, their data will explore opportunities for consolidation, showing segments that might be best suited for  receiving offers from financial institutions based on Vantage Score, debt and total number of trades. Click here to learn more about Vision 2016 and the session on student loans.

Best practices and innovative strategies for banking to millennials Before we begin, a disclaimer: Banking to millennials is a long-term strategy. Many marketing campaigns will not drive immediate returns on investment, but they lay the groundwork for a lifelong, mutually beneficial relationship. Now, some good news. Millennials are just beginning their financial journey — getting ready to embark on a life that includes homes, cars, families and small businesses. Connecting with this generation today can bode well for a financial institution’s success tomorrow. With a strong relationship in place, millennials will turn to that organization when they are ready to fund their life events. Below are some key strategies that will help financial institutions build and continue banking to millennials. Keeping up with technological expectations Millennials were raised in the digital age, and therefore mobile devices are the hubs of their digital lives. They expect real-time access to their accounts for peer-to-peer payments, deposits, paying bills and customer service. Not meeting their digital expectations could drive them to seek another — more technology-oriented — financial institution that embraces CNP, mobile apps and social media. Authentic and targeted marketing messaging Millennials expect targeted messaging. Generic, catchall offers of the past fall flat for them. They want banks to figure out who they are, what they need and how they can access it with the tap of a finger. Additionally, messages to millennials should have a genuine voice that advises and supports them in achieving their goals. Many millennials are interested in taking control of their financial lives but are not prepared to do so. This is a great opportunity for financial institutions to introduce themselves. Connect millennials to something bigger Earning a millennial’s trust is one of the greatest challenges for financial institutions. While money is important, millennials are motivated by becoming a part of something bigger than themselves. Institutions can connect with millennials by creating opportunities to give back or pay-it-forward. Examples include encouraging growth in underbanked markets, such as lending circles, peer-to-peer lending and small-business lending, or partnering with local universities and nonprofits. Strategic segmentation Millennials are the most diverse population group — yet strategic segmentation is still possible. One ideal segment is recent college graduates. As a group, they yield a much different profile than their counterparts without degrees. These ambitious millennials are more likely to focus on life choices that require major financial considerations, such as getting married, having children, buying their first home and earning higher salaries. These life events will require a diverse set of financial services products, and millennials will turn to the institution that has gained their trust first. Millennials are one of the most important markets as financial institutions look to invest in future, long-term growth. Financial institutions need to show millennials that they’re committed to listening and to laying the groundwork for relationships that will help them achieve their dreams. Remember, though, reaching this audience is not about an immediate return on investment but rather a long-term strategy to develop trust and brand preference. Begin the relationship now to reap the rewards later. For more insights and innovative strategies on how to best market and develop a strong relationship with millennials, download our recent white paper, Building lasting relationships with millennials.

April is Financial Literacy Month, a special window of time dedicated to educating Americans about money management. But as stats and studies reveal, it might be wise to spend every month shining some attention on financial education, an area so many struggle to understand. Obviously no one wants to talk money day in and day out. It can be complicated, make us feel bad and serve as a source of stress. But as the saying goes, information is power. Over the years, Experian has worked to understand the country’s state of credit. Which states sport higher scores? Which states struggle? How do people pay down their debts? And what are the triggers for when accounts trail into collections? In the consumer space especially, we’ve surveyed individuals about how they feel about their own credit as it pertains to a number of different variables and life stages. Home Buying: 34% of future home buyers say their credit might hurt their ability to purchase a home 45% of future home buyers delayed a purchase to improve their credit to get better interest rates Holiday Shopping: 10% of consumers and 18% of millennials say holiday shopping has negatively affected their credit score Newlywed Life: 60% believe it is important for their future spouse to have a good credit score 39% say their spouse’s credit score or their credit score has been a source of stress in their marriage 35% of newlyweds believe they are “very knowledgeable” regarding credit scores and reports And let’s not forget Millennials: 71% of millennials believe they are knowledgeable when it comes to credit, yet: millennials overestimate their credit score by 29 points 32% do not know their credit score 61% check their credit report less than every 3 months 57% feel like the odds are stacked against them when it comes to finances and 59% feel like they are “going it alone” when it comes to finances The message is clear. Finances are simply a part of life, but can obviously serve as a source of stress. Establishing and growing credit often starts at a young age, and runs through every major life event. Historically, high school is where the bulk of financial literacy programs have targeted their efforts. But even older adults, who have arguably learned something about personal finances by managing their own, could stand a refresher on topics ranging from refinancing to retirement to reverse mortgages. Over the next month, Experian will touch on several timely financial education topics, including highlighting the top credit questions asked, the future of financial education in the social media space, investing in retirement, ways to teach your kids about money, and how to find a legit credit counselor. But Experian explores financial education topics weekly too, committed to providing consistent resources to both businesses and consumers via weekly tweet chats, blog posts and live discussions on periscope. There is always an opportunity to learn more about finances. Throughout the year, different issues pop up, and milestone moments mean we need to brush up on the latest ways to spend and save. It’s nice so many financial institutions make a special point to highlight financial education in April, but hopefully consumers and lenders alike continue to dedicate time to this important topic every month. Managing money is a lifelong task, so tips and insights are always welcome. Right? Check out the wealth of resources and pass it on. For a complete picture of consumer credit trends from Experian's database of over 230 million consumers, purchase the Experian Market Intelligence Brief.

It’s the “Battle of the Sexes” credit edition. Who sports higher scores, less debt and more on-time payments? According to Experian’s latest analysis, women take the credit title. Thank you very much. The report analyzed multiple categories including credit scores, average debt, number of open credit cards, utilization ratios, mortgage amounts and mortgage delinquencies of men and women in the United States. Results revealed: Women’s average credit score of 675 compared to men’s score of 670 Women have 3.7 percent less average debt than men Women have 23.5 percent more open credit cards Women and men have the same revolving utilization ratio of 29.9 percent Women’s average mortgage loan amount is 7.9 percent less than men’s Women have a lower incidence of late mortgage payments by 8.1 percent “There were several gaps between men and women in this study, including the five-point credit score lead that the women hold,” said Michele Raneri, Experian’s Vice President of Analytics and New Business Development. “Even with more credit cards, women have fewer overall debts and are managing to pay those debts on time.” The report also takes a look at the vehicle preferences of men and women and how those choices play into their overall credit and financial health. Below are the top-line results: Women were more likely to purchase a more functional, utilitarian vehicle, while men tended to lean toward sports cars and trucks The top three vehicle segments men purchased in 2015 were mid-size pickup trucks, large pickup trucks and standard specialty cars. In fact, they were 1.37 times more likely to purchase a mid-sized pickup truck than the general population The top three vehicle segments for women were small crossover-utility vehicles, mid-size sports-utility vehicles and compact crossover-utility vehicles. Women were 1.40 times more likely to purchase the small crossover-utility vehicle than the general population Experian conducted a similar study, comparing men and women on various credit attributes in 2013. At that time, women also scored higher than men in the credit score category - holding steady with a 675 VantageScore® credit score compared to the men’s 674 VantageScore® credit score, but the gap has widened, with the men’s score further lowering to 670. While men’s scores have dropped since 2013, the overall financial health for both sexes is strong. Most notably, the mortgage 60-plus delinquency rate has dropped significantly. In the 2013 pull, men were tracking at 5.7 percent and women were 5.3 percent. Today, those numbers have dropped to .86 percent for men and .79 percent for women. What a difference a few years has made in regards to the recovering housing market. Time will tell if the country’s state of credit will continue to trend higher, as indicated in the 2015 annual report, or if the buzz of potential recession and an election year will reverse the positive trend. As for now, the women once again claim bragging rights as it pertains to credit. Analysis methodology The analysis is based on a statistically relevant, sampling of depersonalized data of Experian’s consumer credit database from December 2015. Gender information was obtained from Experian Marketing Services.

Bankcard origination volumes reached $97.5 billion in Q4 2015, the highest level on record since Q3 2008 and an increase of 22% over the same quarter in 2014. The 60–89-days-past-due bankcard delinquency rate came in at .53% for Q4 2015 — significantly lower than the 1.22% delinquency rate back in Q3 2008. The increase in bankcard originations combined with lower delinquencies points to a positive credit environment. Lenders should stay abreast of the latest bankcard trends in order to adjust lending strategies and capitalize on areas of opportunity. >> Key steps to designing a profitable bankcard campaign

2015 data shows where billing and shipping e-commerce fraud attacks occur in the United States Experian e-commerce fraud attacks and rankings now available Does knowing where fraud takes place matter? With more than 13 million fraud victims in 2015,[1] assessing where fraud occurs is an important layer of verification when performing real-time risk assessments for e-commerce. Experian® analyzed millions of e-commerce transactions from 2015 data to identify fraud-attack rates across the United States for both shipping and billing locations. View the Experian map to see 2015 e-commerce attack rates for all states and download the top 100 ZIP CodeTMrankings. “Fraud follows the path of least resistance. With more shipping and billing options available to create a better customer experience, criminals attempt to exploit any added convenience,” said Adam Fingersh, Experian general manager and senior vice president of Fraud & Identity Solutions. “E-commerce fraud is not confined to larger cities since fraudsters can ship items anywhere. With the switch to chip enabled credit card transactions, and possible growth of card-not-present fraud, our fraud solutions help online businesses monitor their riskiest locations to prevent losses both in dollars and reputation in the near term.” For ease of interpretation, billing states are associated with fraud victims (the address of the purchaser) and shipping states are associated with fraudsters (the address where purchased goods are sent). According to the 2015 e-commerce attack rate data: Florida is the overall riskiest state for billing fraud, followed by Delaware; Washington, D.C.; Oregon and California. Delaware is the overall riskiest state for shipping fraud, followed by Oregon, Florida, California and Nevada. Eudora, Kan., has the overall riskiest billing ZIP Code (66025). The next two riskiest ZIPTM codes are located in Miami, Fla. (33178) and Boston, Mass. (02210). South El Monte, Calif., has the overall riskiest shipping ZIP Code (91733). The next four riskiest shipping ZIP codes are all located in Miami. Overall, five of the top 10 riskiest shipping ZIP codes are located in Miami. Defiance, Ohio, has the least risky shipping ZIP Code (43512). The majority of U.S. states are at or below the average attack rate threshold for both shipping and billing fraud, with only seven states — Florida, Oregon, Delaware, California, New York, Georgia and Nevada — and Puerto Rico ranking higher than average. This indicates that attackers are targeting consumers equally in the higher-risk states while leveraging addresses from both higher- and lower-risk states to ship and receive fraudulent merchandise. Many of the higher-risk states are located near a large port-of-entry city, including Miami; Portland, Ore.; and Washington, D.C., perhaps allowing criminals to move stolen goods more effectively. All three cities are ranked among the riskiest cities for both measures of fraud attacks. Neighboring proximity to higher-risk states does not appear to correlate to any additional risk — Pennsylvania and Rhode Island are ranked as two of the lower-risk states for both shipping and billing fraud. Other lower-risk states include Wyoming, South Dakota and West Virginia. Experian analyzed millions of e-commerce transactions to calculate the e-commerce attack rates using “bad transactions” in relation to the total number of transactions for the 2015 calendar year.   View the Experian map to see 2015 e-commerce attack rates for all states and download the top 100 ZIP Code rankings.       [1]According to the February 2016 Javelin study 2016 Identity Fraud: Fraud Hits an Inflection Point.

Over the next several years, the large number of home equity lines of credit (also known as HELOCs) originated during the boom period of 2005 to 2008, will begin approaching their end of draw periods. Upon entering the repayment period, these 10-year interest-only loans will become amortized to cover both principal and interest, resulting in payment shock for many borrowers. HELOCs representing $265 billion will reach their end of draw between 2015 and 2018. Now is the time for lenders to be proactive and manage this risk effectively. Lenders with HELOC portfolios aren’t the only ones affected by HELOC end of draw. Non-HELOC lenders also are at risk when consumers are faced with payment shock. Experian analysis shows that it is an issue of consumer liquidity — consumers who reach HELOC end of draw are more likely to become delinquent not only on their HELOC, but on other types of debt as well. If consumers were 90 days past due on their HELOC at end of draw, there was a 112 percent, 48.5 percent and 24 percent increase in delinquency on their mortgage, auto and bankcard trade, respectively. With advanced data and analytics, lenders can be proactive in managing the risk associated with HELOC end of draw. Whether your customer has a HELOC with you or with another lender or is a new prospect, having the key data elements to obtain a full view of that consumer’s risk is vital in mitigating HELOC end-of-draw risk. Lenders should consider partnering with companies that can help them develop and deploy HELOC risk strategies in the near future. It is essential that lenders proactively plan and are well-positioned to protect their businesses from HELOC end-of-draw risk. Experian HELOC end of draw study

Ensure you’re protecting consumer data privacy Data Privacy Day is a good reminder for consumers to take steps to protect their privacy online — and an ideal time for organizations to ensure that they are remaining vigilant in their fight against fraud. According to a new study from Experian Consumer Services, 93 percent of survey respondents feel identity theft is a growing problem, while 91 percent believe that people should be more concerned about the issue. Online activities that generate the most concern include making an online purchase (73 percent), using public Wi-Fi (69 percent) and accessing online accounts (69 percent). Consumers are vigilant while online Most respondents are concerned they will fall victim to identity theft in the future (71 percent), resulting in a generally proactive approach to protecting personal information. In fact, almost 50 percent of respondents say they are taking more precautions compared with last year. Ninety-one percent take steps to secure physical information, such as shredding documents, while also securing digital information (using passwords and antivirus software). Many consumers also make sure to check their credit report (33 percent) and bank account statements (76 percent) at least once per month. There’s still room for consumers to be safer Though many consumers are practicing good security habits, some aren’t: More than 50 percent do not check to see if a Website is secure Fifty percent do not have all their Web-enabled devices password-protected because it is a hassle to enter a password (30 percent) or they do not feel it is necessary (25 percent) Fifty-five percent do not close the Web browser when they are finished using an online account Additionally, 15 percent keep a written record of passwords and PINs in their purse or wallet or on a mobile device or computer Businesses need to be responsible when it comes data privacy  Customer-facing businesses must continue efforts to educate consumers about their role in breach and fraud prevention. They also need to be responsible and apply comprehensive, data-driven intelligence that helps thwart both breaches and the malicious use of breached information and protect all parties’ interests. Nearly 70 percent of those polled in a 2015 Experian–Ponemon Institute study said that the increased visibility and media reporting of breaches, including payment-related incidents, have caused their organizations to step up data security efforts. Experian Fraud & ID is uniquely positioned to provide true customer intelligence by combining identity authentication with device assessment and monitoring from a single integrated provider. This combination provides the only true holistic view of the customer and allows organizations to both know and recognize customers and to provide them with the best possible experience. By associating the identities and the devices used to access services, the true identity can be seen across the customer journey. This unique and integrated view of identity and device delivers proven superior performance in authentication, fraud risk segmentation and decisioning. For more insights into how businesses are responding to breach activities, download our recent white paper, Data confidence realized: Leveraging customer intelligence in the age of mass data compromise. For more findings from the study, view the results here.

As millennials continue to experience challenges in obtaining credit, Experian’s latest research finds that this population is very receptive to nonbank lenders for the ease, speed and accessibility they provide.

The world of online marketplace lending has grown tremendously over the past several years. Still, for as much hype as it has received, it’s important to note the sector represents only 1.1 percent of unsecured loans and 2.5 percent of small business loans in the United States. While the industry is still in its infancy, it's expected to grow at an annual rate of 47 percent in the U.S by 2020, according to Morgan Stanley. And as it transitions from its “start-up” phase into “adolescence,” many expect it will become a high-growth, mature and stable market, bringing great benefit to consumers of financial services. So what does the future hold for online marketplace lenders? Who better to weigh in than those in the space, going through the evolution, seeing challenges first-hand and keeping a pulse on where they need to invest in order to survive. This video features a diverse group of leaders in the online marketplace lending industry. // Peter Renton, Founder, Lend Academy Scott Sanborn, COO, Lending Club Sam Hodges, Co-founder, Funding Circle USA Andrew Smith, Partner, Covington & Burling Joseph DePaulo, CEO, College Ave. Kathryn Ebner, VP, Credibly Without stealing all of their thunder, a few key themes emerged for 2016. Online marketplace lenders will look to expand their product offerings into all credit verticals – personal loans, auto, student, small business and beyond. Expect competition to continue to heat up. Large institutional investors will increasingly back and test the space. Some players will partner with large banks. Many will explore scoring with the use of alternative data. Innovations to come in customer service and product expansion. Bottom line, alternative finance doesn’t seem so “alternative” anymore. As such, competition will heat up, and regulators will continue to keep an eye on business practices, processes and what it all means for consumers. To learn more about online marketplace lending, visit https://www.experian.com/business-services/landing/marketplace-lending.html

Payments and the Internet of things has been colliding for a while now – and it surfaced again recently with Mastercard announcing that it is working with an array of partners including Capital One to launch payments in connected devices. The thinking here seems to be that payments is a function in the Marlow’s pyramid of needs for any new consumer device. I am conflicted on this point – not that I don’t believe the Internet of Things isn’t important, but that we may be overthinking in how payments is important to be shoved inside everything that has a radio baked in. And not everything will have a radio in the future, and the role of a smartphone as the center of the connected device commerce universe isn’t going away. It is important to keep perspective here – as this announcement is less about coat sleeves hiding NFC chips with tokenized credit cards – rather it’s the commerce enablement of devices that we may carry on our person so that they can be armed for payment. Though I may disagree on whether a coat sleeve or jewelry are essential end-points in commerce, a platform of capabilities to challenge, authenticate and verify, and ultimately trust and provision a tokenized representation of something, whether its a card or a fragment of a consumer's identity, to a device that itself represents a collection of radios and sensors is very exciting. It is exciting because as device counts and assortments grow, they each have their own residual identity as a combination of things and behaviors that are either deterministic or probabilistic. The biggest shift we will see is that the collective device identities can be a far better and complete representation of customer identity that the latter will be replaced by the former. Name-centric identities will give away to algorithmically arrived ones. As Dan Geer puts it, no longer will I need to announce that I am Cherian, but my collection of devices will indeed do so on my behalf, perhaps in consultation with each other. More over, none of these devices need to replicate my identity in order to be trusted and tethered, either. Coming back to Payments, today my Fitbit’s claim to make a successful payment is validated way before the transaction, when I authorized provisioning by authenticating through a bank app or wallet. What would be interesting is when the reverse becomes true – when these class of devices that I own can together or separately vouch for my identity. We may forget usernames and passwords, fingerprints may prove to be irrevocable and rigid, but we will always be surrounded by a fog of devices that each carry a cryptographically unique and verifiable signature. And it will be up to the smartphone, its ecosystem and the devices that operate in its periphery to individually negotiate and establish trust among each of them. So this is why I believe the MasterCard effort in tokenizing devices is important when you view it in conjunction with the recent launch of SwiftID from CapitalOne. Payments getting shoved in to everyday things like wearables, disguises the more important effort of becoming a beachhead in establishing trust between devices, by using tokenization as the method of delivery. As you may have gathered by now, I am less excited of pushing cards in to devices (least of all – cars!) and more about how a trusted framework to carve out a tamper proof and secure cache within an untrusted device, along with the process to securely provision a token or a signed hash representing something of value, can serve as the foundation for future device – and by extension – user identity. On a side note, here’s a bit about pushing cards in to cars, and mistaking them for connected cars. To me there are only two connected car classes today. One is Tesla where each car on the road is part of the whole, each learning separately and together as they examine, encounter and learn the world around them to maneuver safely. The other is a button in an app that I hit to have a car magically appear in front of me. Other than Tesla and Uber, there are no other commercial instances of a connected car that appeals (Google has no cars you can buy, yet).