Steve Wagner's keynote address at CFSI

1. CFSI Keynote address
June 2012
Steve Wagner | Experian
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2. Session focus
 Reinvigorated focus on the consumer
 The underbanked community is important
to all of us
 What do we need to do?
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3. The consumer is more important today
than ever before
Pre-recession Today
Bank
Satisfying demand safety, soundness
and profit
Pipes wide open Empowered
consumer
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4. The industry is buzzing
 A consistent theme in the press
 A focus of regulators
 Recent research projects growth
These consumers aren’t always
who you think they are
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5. Underbanked market conditions
An estimated 64
million consumers
have little or no
credit history and are
unscoreable by most
traditional credit These
score models underserved
consumers don’t
always have
access to the
most cost
effective credit
products
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6. What population are we talking about?
 Age
 Banking status
 Credit status
 Interest level
 Stability status
 Citizenship status
 Income/wealth status
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7. Who are underbanked consumers?
Experian no hit analysis – March 2012
 Income levels vary  Education levels
► 18% <=$24,999 ► 13% less than high school diploma
► 18% $35,000-$49,999 ► 9% high school diploma
► 23% $50,000-$74,999 ► 12% some college
► 28% >=$75,000 ► 6% bachelor or graduate degree
 Ethnicity is diverse  Automobile data
► 27% Hispanic ► 73% no match or have 0 vehicles
► 21% Caucasian ► 11% have 1 vehicle
► 12% African American ► 16% have 2 or more vehicles
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8. 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 Sender
Sender model income bands $25 – 75k
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9. Who are underbanked consumers?
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
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10. Who are underbanked consumers?
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11. What do we need to do?
 Broaden our view of the consumer
 Drive insight from data
 Empower the consumer
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12. Broaden our view of the consumer
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13. Drive insight from data to provide lenders
confidence to underwrite
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14. Empowering consumers
While driving business results
 Shift in marketing
 Share credit history
 Understand credit and its impact
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15. Empowering consumers
Credit education works! | Consumers take action
Educated Control
Action
group 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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16. In summary
 The focus has changed
 Underbanked consumers are sometimes
different than you expect
 We can evaluate and empower them
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17. ©2012 Experian Information Solutions, Inc. All rights reserved.
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