Sign up for our newsletter and get the latest big data news and analysis.

How Harnessing Data Can Lead to Better Financial Outcomes

In this special guest feature, Greg Wright, Executive Vice President and Chief Product Officer for the Experian Consumer Information Services (CIS) business in North America, discusses how the financial services industry must continue to utilize the most accurate and comprehensive data solutions to enrich credit decisions, while also educating consumers about the options available to them. Greg has been with Experian since 2016. He has more than 18 years of experience working in product management to launch ground-breaking solutions. Wright has a proven track record of delivering successful solutions to market through acquisitions, innovations, and tactical partnerships. He is a strategic business leader who focuses and aligns teams on the most important growth opportunities. Greg has a Juris Doctorate from Stanford Law School and a Bachelor of Science in Environmental Economics from Stanford University.

As Americans surpass the one-year mark of living with the pandemic, many are reflecting on the ways in which society has been impacted. Similar to the 2008 economic crisis, COVID-19 brought insurmountable challenges that forced many consumers out of work and entire businesses to close their doors for good. However, unlike the 2008 crisis, consumer credit has shown resiliency.

According to August 2020 research from the Consumer Financial Protection Bureau (CFPB), negative credit outcomes were far less severe than expected during a period of high unemployment. Delinquencies on mortgage loans, auto loans, student loans, and credit cards fell between March 2020 and June 2020, and consumers did not appear to be accumulating credit card debt to stay afloat. [1] 

While many will argue this was due to government relief programs, there’s another key difference between the Great Recession and where we are today. Today, the financial services industry has far greater access to immediate, comprehensive, and accurate data – a key factor in helping businesses and consumers on the road to recovery.

As we begin to turn a corner on the pandemic, we must continue to think about the long-term economic impacts. In order to ensure the well-being of our economy, we must continue to leverage data-driven solutions to protect consumers’ access to credit. This begins with helping lenders identify individuals who can still meet their financial duties. These consumers play a critical role in getting our economy back on track, as they are able to spend money that in turn can fuel economic stability and growth.

On the other hand, there are millions of consumers who have struggled, and continue to struggle, to meet their financial obligation. In mid-February 2021, the Labor Department estimates that 10.1 million Americans remain unemployed. [2] The CARES Act and stimulus payments were effective in increasing the number of consumers who could maintain their financial health for a period of time, but some still need additional help to get back on their feet.

With accurate data, the financial services industry has the power to create a picture of creditworthiness that wasn’t possible a decade ago, while also improving financial access for consumers who may have been traditionally excluded from the credit ecosystem.

A layered approach to data can help deliver tangible good to consumers who need it most. While traditional credit data remains the primary method for gauging consumer creditworthiness, there are new opportunities for lenders to layer traditional credit data with expanded Fair Credit Reporting Act (FCRA) regulated data. This sort of data includes:  

  • Bills for monthly cell phone, cable, Internet and streaming service payments
  • Repayment of rent-to-own or small dollar loans
  • How a person is managing their accounts over a 24-month period, known as “trended data”

The financial services industry is continuing to innovate to meet unmet needs. For instance, there are new lender scoring models that combine traditional, alternative, and trended data sets to create a more holistic picture of a consumers’ financial behavior. These scoring models have the potential to help more than 40 million credit invisible consumers gain access to credit, while giving other borrowers a second chance at participating in the credit ecosystem.

There are also newly available data-driven solutions that give consumers the power to improve their financial outcomes instantly. These solutions have allowed millions of thin-file consumers to receive credit for paying their regular cell phone, cable and Internet bills – payments that were never before factored into a traditional credit report – to boost their credit profile.

Together as a financial services industry, we must continue to utilize the most accurate and comprehensive data solutions to enrich credit decisions, while also educating consumers about the options available to them. Educating consumers about the information included in their credit report and ways they can improve their credit histories is an important step in getting the economy as a whole humming again and helping those most in need. 


[1] https://files.consumerfinance.gov/f/documents/cfpb_early-effects-covid-19-consumer-credit_issue-brief.pdf

[2] https://www.washingtonpost.com/business/2021/02/19/how-many-americans-unemployed/

Sign up for the free insideBIGDATA newsletter.

Join us on Twitter: @InsideBigData1 – https://twitter.com/InsideBigData1

Leave a Comment

*

Resource Links: