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May 2023 » thefivestar.com 21 May 2023 I N D U S T R Y U P D A T E EMPOWER, ENGAGE, AND EVALUATE T he Financial Inclusion Forum in- cluded several executive roundtable conversations focusing on how to empower and engage more consumers who traditionally do not have access to credit or insurance as well as how to use more inclu- sive ways to evaluate their risk. Topics focused on: » Building consumers' confidence through authentic education and connections » Fostering greater participation with tailored consumer experiences » Embracing innovation to unleash greater fairness, inclusion and sustain- able growth » Exploring what financial inclusion means for the insurance industry » Using nontraditional data to expand credit access and fully assess risk The Forum also included a fireside chat that showcased how a partnership between TransUnion and Pagaya used predictive data- sets and artificial intelligence to extend credit to more consumers. "We were honored to join TransUnion's Financial Inclusion Forum to share how the use of data can make a meaningful impact, ensuring more consumers get access to the financial products and services they need to meet their future goals," said Leslie Gil- lin, Chief Growth Officer, Pagaya. "Pagaya works with partners like TransUnion to help some of the largest banks, fintechs and auto finance lenders enhance their underwriting decision platforms with our credit intelli- gence network to bring more consumers into the mainstream economy." Financial Inclusion a Balancing Act One of the key tenets of the Financial Inclusion Forum was that not all consum- ers follow a traditional credit path and that businesses need to leverage new data sources, particularly when considering first-time credit offerings to previously unscorable customers, who despite a lack of credit data, may ultimately prove worth the risk. A recent TransUnion study found that, in 2022, 5.85 million consumers opened their first credit product and became new-to-credit (NTC). While Gen Z made up the largest part of this group at 61%, many consumers in old- er generations also opened credit for the first time: millennials (21%), Gen X (11%), baby boomers (6%), and Silent Generation (1%). A key takeaway from the study: NTC consumers are generally good risks when compared to other established borrowers with similar credit risk profiles. "A delicate balance exists for organi- zations to support consumers while still managing risk within their portfolios," said Hilary Chidi, EVP, Global Credit Risk Solutions and Chief Sustainability Officer at TransUnion. "Superior insights lead to better decision-making for lenders, and, in turn, the right opportunities for consumers. In these challenging times of stubbornly high inflation and rising interest rates, it is even more important to have a holistic view of a consumer's financial position." FLAGSTAR DONATES $1M TO COMBAT APPRAISAL BIAS N ew York Community Bancorp (NYCB) has announced that its subsidiary, Flagstar Bank, has donated $1 million to the Appraiser Diversity Initiative (ADI), a collaboration between the Appraisal Institute, the National Urban League, Fannie Mae, and Freddie Mac. The ADI aims to attract more diverse applicants to the appraisal field, overcome barriers, such as education and access, and provide support to help aspiring appraisers achieve profes- sional success. "Curbing racial bias in real estate and appraisals has not garnered the attention of more familiar barriers to homeownership for minorities, such as the lack of funds for a down payment and credit scores," said Thomas R. Cangemi, President and CEO of NYCB. "Now with the involvement of a government task force and the advocacy of the Appraiser Diversity Initiative, paths for success are being developed for diverse, aspiring appraisers." Flagstar's funding of the ADI will: » Support recruiting, training, and cre- dentialing of diverse appraiser trainees » Support pathways to appraiser licens- ing through industry connections and experience, including simulations of the appraisal experience as an alter- native to the traditional supervisory "Now with the involvement of a government task force and the advocacy of the Appraiser Diversity Initiative, paths for success are being developed for diverse, aspiring appraisers." —Thomas R. Cangemi, President and CEO, NYCB