An introduction to first-party data - What it is, why it matters and how we all stand to benefit - Aire
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An introduction to
first-party data
What it is, why it matters and how we all stand to benefit.
Washington
Credit DC |it’s
where London
due
1 An introduction to first-party dataCredit where it’s due
Powered by first-party data, Aire provides actionable
credit insight to lenders today, better enabling
consumers to build their tomorrow.
Founded in 2014, Aire is a pioneering data and technology company.
The first of its kind, Aire is the only credit bureau to be capturing brand new
data, gathered directly and with consent from the consumer, to inform
real-time credit decisioning for lenders.
Aire received Financial Conduct Authority (FCA) authorization in 2016 and
operates as a consumer reporting agency in the UK and US. Having evaluated
over $11 billion of credit, today insights from Aire are used everyday across
the lending lifecycle of major financial institutions and banks.
A simple purpose, a personal mission, Aire was established to make consumer
credit work for everyone.
www.aire.io | hello@aire.io | @AireScore
2 An introduction to first-party dataContents
01. Credit and the gaps it leaves behind
02. Challenging the credit monopoly
03. How first–party data can help
04. Introducing Pulse from Aire
First–party data stands to deliver a truly holistic
picture to lenders – gathered from the most
valuable, reliable and real–time data source
available: consumers themselves.
Aneesh Varma
Founder and CEO
3 An introduction to first-party data1. Credit and the gaps it leaves behind
Credit and the gaps it leaves behind
The challenge for lenders
When it comes to making credit decisions, lenders rely on
records from ‘the big three’ nationwide credit bureaus.1 These
This lack of clarity has
records are made up of traditional data sources, containing been exacerbated by the
historic — and often incomplete or outdated — credit recent seismic changes
information. This causes an undeniable, yet little understood, we’ve seen across the
problem at the heart of our credit system.
credit ecosystem over
For lenders, the impact of this problem is commercial. For the the last six months, as
rest of us, it’s personal. Cut off from vital sources of short and millions of consumers
medium-term capital, many consumers struggle without access have encountered
to credit for their entire lifetime. For others, it leaves no choice
sudden and unexpected
but the taking on of greater debt by accepting higher cost
alternatives to provide for their families. change to their financial
circumstances.
With lenders assigning different acceptance criteria to financial
products, the opportunity for marginal decline is another area
that leaves so many without access to the credit they could, if
assessed differently, be eligible for.
In the US, the Consumer Financial Protection Bureau (CFPB)
has estimated that 26 million people, or 11% of US adults, do
not have credit records at the major US credit bureaus, and
therefore are considered ‘credit invisible’. Another 19 million
consumers have insufficient information in their credit file to
have a credit score generated for them.2
This lack of clarity has been exacerbated by the recent seismic
changes we’ve seen across the credit ecosystem over the last
six months, as millions of consumers have encountered sudden
and unexpected change to their financial circumstances.
1. ‘CFPB Report Finds 26 Million Consumers Are Credit Invisible’, press release, CFPB, (May, 2015)
2. Data sourced from the U.S. Bureau of Labor Statistics
5 An introduction to first-party dataCredit and the gaps it leaves behind
Once important, now critical
The challenges of job losses and falling incomes are putting
extraordinary pressures on American consumers. According to
How can lenders
the Bureau of Labor Statistics, the unemployment rate (which
responsibly support their
rose to a historical high of 14.5% in April) remained at 7.9%
at the end of September. And those who have kept their jobs customers with the credit
are making less: the US Census Bureau reported in September they need, confident that
that over 110 million Americans have experienced loss of their customers’ current
employment income since the start of the pandemic.3
financial situation won’t
Even with robust government supportive measures such push them into further
as enhanced unemployment insurance stimulus payments, debt in the weeks and
eviction moratoria, and student loan forbearance, millions months to come?
of consumers have contacted lenders for assistance.4 As of
September, the Mortgage Bankers Association estimated that
3.5 million consumers are enrolled in forbearance plans.5
While this need to identify a consumer’s current affordability
and risk of financial difficulty with new data has always been
significant, it becomes critical in the current circumstances.
How can lenders responsibly support their customers with
the credit they need, confident that their customers’ current
financial situation won’t push them into further debt in the
weeks and months to come?
What is most apparent today is that lenders have a clear
responsibility in this climate to serve their customers
proactively. They must look for new ways to detect
emerging risks on the consumer’s behalf rather than
waiting for the fog to clear to pick up the pieces.
3. Data sourced from the United States Census Bureau
4. The CFPB reports that 6% of all outstanding first-lien mortgages reported a zero payment in June 2020, up from nearly zero in
February 2020
5. ‘Share of Mortgage Loans in Forbearance Declines to 6.93%’, press release, Mortgage Bankers Association, (September, 2020)
6 An introduction to first-party data2. Challenging the credit monopoly
Challenging the credit monopoly
The evolution of credit scoring
Historically, if a lender wanted to get more information about
their customer’s creditworthiness, they’d simply ask them. In
So how, in the modern
the 1900s for instance, you’d be invited to visit a loan officer economy, can lenders
who would review you against a series of markers: collateral, return to a fairer model
capacity and character, in addition to your banking history. of credit assessment?
As the 1950s rolled in, the trend to automate saw human The opportunity provided
interaction replaced by computerized scoring systems that by first-party data is
couldn’t emulate the loan officer’s assessment in any great designed to do just that.
detail. Instead, past credit history was paired with a few
bank held data points (a solution credited to the Fair Isaac
Corporation, now known as ‘FICO’). This framework was
refined through the next decades with greater reliance placed
on the gathering of past credit history data, paving the way for
the modern credit bureau model that lenders rely on around
the world today.
So how, in the modern economy, can lenders return to a
fairer model of credit assessment? The opportunity provided
by first-party data is designed to do just that - augmenting
the traditional, historical data already collected by lenders
to deliver a richer, most current picture of the consumer’s
financial situation.
The consumer landscape
The consumer landscape is also undeniably changing.
The financial lives of many of us have, for years, been
interpreted by lenders as unconventional: the self-employed,
the young and those who move around for travel, work or
education are just some of those impacted. Multiple income
streams and the rise of the gig economy are important factors
in causing consumers to face exclusion from the existing credit
system as lenders struggle to score them appropriately using
existing methods.
8 An introduction to first-party dataChallenging the credit monopoly
Understanding daily changes
In today’s climate, predicting the impact on consumers is even
more difficult. The effect of Covid-19 on borrowers is highly When financial situations
unpredictable. Some will be slammed, blown towards default.
are changing daily,
Others may be spared. It depends very much on the sector
traditional data sources
they work in, their personal circumstances and their luck.
are not useful indicators
When financial situations are changing daily, traditional of creditworthiness
data sources are not useful indicators of creditworthiness
or affordability, taking
or affordability, taking months to report change or to record
defaults. They are just not dynamic enough.
months to report change
or to record defaults.
But...
When traditional credit bureau data takes three months
to record change, how can lenders see the needs of their
existing customers to serve them correctly?
When manual follow up costs lenders time and money,
and can yield little tangible outcome, what should they
focus their resources towards?
When Open Banking cannot accurately identify and
categorize cash flow data, how can lenders then validate
the current financial situation of their existing customers?
Loss of
Promotion Pay increase
employment
New world An unexpected
Job loss
reality bill
A missed
Job change Forbearance
payment
9 An introduction to first-party data3. How first-party data can help
How first-party data can help
Shifting the power balance
towards the consumer
First-party data is both
As we’ve explored, lenders have a clear responsibility in this unique and powerful in
climate to serve their customers proactively. They must look offering lenders the most
for new ways to detect emerging risks, focusing on early
up-to-date view of their
intervention and assistance. But how?
customers imaginable.
To do this, lenders must look to the validity of alternative data
sources to help. Gathered not from a traditional credit bureau,
or from social media, but from the individual. The best data, we
believe, rests with the consumer themselves.
We call this first-party data and it is both unique and powerful
in offering lenders the most up-to-date view of their customer
imaginable, complementing the existing data already collected
from traditional bureau data.
A complementary relationship:
Traditional bureau data First-party data
No. of products held Financial capacity
Amount owed Financial character
New credit Stability
Length of credit history Macro-financial position
11 An introduction to first-party dataHow first-party data can help
From furlough or layoffs to an increase in hours due to
a flourishing business, first-party data provides us with
the individual set of circumstances that contribute to the
consumer’s overall picture of financial health - or difficulty. First-party data provides
us with the individual
Most importantly, it also starts to shift the power balance,
allowing the individual to contribute to their own story and to set of circumstances
have a say in how lenders perceive their current circumstances that contribute to the
— delivering the system upgrade the credit ecosystem so consumer’s overall
clearly requires.
picture of financial health
- or difficulty.
The most dynamic, personalized context
Financial character
Such as financial maturity, savings propensity and
credit attitude
Financial stability
Insights across multiple socio-economic dimensions
and changing scenarios
Financial capacity
Including current and future financial position,
actively serviced debts and timeframes, savings
levels, living costs, current and forecasted monetary
inflow and financial support
Macro-financial position
Such as employment prospects, career stage and
household composition
How are they doing right now, not three months or three years
ago? How does the consumer view their career; the stability
of that job; their savings? What is the consumer’s attitude
towards their finances?
Today, thanks to technology, it is possible to gather and
interpret a wealth of first-party information directly from the
consumer - quickly, efficiently and at scale.
12 An introduction to first-party dataIntroduction: the US credit imbalance
Spot sudden financial change with the most dynamic, personalized
context available to lenders today: first-party data.
Julie Liam Victor
Full-time teacher IT consultant Copywriter
Private rental Mortgage in forbearance Recently moved home
Leased car New to credit
Existing debt
Not impacted by Covid-19 New job and higher income Furloughed, at risk of job loss
13 An introduction to first-party dataThe first of its kind, Aire is
the only credit bureau to be
capturing brand new data
– gathered directly and with
consent from consumers
– to inform real-time credit
decisioning for lenders.
14 An introduction to first-party data4.
Introducing
Pulse from Aire
15 An introduction to first-party dataA credit pulse check on your
existing customers
Access rapid, actionable insight on the current financial
situation of your existing customers, fast.
most current affordability
non-discretionary expenses
individual measure of engagement
Aire’s Interactive Virtual Interview lands with your customers via SMS or
email and typically takes around three minutes to complete.
16 An introduction to first-party dataHelping you solve hard problems
1. Digital outreach 2. Clearer insight 3. Fully auditable
Remove the cost and A credit pulse check that better Strengthen your regulatory
inconsistency of manual protects your existing loan evidence of compliant account
customer management book, Pulse provides ability handling, even if things change
processes by replacing lengthy, to pay indicators alongside rapidly for your existing
individual phone outreach with actionable measures of customers.
a single digital solution, built engagement insight.
with your customer at its heart.
Personalised, optimised, fast — Pulse does
the hard work for you, saving you up to
$78 per existing customer.
Pete Bulley
Director of Product
Get started in just days
Validated Total Non-discretionary Measure of
Income expenditure Engagement
Validated using our unique An individualized view of Pulse helps to prioritize your
set of context data, Pulse expenditure that gives greater outreach by measuring the
returns a dollar value for the insight into a consumer’s ability level of interaction of your
gross income that a consumer to service additional debt, and customers.
receives, or has reasonable withstand shocks.
expectation of access to.
17 An introduction to first-party dataAt Aire, we’ve pioneered
the use of first-party data in
consumer credit decisioning
since 2014. By gathering,
validating and processing
that data, in real-time, Pulse
handles the full journey for
your business, seamlessly
and at scale.
18 An introduction to first-party dataAire can help
Credit insights from Aire are used everyday across the lending
lifecycle by major financial institutions.
We’d love to talk to you about the opportunities that first-party data
can unlock for your business, and your customers.
Get in touch with our international team today: hello@aire.io
Ben Harvey Tom Oscherwitz Daniel Bhugon
US Sales US Counsel and Market Lead Lead Product Manager
aire.io/pulse-us aire.io/pulse-us aire.io/pulse-us
‘MOST INNOVATIVE ‘BEST AI PLATFORM’ ‘DATA USAGE & ‘MONEY START-UP ‘FUTURE FIFTY’
VENDOR’ ANALYTICS’ LIGHTNING SHOWCASE’
Risk Technology Awards Juniper Research Future Awards for Product and Wired Smarter Tech Nation
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19 An introduction to first-party data
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