cfsi keynote address - june 2012

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CFSI Keynote address June 2012

Steve Wagner | Experian

2©2012 Experian Information Solutions, Inc. All rights reserved.Experian Public.

Reinvigorated focus on the consumer

The underbanked community is important to all of us

What do we need to do?

Session focus


The consumer is more important today than ever before

Bank safety, soundness and profit

Empowered consumer

TodayPre-recession

Pipes wide open

Satisfying demand


These consumers aren’t always who you think they are

The industry is buzzing

A consistent theme in the press

A focus of regulators

Recent research projects growth


Underbanked market conditions

An estimated 64 million consumers have little or no credit history and are unscoreable by most traditional credit score models

These underserved consumers don’t always have access to the most cost effective credit products


What population are we talking about?

Age Banking status Credit status Interest level Stability status Citizenship status Income/wealth status


Income levels vary

► 18% <=$24,999

► 18% $35,000-$49,999

► 23% $50,000-$74,999

► 28% >=$75,000

Ethnicity is diverse

► 27% Hispanic

► 21% Caucasian

► 12% African American

Education levels

► 13% less than high school diploma

► 9% high school diploma

► 12% some college

► 6% bachelor or graduate degree

Automobile data

► 73% no match or have 0 vehicles

► 11% have 1 vehicle

► 16% have 2 or more vehicles

Who are underbanked consumers?

Experian no hit analysis – March 2012



Demographics of money transfer remitters

Between 18-35 years old

Typically balanced gender – some skews by culture

Majority are single

80% have Internet access

International sender – Higher proportion of married and born in other countries Long-term residency in the U.S.Domestic sender – typically single and U.S. born

International cultures – Latino / Hispanics, African Americans, Africans, Asians, Eastern Europeans

Some hold a high school degree Receiver likely to be better educated than the SenderSender model income bands $25 – 75k

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Changing patterns and behaviors of unsecured short-term loan consumers

95% have an open bank account ( DDA)

16% have an open credit card trade

40% earn more than median income of $49,000

35% took out a payday loan to catch up on bills

34% took out a payday loan to pay for an unexpected event

38% identified as generally financially healthy but have fallen on hard times

33% bad credit, can’t get a loan anywhere else

Stable employment history 44% on job for 5+ years

67% recently denied for credit other than short-term loan market



What do we need to do?

Broaden our view of the consumer

Drive insight from data

Empower the consumer


Broaden our view of the consumer


Drive insight from data to provide lenders confidence to underwrite


Empowering consumersWhile driving business results

Shift in marketing

Share credit history

Understand credit and its impact


Empowering consumersCredit education works! | Consumers take action

Action Educated group

Control group

Average VantageScore®

Total number external collections trades

Open revolving trades >100% utilization

Balance on open revolving bankcards

Trades voluntarily closed in last 6 months

Number mortgage inquiries

Directional, preliminary results


In summary

The focus has changed

Underbanked consumers are sometimes different than you expect

We can evaluate and empower them

cfsi keynote address - june 2012

Economy & Finance