Dean Velentzas from the CLA reviews the 2023 TransUnion Canada Summit

After an exhilarating experience at last year’s TransUnion Canada Summit, where I documented my experience in this op-ed, I was thrilled to have been invited to TransUnion’s 2023 event. The theme, “Finding Opportunity for Profitable Growth,” set the stage for captivating discussions covering a wide range of contemporary credit dynamics. From exploring credit inclusion for new-to-credit (NTC) consumers to unraveling the complex psyche of Gen Z and Millennials, and addressing the ever-present challenge of fraud in the digital age, no aspect of the credit industry was left unexplored.

Suiting up for success at the TransUnion Canada Summit!

This year’s Summit took place at the Globe & Mail Centre, an exceptional venue that combines elegance, functionality, and panoramic views. Stepping into this architectural gem, one is immediately struck with a very welcoming vibe, characterized by sophistication and professionalism. As I ascended to the 17th floor, anticipation filled the air, fueling the excitement for the insightful discussions and business opportunities that awaited.

The Exterior and Interior of the Iconic Globe & Mail Centre in Toronto

Armed with a freshly brewed cup of coffee and savoring a delectable buttery croissant, I made my way to the main stage, where Matt Fabian, the Director of Research & Consulting at TransUnion Canada, was delivering an outstanding presentation on key trends and critical dynamics in the consumer lending marketplace. Matt’s insights shed light on various themes, ranging from consumer resiliency and financial fragility to growth opportunities and evolving risks. The standout takeaway from Matt’s address was the imperative for lenders to embrace a fresh perspective in the face of evolving risks. Regulatory changes, interest rate fluctuations, and rising rates of digital fraud will undoubtedly impact portfolio composition and growth prospects, necessitating adaptive strategies. Matt’s presentation left me with a renewed outlook and a wealth of insights to contribute to future CLA Roundtables.

Matt Fabian, with his arms wide open for digital acceleration 

TransUnion Insights Showcasing the Key Implications For Lenders to Consider in the Future

I was particularly eager for the next presentation, considering my extensive focus at the CLA on developing innovative solutions to facilitate the graduation of borrowers from non-prime to prime credit. The new-to-credit (NTC) borrower segment, in particular, presents a remarkable opportunity for substantial growth, making it a crucial moment to prioritize financial inclusion for all.

Nidhi Verma, VP of International Research and Consulting at TransUnion, shed light on the fact that Canadian lenders currently overlook more than 650 million underserved consumers in international markets. These consumers, mainly younger individuals, have distinct needs, preferences, and channels for accessing credit. Nidhi’s insightful comparison of NTC consumers with those who have established credit offered valuable insights into their unique characteristics and behaviors. Here are some key insights that Nidhi found based on her comparison: 

• NTC consumers typically receive smaller initial loan amounts due to their lower risk appetite as individuals with little or no credit history.
• Over time, they accumulate credit balances, indicating their increasing credit needs and growing awareness of credit.
• Convenience plays a significant role in their choice to open their first credit product, whether in developed markets or to manage new expenses in developing markets.

As someone who has been with the same bank since I was 14 years old, I couldn’t help but agree with TransUnion’s findings. So, how can emerging lenders attract Canadian borrowers if loyalty often influences their decisions? Nidhi proposes three essential steps for lenders to consider:

1. ENGAGE RELEVANTLY: Ensure that your products, channels, and onboarding experience cater to the early-stage needs of NTC consumers.
2. LEVERAGE ENHANCED DATA: Utilize alternative data sources to gain a better understanding of NTC consumers.
3. ENABLE CREDIT EDUCATION: Provide education and resources to empower NTC consumers to manage credit responsibly.

Overall, Nidhi’s presentation was incredibly enlightening. It not only sparked a strong desire within me to own a hot pink blazer that perfectly complemented her fabulous pink jacket, but also fueled a sense of urgency to inspire Canadian lenders to heed TransUnion’s advice and embrace the opportunity of serving NTC consumers.

Nidhi Verma, VP of International Research and Consulting at TransUnion

A room full of watchful observers gleaning insights about the NTC market

Once Nidhi’s presentation had wrapped up, I noticed that I had definitely worked up an appetite. I treated myself to some delicious pasta and salad and made my way to the rooftop to check out the gorgeous view. As I meandered around, taking in the scenery, I stumbled upon some familiar faces from goeasy. Our conversation began with the usual small talk about the weather and Bank of Canada rate hikes, but we also delved into more significant discussions,  particularly related to the well-being of our planet. We eagerly discussed the CLA’s Sustainable Finance Summit at the EY Tower on September 6th, where experts have been invited to debate crucial topics ranging from strategies for implementing Global GHG Accounting and Reporting Standards in the Financial Industry to the ingenious ways financial institutions are employing risk quantification techniques to comprehend the current vulnerabilities posed by climate-related risks. As I babbled about OSFI’s new governance and risk management expectations for climate-related risks, I suddenly realized that the next presentation was about to begin.

My Lunchtime View 

Being a cusper (someone born between the millennial and Gen Z eras), I felt a strong sense of relatability to the data presented in “Understanding Gen Z and Millennials: A Perspective into the Credit Market’s Next Growth Engine.” In her session, Monique Ardizzi delivered a thorough review of various crucial aspects. Firstly, she evaluated the market size and recent consumer credit trends within the Gen Z population, shedding light on the landscape’s dynamics. Ardizzi went on to compare key credit characteristics, including participation, risk, utilization, and performance, between Gen Z consumers and their Millennial counterparts, providing valuable insights into the similarities and differences. Lastly, she highlighted essential implications for lenders to consider when engaging with Gen Z consumers, offering valuable guidance for portfolio growth. There is no doubt that lenders have a significant opportunity to strengthen portfolio growth by developing and implementing a targeted strategy for these emerging consumer demographics. 

Monique Ardizzi, Manager, Data Science and Analytics at TransUnion

The next session, led by Andrew Sigfrid, was titled, “Advantage Undetected: How Fraudsters Benefit from Obscurity.” As the CLA nears the completion of its response to the Consultation on Strengthening Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime, which is aimed at enhancing operational results, addressing risks and vulnerabilities, upholding international commitments, and responding to the recommendations of the Cullen Commission, I was interested to hear TransUnion’s perspective on the rising rates of fraud in various lending segments. Notably, Sigfrid highlighted a staggering 189% increase in suspected digital fraud attempts from Canada between 2022 and 2019.  This statistic undoubtedly raises important considerations for lenders. Fraudsters exhibit opportunistic behavior rather than actively seeking credit, making it challenging to detect their fraudulent applications that often appear indistinguishable from legitimate ones in terms of limits or loans assigned. However, as exposure grows throughout the credit lifecycle, the need for data beyond demographics becomes crucial to identify and combat fraud effectively. Victims of fraud skew towards those with

higher exposure, but the reality is that anyone can fall prey to fraudulent activities. To mitigate these risks, it is imperative for lenders to employ a combination of fraud tools and credit risk management tools, particularly during the origination phase, in order to minimize exposure. Rethinking the analysis of traditional credit data by considering factors such as velocity and discrepancies of individual personal identification elements provides a substantial boost in fraud detection capabilities. The insights from Sigfrid’s presentation underscore the pressing need for lenders to enhance their strategies and technologies to proactively identify and prevent fraud, safeguarding both their own interests and the financial well-being of their clients.

The last research-heavy session of the day was a captivating deep dive into the POS/BNPL industry, led by Charlie Wise, Senior Vice President of International Research and Consulting at TransUnion. Over the past year, POS/BNPL lending has gained significant traction among consumers, attracting both increased market attention and regulatory scrutiny, thereby fueling the need to understand consumer behaviors within this space. In the ever-evolving landscape of consumer finance, it is evident that consumers are actively seeking new avenues to finance their purchases, emphasizing convenience and effective budgeting as crucial factors. Contrary to concerns of cannibalization, buy-now-pay-later (BNPL) loans have emerged as a driving force behind the growth in the lending market, presenting a promising opportunity for all stakeholders involved. Despite several published articles aiming to explain this new payment opportunity to consumers, businesses, and retailers, BNPL still remains somewhat misunderstood. Fortunately, the CLA’s BNPL Roundtable consisting of prominent solution providers and key stakeholders in the industry, diligently works to dispel misconceptions surrounding BNPL throughout Canada, exemplified by resources such as the CLA’s BNPL Myth Debunker. The CLA eagerly anticipates collaborating with TransUnion to delve deeper into the opportunities presented by BNPL, contributing valuable resources and thought leadership to the field.

Charlie Wise, TransUnion Senior Vice President of Research and Consulting

Just when I thought the day was coming to a close, I was pleasantly surprised to learn that a sports legend was in our midst, ready to address the room. Enter Hayley Wickenheiser, a remarkable individual who embodies resilience and achievement in both the world of high-performance sports and as a medical doctor. Drawing from her experiences on the front lines, where she championed securing PPE for Canadians, she offers profound insights into the significance of fostering personal and professional resilience and strength when they are needed most. Hayley’s presence truly added the perfect finishing touch to a day filled with knowledge and insights. She left the crowd with a resounding call to action for all the financial services titans in the room, that with the right kind of teamwork, there are no bounds to the immense positive change we can bring forth.

 A Powerful Speech Against the Backdrop of a Breathtaking Skyline

I’d like to thank @Jordan Malandra and the rest of the TransUnion Canada team for making me feel welcome, and I look forward to seeing everyone at the next big event!