cfsi keynote address - june 2012
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Steve Wagner's keynote address at CFSITRANSCRIPT
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CFSI Keynote address June 2012
Steve Wagner | Experian
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Reinvigorated focus on the consumer
The underbanked community is important to all of us
What do we need to do?
Session focus
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The consumer is more important today than ever before
Bank safety, soundness and profit
Empowered consumer
TodayPre-recession
Pipes wide open
Satisfying demand
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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
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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
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What population are we talking about?
Age Banking status Credit status Interest level Stability status Citizenship status Income/wealth status
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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
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Who are underbanked consumers?
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
Who are underbanked consumers?
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Who are underbanked consumers?
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What do we need to do?
Broaden our view of the consumer
Drive insight from data
Empower the consumer
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Broaden our view of the consumer
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Drive insight from data to provide lenders confidence to underwrite
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Empowering consumersWhile driving business results
Shift in marketing
Share credit history
Understand credit and its impact
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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
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In summary
The focus has changed
Underbanked consumers are sometimes different than you expect
We can evaluate and empower them
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