Top 7 Insights for the Retail Banking Industry

Our industry leaders are constantly providing and sharing insightful knowledge on topics including factors impacting consumer behavior and banking, consumer expectations and our overall economy. In this article, we share our top insights from experts, Tom Aliff, Risk Consulting Leader; Anna Fisher, VP of Identity & Fraud Consulting; and Jennifer Cox, Business Solutions Engineer Leader at Equifax.

Skip to a specific session to learn our top insights pertaining to that topic:

• Elevated Economic Uncertainty Fueling Changes in Consumer Banking
• Staying Competitive in an Uncertain Landscape

Elevated Economic Uncertainty Fueling Changes in Consumer Banking

1. Empower yourself to test various data sources or implement the data at the go

Recently, Tom Aliff, Risk, Consulting Leader at Equifax, explained the importance of data and working with data when it comes to the elevated economic uncertainty our world is facing today. Aliff mentions, “To first start off is, in order to have access to it (data), you have to have access to it (data). And, if you've not enabled yourself to either test various data sources or to have them implement it at the go, then that's where things could be more problematic.” 

In order to adapt, one would need to have the data first to know whether to adapt or not. Aliff has worked with large amounts of alternative data and continued to describe how you can test, evaluate, and know what the data looks like, which according to Aliff, is a process called configurable modeling. Configurable modeling is when one analyzes multiple data sources which can include specialty finance data, credit data, phone data, and other data that could be affecting the economy. By examining the order, which is best, which is worse, and top attributes for underwriting a credit card in near prime space, you will be able to know what data you have available and how you can pull and use that data. 

2. Take a logical approach

When it comes to obtaining alternative data, it is important to take a logical approach. Jennifer Cox, Business Solutions Engineer Leader at Equifax explained that one does not need to receive the most obscure alternative data to maximize their policies. As Aliff mentioned previously, examining data as simple as phone bill data and car data can provide enough information for one to analyze and be able to think logically about what would make the most impact. 

3. Consumers are in the driver’s seat

Lately, there has been an increase on digital to drive transactions. Before COVID-19, we here at Equifax worked on loans with a subprime lender face-to-face with about 1,500 branches. However, once COVID-19 hit, over 75% of these loans were done online. This was a new area for these businesses to transact in and unfortunately they had to react very quickly. 
Consumers expect a fast transaction. Some companies nowadays can deliver packages within hours. Consumers want the same experience and service with banks. Consumers want banks to take care of them, keep them safe and keep their personal and credit information safe. Consumers also want the banks to know them and what they want from banks. It is important to know who your customer is, what they want and the importance of saying “yes” more. It’s about customization, but without being too intrusive. Data and technology enable saying “yes” more to customers. 

4. Good credit isn't enough anymore, a frictionless experience is

Good credit isn't enough anymore. In fact, according to Anna Fisher, VP of Identity & Fraud Consulting at Equifax, we've seen that if you can't provide a frictionless experience for consumers, 25% of them will abandon the process and move on and do something different. That being said, it is important to try to find that balance between “having your cake and eating it too.” It is important to want protection and for it to be easy for the consumer and for you trying to gather the information. Consumers want you to not know everything about them, but they want you to know enough about them that they can experience overall a seamless, digital engagement. 

Staying Competitive in an Uncertain Landscape (Fintechs)

5. Identify new customers by adopting new practices

Retail banks and fintechs are starting to adopt practices that help consumers say yes more, while making sure they do not risk falling behind. Promoting greater financial inclusion is one way to have many more consumers included. Approximately 7.1 million U.S. households are unbanked – meaning they rely on alternative financial services rather than traditional financial services such as bank accounts and credit cards – according to the Federal Deposit Insurance Corporation (FDIC). Banks and financial institutions that only look at a consumer’s credit score could be missing out on a new market of financially viable consumers.

Alternative data sources can help credit files paint a broader picture of a consumer. Many of these consumers qualified for credit opportunities that may not have existed for them before. Incorporating alternative data sources can help banks and financial institutions say ‘Yes’ to more customers – helping meet the need for credit on demand and access to credit. 

6. Harness Digital Enablement

Every consumer and bank’s security is at risk especially when it comes to fraud. Synthetic identity fraud is on the rise, and consumers are increasingly aware of such risks. That is why, Aliff states, that many banks and fintechs use digital enablement to meet consumer demands for both banking on demand and to live in a safe digital world. By leveraging real-time consumer verifications and authentication, banks can build trust across the customer journey and fully harness digital enablement in order to prevent robust fraud. 

7. Leverage data and segment 

When continuing to foster your existing relationships, improve your customer experience, and grow your share of wallet, it is important to leverage data and segmentation. Banks and financial institutions need to make sure they’re meeting the evolving demands of their existing customers. This starts with looking at how they can increase share of wallet with their customers, while identifying customers that have additional assets and growth potential. Working with a third-party vendor, like Equifax, that examines portfolios and leverages data can uncover areas they might be missing out on. By leveraging data-driven insights they can segment potential audiences to realize new opportunities. This will then allow banks to develop messaging and offerings better tailored to new and existing customers’ needs.

For more insights on the retail banking industry, contact an Equifax representative today.