Although it’s hard to imagine, some synthetic identities are being used for purposes other than fraud. Here are 3 types of common synthetic identities and why they’re created: Bad — To circumvent lag times and delays in establishing a legitimate identity and data footprint. Worse — To “repair” credit, hoping to start again with a higher credit rating under a new, assumed identity. Worst — To commit fraud by opening various accounts with no intention of paying those debts or service fees. While all these synthetic identity types are detrimental to the ecosystem shared by consumers, institutions and service providers, they should be separated by type — guiding appropriate treatment. Learn more in our new white paper produced with Whitepages Pro, Fighting synthetic identity theft: getting beyond Social Security numbers. Download now>

An introduction to the different types of validation samples Model validation is an essential step in evaluating and verifying a model’s performance during development before finalizing the design and proceeding with implementation. More specifically, during a predictive model’s development, the objective of a model validation is to measure the model’s accuracy in predicting the expected outcome. For a credit risk model, this may be predicting the likelihood of good or bad payment behavior, depending on the predefined outcome. Two general types of data samples can be used to complete a model validation. The first is known as the in-time, or holdout, validation sample and the second is known as the out-of-time validation sample. So, what’s the difference between an in-time and an out-of-time validation sample? An in-time validation sample sets aside part of the total sample made available for the model development. Random partitioning of the total sample is completed upfront, generally separating the data into a portion used for development and the remaining portion used for validation. For instance, the data may be randomly split, with 70 percent used for development and the other 30 percent used for validation. Other common data subset schemes include an 80/20, a 60/40 or even a 50/50 partitioning of the data, depending on the quantity of records available within each segment of your performance definition. Before selecting a data subset scheme to be used for model development, you should evaluate the number of records available in your target performance group, such as number of bad accounts. If you have too few records in your target performance group, a 50/50 split can leave you with insufficient performance data for use during model development. A separate blog post will present a few common options for creating alternative validation samples through a technique known as resampling. Once the data has been partitioned, the model is created using the development sample. The model is then applied to the holdout validation sample to determine the model’s predictive accuracy on data that wasn’t used to develop the model. The model’s predictive strength and accuracy can be measured in various ways by comparing the known and predefined performance outcome to the model’s predicted performance outcome. The out-of-time validation sample contains data from an entirely different time period or customer campaign than what was used for model development. Validating model performance on a different time period is beneficial to further evaluate the model’s robustness. Selecting a data sample from a more recent time period having a fully mature set of performance data allows the modeler to evaluate model performance on a data set that may more closely align with the current environment in which the model will be used. In this case, a more recent time period can be used to establish expectations and set baseline parameters for model performance, such as population stability indices and performance monitoring. Learn more about how Experian Decision Analytics can help you with your custom model development needs.

The business case for identity verification and risk assessment tools is most compelling when it includes a broad range of both direct and indirect factors. Here are 3 indirect measures we suggest you consider: Customer experience improvement — With 72% of businesses focused on service, according to Forrester Research,* the value of reduced friction can’t be overstated Reputation and brand protection — The monetary cost of fraud losses can be high, but the impact on customer relationships and brand integrity can be even higher. Compliance — Noncompliance costs an average of 2.65 times more than investing in a technology-based compliance solution. Justifying investment in fraud prevention technology can be challenging. A business case built on the right data can pave the way to upgrading your identity verification and risk assessment technology. Learn more in our buyer's guide>

Data is a part of a lot of conversations in both my professional and personal life. Everything around us is creating data – whether it’s usable or not is a business case for opportunity. Think about how many times a day you access the television, your phone, iPad or computer. Have a smart fridge? More data. Drive a car? More data. It’s all around us and can help us make more informed decisions. What is exciting to me are the new techniques and technologies, like machine learning, artificial intelligence and SaaS-based applications, that are becoming more accessible to lenders for use in managing their relationships with customers. This means lenders – whether a multi-national bank, online lender, regional bank or credit union – can make better use of the data they have about their customers. Let’s look at two groups – Gen-X and Millennials – who tend to be more transient than past generations. They rent not buy. They are brand loyal but will flip quickly if the experience or their expectations aren’t met. They live out their lives on social media yet know the value of their information. We’re just now starting to get to know the next generation, Gen Z. Can you imagine making individual customer decisions at a large scale on a population with so many characteristics to consider? With machine learning and new technologies available, alternative data – such as social media, visual and video data – can become an important input to knowing when, where and what financial product you offer. And make the offer quickly! This is a stark change from the days when decisions were based on binary inputs, or rather, simple yes/no answers. And it took 1-3 days (or sometimes weeks) to make an offer. More and more consumers are considering nontraditional banks because they offer the personalization and speed at which consumers have become accustomed.  We can thank the Amazons of the world for setting the bar high. The reality is - lenders must evolve their systems and processes to better utilize big data and the insights that machine learning and artificial intelligence can offer at the speed of cloud-based applications. Digitization threatens to lower profits in the finance industry unless traditional banks undertake innovation initiatives centered on better servicing the customer. In plain speak – banks need to innovate like a FinTech – simplify the products and create superior customer experiences. Machine learning and artificial intelligence can be a way to use data for making more informed decisions faster that deliver better experiences and distinguish your business from the next. Prior to Experian, I spent some time at a start-up before it was acquired by one of the large multi-national payment processors. Energizing is a word that comes to mind when I think back to those days. And it’s a feeling I have today at Experian. We’re taking innovation to heart – investing a lot in revolutionary technology and visionary people. The energy is buzzing and it’s an exciting place to be. As a former customer of 20 years turned employee, I’ve started to think Experian will transform the way we think about cool tech companies!

Data driven insights about your marketplace are critical to your success. For instance, data can be used to determine if your customers are loyal or if they are likely to defect to another dealership. According to Experian research, there were 54 million consumer vehicle sales transactions in 2017. While that may sound great, not all returning buyers are loyal. In fact, we found that three out of four people are not dealer loyal. Even though only ¼ of a dealer’s customer base regularly return, the remaining ¾ can be conquested. 41 million non-dealer loyal vehicle sales happened in 2017, meaning there were 41 million chances to conquest for dealers across the country. You may be asking yourself “that’s interesting, but how do I win?”.  Start with best in class data. At Experian, we work with our North American Vehicle Database℠, File One℠ Credit Database, and Consumer View℠ Marketing Database. These databases have information including the history of 900 million vehicles in the United States and Canada, 10 billion vehicle history records, to consumer data about credit inquiries and data attributes for consumers and households. Figuring out how to increase customer loyalty and conquesting becomes simple once you consider Experian’s solution: Auto HyperConnect™. Auto HyperConnect is the answer to the question of “how do I use my data to win my market?” Our Auto HyperConnect suite includes two different products. The first is Auto HyperMonitoring™ which improves customer loyalty. The second is Auto HyperTargeting™, which offers four different ways to conquest vehicle owners: through owners/service, expired leases, off-loan, and current vehicle equity. Since there is a lot to talk about regarding conquesting vehicle owners, this will be a basic overview and we will go into detail later. Experian goes beyond providing quality data to our clients- we are your partner in the discovery of critical information to drive your success.  The first step in our Auto HyperTargeting methodology starts with discovery - working with an Experian Automotive representative to create the most effective conquest strategy. After that, quantify and understand what data is available and how similar records have performed historically. Next, execute the strategy by launching campaigns to communicate with prospective customers via direct mail, email, and phone, etc. Finally, measure and track results with quarterly marketing attribution reporting with Experian’s Auto Response Analysis With Auto HyperTargeting, these six product benefits help it to stand apart from the competition: Highly targeted audiences and attributes lists closely fit prospecting profiles. These profiles include geography, vehicle make, vehicle class, and lease maturity data. Append 1,500+ demographic attributes, 650+ psychographics, and 70+ Mosaic segments. Complete, accurate, and actionable data is delivered timely. Data derived from the source with proprietary processes ensure that it’s the highest quality and best coverage. Flexible marketing execution has no firm offer of credit required and customizable messaging for relevancy. Full visibility performance tracking has closed loop ARAs delivered quarterly with performance details. Performance driven audience hyper targeting approach gets dealers the closest to the customer as possible while saving time and money. Focusing on marketing strategy and tactics delivers results and eliminates waste from unproductive volume/cost opportunities. Finally, the competitive advantage takes market share away from the competition by identifying, engaging, and converting the right prospects. Briefly, here are the four different types of conquesting a dealer can do with Auto HyperTargeting: Expired Lease lets a dealer conquest new prospects based on customized input criteria including zip codes, vehicle makes and classes, and lease maturity data with the marketing flexibility necessary to drive engagement and win new customers. There is no firm offer of credit required. Vehicle Owners lets a dealer engage with current owners to enable new relationships and opportunities. These opportunities reach out to service and parts, aftermarket accessories, new/used car, warranty, insurance, and financial services. Vehicle Equity identifies, engages, and acquires new customers with positive vehicle equity status and maximizes sales opportunities. Getting consumers into a new vehicle, into re-finance solutions, into new loans, and get third party offers in front of consumers are all apart of vehicle equity. End of Loan connects dealers with consumers who are reaching the end of their loan term and help them transition into their new vehicle of choice. These include customized offers, getting consumers into a new vehicle, getting consumers into new loans, and getting third party offers in front of consumers. Juggling the requirements to both maintain customer loyalty and conquest for new ones can be difficult, but our Auto HyperConnect suite helps dealers to succeed at both. In our upcoming mini-series on conquesting with Auto HyperTargeting, we will detail it’s four core capabilities in more detail to help dealers to conquest with confidence.

Consumers and businesses alike have been hyper-focused on all things data over the past several months. From the headlines surrounding social media privacy, to the flurry of spring emails we’ve all received from numerous brands due to the recent General Data Protection Regulation (GDPR) going into effect in Europe, many are trying to assess the data “sweet spot.” In the financial services space, lenders and businesses are increasingly seeking to leverage enhanced digital marketing channels and methods to deliver offers and invitations to apply. But again, many want to know, what are the data rules and how can they ensure they are playing it safe in such a highly regulated environment. In an Experian-hosted webinar, Credit Marketing in the Digital Age, the company recently featured a team of attorneys from Venable LLP’s award-winning privacy and advertising practice. There’s no question today’s consumers expect hyper-targeted messages and user experiences, but with the number of data breaches on the rise, there is also the concern around data access. Who has my data? Is it safe? Are companies using it in the appropriate way? As financial services companies wrestle with the laws and consumer expectations, the Venable legal team provided a few insights to consider. While the digital delivery channels may be new, the underlying credit product remains the same. A prescreened offer is a prescreened offer, and an application for credit is still an application for credit. The marketing of these and other credit products is governed by an array of pre-existing laws, regulations, and self-regulatory principles that combine to form a unique compliance framework for each of the marketing channels. Adhere to credit regulations, but build in enhanced policies and technological protocols with digital delivery. With digital delivery of the offer, lenders should be thinking about the additional compliance aspects attached to those varying formats. For example, in the case of digital display advertising, you should pay close attention to ensuring delivery of the ad to the correct consumer, with suitable protections in place for sharing data with vendors. Lenders and service providers also should think about using authentication measures to match the correct consumer with a landing page containing the firm offer along with the appropriate disclosures and opt-outs. Strong compliance policies are important for all participants in this process. Working with a trusted vendor that has a commitment to data security, compliance by design, and one that maintains an integrated system of decisioning and delivery, with the ability to scrub for FCRA opt-outs, is essential. Consult your legal, risk and compliance teams. The digital channels raise questions that can and must be addressed by these expert audiences. It is so important to partner with service providers that have thought this through and can demonstrate a compliance framework. Embrace the multitude of delivery methods. Yes, there are additional considerations to think about to ensure compliance, but businesses should seek opportunities to reach their consumers via email, text, digital display and beyond. Also, digital credit offers need not replace mail and phone and traditional channels. Rather, emerging digital channels can supplement a campaign to drive the response rates higher. In Mary Meeker’s annual tech industry report, she touched on a phenomenon called the “privacy paradox” in which companies must balance the need to personalize their products and services, but at the same time remain in good favor with consumers, watchdog groups and regulators. So, while financial services players have much to consider in the regulatory space, the expectation is they embrace the latest technology advancements to interact with their consumers. It can be done and the delivery methods exist today. Just ensure you are working with the right partners to respect the data and consumer privacy laws.  

The economy remains steady, maintaining a positive outlook even though the GDP growth slowed in the first quarter. Real estate is holding ground even as rates rise. We’ve reached a 7-year high in 30-year fixed-rate mortgages, which could have a longer-term effect on this market. Bankcard may be reaching its limit — outstanding balances hit $764 billion and delinquency rates continue to rise. While auto originations were flat in Q1, performance is improving as focus moves away from subprime lending. The economy remains steady as we transition from 2017. Keep an eye on inflation and interest rates in regard to their possible short-term economic impact. Learn more about these and other economic trends with the on-demand recording of the webinar. Watch now

Who is the ideal dealership customer? Wouldn’t they be one that buys or leases a car and becomes a repeat customer? Loyal customers are ideal because they prefer to go to your dealership to purchase a vehicle, get their vehicle serviced, and even have their family and friends purchase from you. This brings up an important question: what is customer loyalty worth to you? According to the White House Office of Consumer Affairs, on average, loyal customers are worth up to 10 times as much as their first purchase. They also found that it is six to seven times more expensive to acquire a new customer than it is to keep a current one. Marketing Metrics found the probability of selling to a new prospect is only between 5-20%. But if you are selling to an existing customer, the probability rises to 60-70%. So, knowing this, what holds dealers back from actively conquesting loyal customers? Time, money, resources, expertise, priority, process and systems, and data are the key factors that keep them from pursuing these ideal customers. Even though you may stare across the street at them every day, you must remember that your competition is much bigger than the dealerships next door to you. According to recent Experian® research, Whether it is a new, certified used, or non-certified used vehicle, auto manufacturers will have the highest level of loyalty by owned vehicle acquisition. Next to that, you have the Make of a vehicle followed the Model.  Dealerships rank last in loyalty against these major factors. This leads to asking a few “what-ifs”. What if you have the unique opportunity to improve customer loyalty, make more money, and prevent defection to the competition? What if you had actionable insights to know your customer’s buying and loyalty propensities with a high degree of accuracy? How about if you had knowledge of timing on when to engage with your customers to appropriately deliver the right message and offers with the highest potential conversion rate? Finally, what if you had an easy, cost-effective, yet powerful way to unify big data relating to consumer, vehicle, and market and your customer data to make better marketing decisions? Thanks to Experian® and Auto HyperConnect™, you don’t have to ask those questions anymore. Auto HyperConnect leverages the most robust combination of data assets under one roof.  Our loyalty component is called Auto HyperMonitoring™ and takes loyalty to the next level. Auto HyperMonitoring is an event-based customer loyalty measurement solution that gives you the ability to more effectively manage and strengthen your customer retention efforts.  With insights derived from the monitoring of both macro- and micro-environments relating to the vehicle, consumer events, and the overall automotive landscape, clients can quickly gain a deep understanding of consumer loyalty propensities and can create and execute initiatives that maximize their customer loyalty opportunities. Starting with a client’s customer file, Auto HyperMonitoring provides data hygiene that verifies the VIN matches the customer household and will only monitor the VINS that have a match. Next, there is monitoring for vehicle events such as accidents or airbags going off.  Consumer events equate to having a baby or moving.  Market events involve incentives, OEM loyalty, and warranty expiration. Data events are phone numbers, email address, or VIN verification through the hygiene process.. These events feed into the creation of analysis & insights to identify your customers’ behavioral patterns attributed to loyalty, purchasing, and other factors.  When key opportunities are identified, there is client notification. This is used to manage the customer relationship and loyalty through a dealer’s CRM system and comes in an email. How you would use Auto HyperMonitoring? It can be used to bring customers back into the showroom or service lanes in a few different ways. Initially, Dealers can call consumers to open the lines of communication. Next, sending consumers emails and direct mail with special offers are both effective. Finally, Auto HyperMonitoring can also be used to activate digital media targeting campaigns to better reach them where they’re spending their time. Finally, we have the product benefits of Auto HyperMonitoring. First off, it enhances customer engagement & loyalty. By proactively engaging with clients at the right moment based on important and relevant vehicle, customer, and market-related event triggers, loyalty can be systematically strengthened. Second, it improves marketing efficiency. Knowing when to engage with your customer base to minimizes the risk of over and under marketing exposure; improve conversion and reduce cost. Third, complete, accurate, & actionable data is delivered in a timely manner. Auto HyperMonitoring leverages both a client’s customer file and Experian’s rich data assets to enable a complete view of customer opportunities. Finally, Auto HyperMonitoring compliments and supports OEM/dealer loyalty programs. Maximizing revenue opportunities by achieving/surpassing OEM/Dealer loyalty program goals is possible with Auto HyperMonitoring. Customer loyalty is important and will directly impact dealership sales in both your showroom and your service lanes – including the benefit of referral customers. The challenges of competing with manufacturers and other dealerships are mitigated with Experian’s Auto HyperConnect suite and Auto HyperMonitoring. With these, you will have greater success when targeting customer loyalty and using data to keep the relationship between the dealership and the customer alive.

The auto industry is blessed with an abundance of data - market research, demand estimates, demographic trends, registration history, not to mention your dealership's own sales and inventory data. Dealers are often visual people - who love beautiful cars more than boring spreadsheets. The more visual you can make your data, the easier it will be to make decisions based on what it's telling you. Here are the five steps to being a data-driven dealer. 1. Where am I selling the most cars? You probably have a good instinct about where the "hot spots" are around your dealership. But there's a reason many dealers often display a map somewhere in the dealership, with pushpins representing recent new and used sales. It's a tried-and-true technique because there's no substitute for a visual representation of data, especially to get a good sense of where you're currently successful. More importantly, it will also help you answer a critical question - where should I be selling the most cars? By layering your web stats, such as Google Analytics, on top of your sales data, you can start to see whether your PPC spend is resulting in sales. Then layer on registration data to understand whether you're maximizing opportunity in your own backyard. You might already be selling a lot of cars into a town, but looking at your on-brand market share will help you determine if you've fully penetrated the area. Looking at overall market activity, not just your own data, is required to understand where you fit into the bigger picture and decide upon your best sales strategy. 2. Where should we be conquesting? Once you've confirmed that you're (hopefully) dominating in your town and those directly adjacent to you, it's time to turn your eye to how to take on competitive dealerships farther afield. Again, data can help you determine next steps and target your budget appropriately. Every dealership approaches and defines "conquesting" a little differently, but there are two common techniques that can be made much easier using recent registration statistics. First, look for ZIP Codes outside of your immediate PMA that are selling a high number of on-brand vehicles. These are your competitors' happiest hunting grounds; focus on enticing shoppers in those areas to drive a little further to take advantage of special pricing or promotions, rather than attacking blindly in a 20-mile radius. 3. What is my best performing campaign now? No matter what your position is at the dealership, you need to know what's working best at any given moment. The GM needs to be able to make on-the-fly budgeting decisions, while the e-commerce Director wants to know which campaigns are working and what to do more of. But too often, the only objective measures we're regularly provided are traffic stats. Traffic is important, of course, but we'd suggest there are three factors dealers should evaluate for every campaign. A campaign may be driving lots of shoppers to your site, but if they're immediately leaving the site, they aren't worth much for you. A high bounce rate is your first sign that something is amiss since shoppers aren’t finding what they were looking for on your site. A second-level analysis involves looking at what other pages visitors looked at after hitting the campaign landing page. For an offer focused on a specific vehicle, visitors should be moving on to look at inventory on VDP pages. Free oil change promotion? Visitors should be spending time on the service portion of your site. Work with your agency or internal e-commerce team to determine what content, language and images are the most effective at engaging potential buyers to take the desired action. Speaking of action, conversion rate is your single best measure of whether a campaign is performing to expectations. Just make sure you're measuring actions that matter: Form submissions, email leads, mobile clicks to call, and visits to hours and directions pages all indicate various levels of positive customer interest in beginning a dialogue. 4. How do I determine whether my traditional advertising spend is producing results? Measuring dealer marketing ROI can be challenging, especially for traditional advertising. History tells us that radio, TV, newspaper, and outdoor are successful in driving demand, but quantifying that effect can be an elusive goal. But there are methods that will get you closer to determine the effect of your traditional efforts on sales. By tagging the start dates of all your marketing activities and mapping them on a trendline of your traffic for your URLs, leads such as phone calls, chat, and coupon codes for your service department as well as sales, you'll get a good sense about whether your offline campaigns are generating online interest.   5. Who is my ideal customer? Once you understand which models are likely to move next month, your next question should be: "Who am I selling to?" You probably have a good sense of your typical customer profile for many models (there's a good chance you're showing minivans and SUVs to young families, for example). But do you know where those customers live? And how to best talk to them? There is an incredible amount of data available on consumers, from credit history to buying behavior to lifestyle preferences. So how do you make use of this rich consumer data? At a basic level, Experian data can tell you a lot about the residents of each ZIP Code surrounding your dealership - from average age, income, and number of children, all the way to the most prevalent Mosaic® profiles in each town.  In a previous article, we talk about locating your ideal customer using Mosaic profiles. You might have a high number of "American Royalty" in one area, or an abundance of "Sports Utility Families" just a couple of towns over. This information can tell you not only where you might want to market particular models, but what medium and messaging will resonate best in each area. While only 15 miles apart, the Boston suburbs of Sudbury and Norwood are home to very different types of BMW buyers, suggesting vastly different marketing campaigns to best appeal to each.   Data is a necessary tool for understanding your ideal customer, improving your marketing results, and selling more vehicles. These five steps to becoming a data-driven dealer address all your requirements to enrich your marketing and conquest more successfully.

With delinquencies on the rise, financial institutions are looking for new tools to evaluate and improve the financial lives of customers and members. As the consumer’s bureau, Experian is also committed to improving the financial well-being of consumers. As part of that commitment, Experian supports the mission of the Center for Financial Services Innovation (CFSI), an organization focused on improving the financial health of Americans, especially the underserved, through innovative financial products and services.    Experian recently spoke with CFSI’s Thea Garon, a Director on CFSI’s Program Team to learn more about a new free, open-source tool the organization will be launching in June to help financial institutions drive consumer financial health. Here are some insights she shared about the new tool. Can you provide an overview of the CFSI Financial Health Score™ and how it is calculated? The CFSI Financial Health Score™ is designed to help financial service providers, employers, and other organizations diagnose and measure the financial health of their customers, clients, and employees. The framework provides a holistic, moment-in-time snapshot of an individual’s financial health based on eight multiple-choice questions that align with CFSI’s eight indicators of financial health. It includes one Financial Health Score and four sub-scores (Spend, Save, Borrow, and Plan). A set of nationally representative benchmarks offers comparisons across peer groups. CFSI has designed the framework to be free, open-source, simple, and easy-to-use. It’s intended to be a starting point; a proof point that financial health can be quantified, measured, and ultimately improved. Why did CFSI decide to develop this framework? At CFSI, we believe, and have recently released research to support the concept that financial institutions have a business incentive to help their customers lead financially healthy lives. Financial health comes about when your daily financial systems allow you to be resilient and pursue opportunities over time. As a financial service provider, you can help your customers lead financially healthy lives by helping them spend wisely, build savings, borrow responsibly, and plan for the future. To do this, you need a measurement framework to understand and track your customers’ financial health over time. The CFSI Financial Health Score™ is one way to do this. You can use the methodology to diagnose your customers’ financial needs and use these insights to develop products, programs, and solutions to help them improve their financial health over time. You can also share financial health scores directly with your customers to help them understand the actions they can take to improve their own financial health. Ongoing tracking will allow you to assess whether your company is making a meaningful difference in your customers’ lives over time. Can you provide any early examples of how CFSI Health Network members have adopted and incorporated this framework? Approximately 100 financial service providers have downloaded the framework, representing a diverse range of companies, including banks, credit unions, fintechs, non-profits, payment networks, and B2B technology providers. At least 14 companies are actively using the Financial Health Score to measure and track their customers’ financial health and have committed to sharing data and insights with us through CFSI’s Financial Health Leaders program. Some companies, are using the framework to assess their customers’ financial health for strategic planning purposes. Other companies, such as Wright-Patt Credit Union, are using the financial health score to engage their customers in a dialogue about financial health. The credit union has incorporated the framework into their MoneyMagnifier program, a financial coaching program designed to provide free, one-on-one advice and guidance to members in a judgment-free environment. Financial coaches have been trained to use the framework to start a conversation with members to help them improve their spending, saving, borrowing, and planning behaviors. Coaches help members set goals and develop personalized action plans to achieve those goals toward a better financial future, following up with them after six months to measure improvement and advance the conversation. What have you learned from companies who have started measuring and improving their customers’ financial health with the CFSI Financial Health Score™? While interest in advice is high, uptake can be slow. Making the interaction quick and easy, whether online or in person, is critical. The health check lengthens the interaction, so conducting the health check by appointment rather than with walk-in customers, can help set customer expectations for a lengthier interaction, but may reduce the number of potential participants. Enabling customers to expedite the session by taking the survey online can be helpful, but requires development resources to implement. Many companies are exploring the pros and cons of sharing customers’ scores with them. A single score can help motivate individuals to take action that will improve their financial well-being. However, sharing a low score can also be demoralizing to some, and focusing on the number itself can divert attention from behavioral changes and action steps. Some organizations are choosing to use customers’ response patterns to drive recommendations without sharing the score. Others are opting for a middle ground, sharing an indicator (such as green, yellow, red) instead of a specific number. The most effective measurement and improvement strategies go beyond the CFSI Financial Health Score™. While the framework can help you get started identifying high-level needs, targeted recommendations often require a more nuanced understanding of behaviors and challenges. Combining survey data with account or transaction data can provide a more holistic view into a customer’s full financial life. Each organization must find a balance between the comprehensiveness required to provide meaningful advice and the simplicity required to engage both customers and staff. How can interested companies start using the CFSI Financial Health Score™? We will be publicly releasing the CFSI Financial Health Score™ at the EMERGE: Financial Health Forum (June 6 -8 in Los Angeles). The score will be easy to download and completely free to use. Those who are interested in learning more can also sign up for our newsletter to get an update when the Toolkit is released.

According to our recent research for the State of Alternative Credit Data, more lenders are using alternative credit data to determine if a consumer is a good or bad credit risk. In fact, when it comes to making decisions: More than 50% of lenders verify income, employment and assets as well as check public records before making a credit decision. 78% of lenders believe factoring in alternative data allows them to extend credit to consumers who otherwise would be declined. 70% of consumers are willing to provide additional financial information to a lender if it increases their chance for approval or improves their interest rate. The alternative financial services space continues to grow with products like payday loans, rent-to-own products, short-term loans and more. By including alternative financial data, all types of lenders can explore both universe expansion and risk mitigation. State of Alternative Credit Data

The second full day of Experian Vision 2018 kicked off with an inspirational message from keynote speakers Capt. Mark Kelly and Former Congresswomen Gabby Giffords, rolled into a series of diverse breakout sessions, and concluded with Super Bowl-winning quarterback Aaron Rodgers sharing tales of sports, leadership and winning. Need a recap of some of the headlines from the day? Here you go ... Retail Apocalypse? Not so fast alarmists. Yes, there are media headlines around mergers, closings and consumers adopting new ways to shop, but let me give you three reasons as to why the retail sky is not falling. There were more store openings last year than closings, and that trend is expected to continue this year with an estimated 5,500 openings by December. There continues to be a positive sales trajectory. E-commerce sales are increasing. Big department stores have seen pains, but if brands are focused on connection, relevance and convenience, there is hope. Consumers continue to spend. Subprime auto bubble? Nope. Malinda Zabritski, Sr. Director of Experian Automotive Sales, says the media likes to fixate on the subprime, but subprime financing has been on the decline, reaching record lows. Deep subprime is at .65%. Additionally, delinquency rates have also tapered. The real message? Consumers are relying on auto lenders for financing, largely due to consumer preferences to lease. The market is healthy, and while it has slowed slightly, the market is still at 7% year-over-year growth. Consumer-permissioned data is not just a value-add for thin-file consumers. Take for instance the inclusion of demand deposit accounts (DDAs). David Shellenberger, Sr. Director of Scoring and Predictive Analytics for FICO, says people who have had long relationships with their checking accounts tend to be more stable and generally sport higher credit scores. Consumers with thick, mature files can also benefit with DDA data. Consumer-permissioned data is not just about turning a “no” to a “yes.” It can also take a consumer from near-prime to prime, or from prime to super-prime. Would you want to make a credit decision with less information or more? This was the question Paul DeSaulniers, Experian Sr. Director of Product, posed to the audience as he kicked off the session on alternative data. With an estimated 100 million U.S. consumers falling below “thick-file” credit status, there is a definite need to learn more about these individuals. By leveraging alternative credit data – like short-term lending product use, rental data, public records and consumer-permissioned data – a more holistic view of these consumers is available. A few more facts: While alternative finance users tend to be more subprime, 20% are prime or better. A recent data pull revealed 20% of approved credit card users also had alternative finance data on them as well. About 2/3 of households headed by young adults are rentals. Imagine a world where the mortgage journey takes only seven to 10 days. With data and technology, we are closer than you think. Future products are underway that could master the underwriting phase in just one day, leaving the remaining days dedicated for signing disclosures, documents and wiring funds. Processes need to be firmed up, but a vision has been set. The average 30- to 45-day mortgage journey could soon be a distant memory. 97% of online banking applications that are started are abandoned. Why? Filling out lengthy forms, especially on a mobile device, is not fun. New technology, such as Experian’s Instant Form Fill, is allowing consumers to provide a name, zip and last four numbers of their social security number for an instant form fill of the rest of the application. Additionally, voice assistants are expected to increasingly facilitate research on purchases big and small. A recent study revealed nearly half of consumers perceive voice assistants to be useful. Businesses have more fraud losses than ever before. Not surprising. What is scary? An estimated 54% of businesses said they are not confident in their ability to detect fraud. Another session reported that approximately 20% of credit charge-offs are synthetic IDs, a growing pain point for all businesses. Consumers, on the other hand, say they “want visible signs of security” and “no friction.” Tough to balance, but those are today’s expectations. More Vision 2018 insights can be accessed on #ExperianVision twitter feed. Vision 2019 will be in San Antonio, Texas next May 5-8.

When sales are going relatively well, do you immediately look to conquesting? Are your key vendors encouraging you to do so? There’s absolutely nothing wrong with being out to conquer the world. No matter how you define conquesting – stealing market share from your competitors on their turf, making inroads on a cross-shopped make, or expanding your sales radius – chances are, you shouldn’t be focused on doing it. At least not until you’ve created some high barriers to prevent competitors from encroaching into your territory. Luckily, it’s easy to know when to stop conquesting and start getting defensive. All you need to answer is one simple question: Do you own your backyard?  Even when it feels like all is going well in terms of sales and market penetration, it’s worth taking another look. You might be doing lots of volume in your immediate vicinity, but still be missing out on a lot of potential sales that are going to your competitors. We suggest that most dealers shouldn’t be happy with anything less than 90% market share of new, on-make models in surrounding ZIP Codes™. If you’re not regularly tracking your “backyard” market share, it’s a good practice to get in. Here’s why you should care about totally shutting out the competition in your local area: You’ve got physical brand presence. Buyers in your ZIP code and the surrounding towns drive by your sign every day. Your name should be the first they that comes to mind when they think of your make. You should own hometown SEO. Do you own search terms like “Honda dealers in Lakeland”? If you’re not the number one organic search result for your town, you’ve got some work to do. These are your most likely service customers. Every local deal you walk away from is a potential – and profitable – service customer lost. If you don’t own your backyard, what should you do about it? Aside from making sure you’ve got your SEO and SEM in good shape, it may well be an inventory problem: Are you stocking the models that buyers in your area are looking for? Here’s where looking at data from outside your four walls can be helpful. Demand data which aggregates online search activity to determine what models shoppers are likely to be buying in the next six weeks – can be a great resource to determine what’s going to be hot. This can certainly assist you in acquiring in-demand used inventory, and while you don’t always have control over your new allocations, a grasp of local purchase trends can help you figure out where and how to successfully market the models you do have on your lot. You may find that one or two problem models are dragging down your total market share – either because you have a large volume of them in stock and they aren’t moving, or they are hot sellers and you don’t have enough of them to meet demand. Once you’ve got the basics covered and you’ve identified any inventory gaps, let’s get granular about your strategy to dominate market share. A great way to do that is to look at the models and zip codes where you’re losing market share, starting with your bread and butter models. Dig in and look at your market share, by ZIP code, for each of your high-volume models. If you’re well under that 90% threshold on Focuses or 3-series, for example, that’s a good place to start targeting your marketing efforts in your backyard. So how do you sell more cars into the Zip codes you’ve identified? By understanding the prospective buyers of your chosen model and laser-targeting your marketing to appeal to them. Demographic data from the likes of Experian Automotive can provide a rich array of details on the values and preferences of buyers who are most likely to be interested in your specific vehicles. From the advertising channels that reach them, to the types of offers and benefits they prefer to hear about, there’s a plethora of valuable information available to inform successful campaigns. Armed with this data, it’s possible to hone your messaging to appeal to those individual buyers, especially when undertaking campaigns that can be targeted down to the ZIP code level, such as PPC and direct mail. If you’re not already buying your PPC by ZIP code, and creating model-specific landing pages with customized messaging for each area, we highly recommend it for a dramatic effect on conversion.  We’ve seen rates rise from 2% to 8%, and inventory engagement rates rise from 50 to 90%, just by employing these techniques. By employing your marketing dollars more strategically and creating messaging that better resonates with consumers, you’ll be well on your way to consistently achieving dominant market share in your own backyard. But once accomplished, the work is not done! Be sure to experiment with conquesting against competitive makes – and do so in a controlled and measurable way.  Here are some considerations as you set your strategy: Choose just one make to take on… but avoid conventional wisdom. If you’re a Honda dealer, conventional wisdom says conquest Toyota – since they consistently show up in the list of cross-shopped makes for Honda, regardless of market. But Toyota buyers are highly loyal… how much are you going to have to spend to convince them to leave their tried and true models? Why not go after Kia or Hyundai instead? Stick with your bread and butter models. You might be all excited about that shipment of new electric vehicles you just got in stock, but those “specialty” buyers are going to seek you out. For the highest impact, spend your conquesting dollars where you’re doing the most volume. For example, , if you’re a BMW dealer, put your 3-series up against the Lexus IS. Choose 3-4 ZIP codes in your PMA where demand is highest. It may be tempting to try to lure buyers who are farther afield, but you are more likely to lose on the front and back end of every sale that’s over 20 miles from your dealership. Remember, we’re looking for buyers that are easy to lure and have a good shot at becoming loyal service customers These techniques can be used persistently to ensure that you own your backyard, dominate your PMA and steal market share from your competitors. All it takes is knowledge of your market. Your gut will lead you in the right direction most of the time, but look at the data to verify your instinct, and be open to being surprised. Take the time to wait for results before moving on to the next campaign. You’re guaranteed to learn something that will make you better next time. And there’s no need to go it alone. All this data and the accompanying visualizations can be found in Experian’s Dealer Positioning System®, or DPS, a dealership intelligence platform created expressly for auto retail. The DPS can surface recommendations on the models and ZIP Codes with the most opportunity, and a monthly Market Guidance call with one of our Performance Managers who can help you crystallize your strategy, track results, and hold you and your extended team accountable. Experian also has a growing list of agency partners who use the DPS to help clients like you shape and execute on effective marketing and advertising campaigns.

Alternative credit data. Enhanced digital credit marketing. Faster, integrated decisioning. Fraud and identity protections. The latest in technology innovation. These were the themes Craig Boundy, Experian’s CEO of North America, imparted to an audience of 800-plus Vision guests on Monday morning. “Technology, innovation and new sources of data are fusing to create an unprecedented number of new ways to solve pressing business challenges,” said Boundy. “We’re leveraging the power of data to help people and businesses thrive in the digital economy.” Main stage product demos took the shape of dark web scans, data visualization, and the latest in biometric fraud scanning. Additionally, a diverse group of breakout sessions showcased all-new technology solutions and telling stats about how the economy is faring in 2018, as well as consumer credit trends and preferences. A few interesting storylines of the day … Regulatory Under the Trump administration, everyone is talking about deregulation, but how far will the pendulum swing? Experian Sr. Director of Regulatory Affairs Liz Oesterle told audience members that Congress will likely pass a bill within the next few days, offering relief to small and mid-sized banks and credit unions. Under the new regulations, these smaller players will no longer have to hold as much capital to cover losses on their balance sheets, nor will they be required to have plans in place to be safely dismantled if they fail. That trigger, now set at $50 billion in assets, is expected to rise to $250 billion. Fraud Alex Lintner, Experian’s President of Consumer Information Services, reported there were 16.7 million identity theft victims in 2017, resulting in $16.8 billion in losses. Need more to fear? There is also a reported 323k new malware samples found each day. Multiple sessions touched on evolving best practices in authentication, which are quickly shifting to biometrics-based solutions. Personal identifiable information (PII) must be strengthened. Driver’s licenses, social security numbers, date of birth – these formats are no longer enough. Get ready for eye scans, as well as voice and photo recognition. Emerging Consumers The quest to understand the up-and-coming Millennials continues. Several noteworthy stats: 42% of Millennials said they would conduct more online transactions if there weren’t so many security hurdles to overcome. So, while businesses and lenders are trying to do more to authenticate and strengthen security, it’s a delicate balance for Millennials who still expect an easy and turnkey customer experience. Gen Z, also known as Centennials, are now the largest generation with 28% of the population. While they are just coming onto the credit scene, these digital natives will shape the credit scene for decades to come. More than ever, think mobile-first. And consider this … it's estimated that 25% of shopping malls will be closed within five years. Gen Z isn’t shopping the mall scene. Retail is changing rapidly! Economy Mortgage originations are trending up. Consumer confidence, investor confidence, interest rates and home sales are all positive. Unemployment remains low. Bankcard originations have now surpassed the 2007 peak. Experian’s Vice President of Analytics Michele Raneri had glowing remarks on the U.S. economy, with all signs pointing to a positive 2018 across the board. Small business loan volumes are also up 10% year-to-date versus the same time last year. Keynote presenters speculate there could be three to four rate hikes within the year, but after years of no hikes, it’s time. Data There are 2.5 quintillion pieces of data created daily. And 80% of what we know about a consumer today is the result of data generated within the past year. While there is no denying there is a LOT of data, presenters throughout the day talked about the importance of access and speed. Value comes with more APIs to seamlessly connect, as well as data visualization solutions like Tableau to make the data easier to understand. More Vision news to come. Gain insights and news throughout the day by following #ExperianVision on Twitter.    

The traditional credit score has ruled the financial services space for decades, but it‘s clear the way in which consumers are managing their money and credit has evolved. Today’s consumers are utilizing different types of credit via various channels. Think fintech. Think short-term loans. Think cash-checking services and payday. So, how do lenders gain more visibility to a consumer’s credit worthiness in 2018? Alternative credit data has surfaced to provide a more holistic view of all consumers – those on the traditional file and those who are credit invisibles and emerging. In an all-new report, Experian dives into “The State of Alternative Credit Data,” providing in-depth coverage on how alternative credit data is defined, regulatory implications, consumer personas attached to the alternative financial services industry, and how this data complements traditional credit data files. “Alternative credit data can take the shape of alternative finance data, rental, utility and telecom payments, and various other data sources,” said Paul DeSaulniers, Experian’s senior director of Risk Scoring and Trended/Alternative Data and attributes. “What we’ve seen is that when this data becomes visible to a lender, suddenly a much more comprehensive consumer profile is formed. In some instances, this helps them offer consumers new credit opportunities, and in other cases it might illuminate risk.” In a national Experian survey, 53% of consumers said they believe some of these alternative sources like utility bill payment history, savings and checking account transactions, and mobile phone payments would have a positive effect on their credit score. Of the lenders surveyed, 80% said they rely on a credit report, plus additional information when making a lending decision. They cited assessing a consumer’s ability to pay, underwriting insights and being able to expand their lending universe as the top three benefits to using alternative credit data. The paper goes on to show how layering in alternative finance data could allow lenders to identify the consumers they would like to target, as well as suppress those that are higher risk. “Additional data fields prove to deliver a more complete view of today’s credit consumer,” said DeSaulniers. “For the credit invisible, the data can show lenders should take a chance on them. They may suddenly see a steady payment behavior that indicates they are worthy of expanded credit opportunities.” An “unscoreable” individual is not necessarily a high credit risk — rather they are an unknown credit risk. Many of these individuals pay rent on time and in full each month and could be great candidates for traditional credit. They just don’t have a credit history yet. The in-depth report also explores the future of alternative credit data. With more than 90 percent of the data in the world having been generated in just the past five years, there is no doubt more data sources will emerge in the coming years. Not all will make sense in assessing credit decisions, but there will definitely be new ways to capture consumer-permissioned data to benefit both consumer and lender. Read Full Report