If we’re serious about empowering consumers, we have to commit to putting tools and products in the hands of all consumers. It’s not enough to cater to consumers that are already in the know, who already take advantage of digital solutions to enhance their financial lives. Empowering consumers has to be about delivering simple products that make it easy for all users to understand potential risks and benefits.
Poll Results Overview
In a poll of 1,500 consumers, we found that people that identify as financially underprivileged and who have received less formal education are more likely to:
- Avoid loans or activities associated with credit checks. This ends up increasing their cost of credit and limiting their choices for jobs, housing, and other important life decisions.
- Not share their data. This makes it difficult for them to improve their credit scores. It also reduces their access to financial management help like budgeting tools or investing tips.
- Feel uninformed. These consumers report that they often feel like they don’t understand what’s going on with their finances. No one should experience this kind of uncertainty.
Basically, it comes down to two correlated issues.
- These consumers tend not to trust third party financial apps, products, or organizations.
- Because of this, they are not tapping into the benefits of accessing and using their personal financial data.
So, the financial services industry needs to do better. The task for financial institutions, fintech companies, and other financial service providers is to connect consumers with their data so that they understand their financial health, perceive the gaps in their financial knowledge, and have access to education and tools. This will ultimately give them more control over their money and their data. Now that’s an empowered consumer.
Linking Data Access to Consumer Trust
With today’s digital tools, it’s easier than ever for consumers to see and use their financial data. However, our research shows that among people who report a high school degree as their highest level of education, only 17 percent are taking advantage of their financial data. It’s clear that we have some work to do.
Part of this work is connecting the dots between data access and improved decision making. According to our survey results, roughly 4 in 10 consumers who use their data (38 percent) feel they get enough out of it to make informed and beneficial financial decisions. When we strengthen the links between access to financial data and clear applicable benefits, we go a long way in increasing consumer trust and adoption.
Promising Consumer-Centric Solutions
One exciting tool to do just this is Experian Boost™. With Experian Boost, consumers can build their credit history, and improve their credit scores, by looping in things like utility bill payment histories. By expanding the usable data for credit reports, Experian Boost opens doors to people that would otherwise be limited by a thin credit file.
The good news: It’s working. According to Experian, 75 percent of consumers with credit scores below 680 saw an increase in their credit score when they used Experian Boost. An amazing 90 percent of thin file consumers were rewarded with higher credit scores and 70 percent of sub-prime users saw an increase in their scores.
These numbers matter. FICO® estimates that 79 million consumers have scores below 680 and another 53 million don’t have enough data to be scored. The new UltraFICO™ Score allows consumers to use information from their checking, savings, or money market accounts to augment their credit files. Imagine the possibilities when we connect these millions of people with their own financial data.
This is what an empowered consumer looks like. Actively engaging with their personal financial data. Tapping into resources and tools. Confident about their financial future.