Navigating the Financial Terrain of 2024: Trends, Challenges, and Opportunities

As we navigate the financial terrain of 2024, economic volatility has become the standard. Here are some trends, challenges and opportunities to consider.

US consumer financial metrics are reaching All-Time Highs across various categories.

Trends reflecting the dynamic state of the economy

• According to the FDIC, a record-high 95% of Americans now have access to a bank account
• Average FICO® Scores for US consumers have soared to an all-time high of 718
• The current average interest rate for bank credit cards has hit 22.8%
• Prices remain 17% higher than pre-pandemic levels
• 96% of US companies were targeted with at least one payment fraud attempt last year

Challenges in assessing financial health

As consumers continue to change how they acquire credit, traditional credit scores remain unchanged, portraying a delayed and incomplete financial picture without real-time inputs. For instance, BNPL, the fastest-growing form of credit with 56% of Americans participating, is largely excluded from traditional credit scores. Additionally, medical debt is no longer included in credit score calculations. For many financial service providers and lenders, this makes having a true picture of financial health and calculating accurate debt-to-income calculations near impossible.

Despite these challenges, the dynamic landscape of digital transactions and online banking industry presents opportunities. Recent findings from a Harris Poll reveal an intriguing trend: 71% of America’s consumers and borrowers are open to sharing additional data for an improved overall experience, reflecting a notable shift in the realm of personalized and efficient financial services. Simultaneously, the American Bankers Association reports a significant majority of Americans (71%) now prefer managing their accounts through online platforms or mobile apps, signaling a widespread departure from traditional branch-based banking to digital banking.

Opportunities in the shifting landscape of consumer banking insights

This transition underscores the transformative impact of technology on consumer preferences, prompting US banks and financial institutions to prioritize seamless experiences and customer needs.

Additionally, the relationship between consumers and banks presents a valuable opportunity to leverage these insights for an improved assessment of consumer financial health, stability, and the identification of potential fraud—a crucial factor for well-informed decision-making in today’s ever-evolving financial landscape.

In 2024, as organizations navigate a rapidly evolving landscape, tracking changes in consumer accounts, email addresses, phone details, and payment success rates becomes pivotal for optimization. Not only does this help identify potential fraud, but it also empowers organizations to make smarter decisions, emphasizing the importance of staying ahead in the ever-changing dynamics and advancements of the financial services industry.

Some examples of valuable key findings from ValidiFI data studies:

• A consumer applying with a bank account seen with 5 other consumers within 90 days increases the default rate by 60%.
• Combining 3 or more phone numbers with a single bank account results in a 62% increase in risk.
• Applicants with 2 or fewer DDA’s perform 60% better than those with 3 or more in a 90-day period.
• Applicants with First Party Fraud Returns (R8, R10) frequently repeat the behavior.

In summary, the financial landscape of 2024 presents its own unique challenges and opportunities financial service organizations. Navigating through these dynamic trends requires a keen understanding of evolving consumer preferences and the strategic use of technology. Assessing the consumer-bank relationship can help safeguard against fraud, enhance risk management models and provide confidence in decisions and transactions.

To learn about ValidiFI and our robust solutions, contact us today!