Before the recession, consumers felt investment rich, banks were doing everything they could to satisfy demand…Today everything has changed…
Point #1:New York Times article: “Unemployment is bad enough; underbanked can be worse”WSJ: “New attempts to woo unbanked consumers”New Market Partners: “The new face of underbanked – your next generation of members?Point #2:Richard Corday from the CFPB “... transparency alone is not enough... it is important that these products (payday and other short-term loans) actually help consumers, rather than harm them.Point #3: From CFSI in 2011:…A survey of financial services providers that cater to the underbanked population found that 87 percent of respondents expect the underbanked market to grow in the next year, and 85 percent expect to expand their offerings to this segment in response to that growth….…The market for underbanked services is anticipated to grow in the next two years, and providers plan to expand their product offerings accordingly….SO IT MUST BE THAT WE KNOW EXACTLY WHO THESE PEOPLE ARE…RIGHT???
>>> And when they do get credit, they often pay more for it.
A lot of us think age has something to do with underbankedSome of us think whether you have a checking account or not qualifies you…….go through the points…We took 4 different approaches to answer this question…
We don’t have perfect data on all of these but I can tell you with certainty some things about them…Point about incomePoint about being ethnically diverseRegarding education: 40% of the no hits we were able to discern education on…and half of them had at least some college, if not a graduate degree!
Call out bold statements
We need to broaden our view of consumers and to do that effectively, we need to isolate each consumer and broaden our view of them individually…Understanding a consumer’s income mattersUnderstanding their potential banking relationships matterKnowing how they live mattersTwo main gaps in credit file today.Rental dataUtility data
Shift in marketing – consumer is doing more and more shopping and evaluating online. And in doing so, they are more empowered than ever before. You’re seeing a shift in marketing in the financial services industry where consumers are opting into being evaluated for marketing offers…even before they actually apply for a loan.Share credit history – consumers need safe and secure vehicles to share their credit data with the people they choose – like landlords, small business owners, etc.And finally, what Experian is finding is that consumers are asking for education about financial services, credit and banking. We receive millions of calls from consumers each year, and we have noticed the tone of the questions we receive changing. Consumers want to understand how their credit report – inquiries, late payments, utilization ratios impact their ability to get financing. So last year, we launched Credit Educator…We took the time to develop a CROA-compliant process……..And what really matters is what the consumers who receive the education do with it. And the early results are in.
They take action.On every measurable condition, consumers who receive credit education are taking action.
In summary, Our focus has shifted collectively in the United States around financial servicesUnderbanked consumers aren’t always who you think they are, they are often more wired in, capable, educated and engaged than you might expect, and many of them are creditworthy.If we are creative enough and we work hard enough there are ways for you to focus on, evaluate and ultimately empower them that is consistent with all of us doing better in our businesses.Thank you.