Presented at CFSA 2018 Annual Conference and Expo Presented by: George Coutros, Clarity’s Chief Revenue Officer Overview: More than 19 million American households consider payday loans a viable option for short-term credit, according to CFSA. Subprime consumers, who are often the most in need of a loan, cannot be ignored. That’s why Clarity Services, now a part of Experian, leverages more than 62 million consumer profiles to better understand the subprime market.

1. How to Retain Your Evolving
Storefront Customers
George Coutros
Chief Revenue Officer, Clarity Services

2. • Industry Trends
• Lender Opportunities
• Best Practices
• Clarity Services
Agenda

3. • Fintech lending further down credit spectrum
• Banks looking to add deposit advance products
• Online lending growing significantly year-over-year
• Lenders leveraging omnichannel marketing
Trend 1: More Lenders Are Competing for Storefront
Customers

4. More than a third of storefront payday borrowers in 2013
shopped for online loans in the next four years
Trend 2: Storefront Borrowers Are More Actively
Seeking Credit Online

5. Trend 3: Lenders Are Using Proven Acquisition Channels
to Reach YOUR Storefront Customers
Growth in Prescreen Mailed Names Growth in Number of Lenders Using Direct Mail
Mail Growth (Names Mailed and Number of Lenders)
Indexed to Calendar Year 2015

6. What can storefront lenders do to
remain competitive?

7. Customer Assessment/Profiling/Underwrite
• Overall quality of customers ?
• Borrower preferences?
• Historical loan performance?
• Intent to repay?
• Ability to repay?
Gain Customer Insights at Time of Acquisition

8. Default Rates by Previous Loan History
Bad Rate by # of Previous Loans
Consumers with 1 previous loan: default 20% lower than new consumers
Consumers with 2-4 previous loans: default 35% lower than new consumers
Consumers with 5+ previous loans: default 65% lower than new consumers

9. FPD Rates by Fraud (Intent to Repay) Score Bands
0
10
20
30
40
50
60
70
1 2 3 4 5 6 7 8
New Customer Default Rates
payday installment

10. Monitor Overall Customer Credit-Related Activity
• Are other lenders marketing to your customers?
• Are your customers shopping for new loans?
• Are your customers involved in potential loan stacking?
• Are your good-paying customers delinquent with other lenders?
Gain Customer Insights Post Acquisition

11. Alert Types:
• Credit inquiry
• Collection inquiry
• Funded loans
• Delinquency status
• Collection status
Portfolio Alerts
• Charged-off loans
• Loans where a positive payment has been made
• Loans that have been paid in full
• PII changes
• Income changes

12. Leverage Best Practices
• Underwriting/Risk Segmentation
• Storefront, Online
• First-time, Returning Customers
• Payday, Installment, Line of Credit
• Pre-Approved Direct Mail
• Pre-screening
• Post-screening
• Portfolio Reviews & Alerts
• Loan Reporting

13. • Largest nationwide, FCRA-regulated non-prime credit bureau
• Robust data on 62 million unique consumers
• Real-time risk management solutions across credit life cycle
• Non-prime consumer subject matter expertise
Clarity Services is now a part of Experian.
Clarity Services