Business and market overview
Experian provides information, analytical tools and marketing
services to organisations around the world, ranging from small
start-up businesses to multinational corporations. Clients use these
services to manage risk, find and retain customers, and automate
decision-making. Experian also helps individuals to manage their
credit relationships and to minimise the risk of identity theft.
Experian’s vision is for its people, data
and technology to become a necessary
part of every major consumer economy
in the world.
The Group reports its financial performance on a geographical basis across four regions – North America, Latin America, UK and Ireland and EMEA/Asia Pacific. Its activities in these regions are grouped into four principal business lines.
Credit Services
Credit Services helps organisations to acquire new customers for credit products, to predict and manage credit risk, and to reduce their exposure to bad debt and fraud. Experian maintains very large, comprehensive databases that hold the credit application and repayment histories of millions of consumers and businesses. The Group owns 13 consumer credit bureaux and ten business credit bureaux and has an interest in a further two consumer and two business credit bureaux around the world.
Decision Analytics
Decision Analytics enables organisations with large customer bases to manage and automate huge volumes of day-to-day decisions. Experian’s clients include international banks, utility companies and public service providers, who rely on its predictive tools and sophisticated software to control decision-making at all points of contact with customers.
Marketing Services
Marketing Services helps clients to find and retain customers, using the most appropriate channel and message. Experian gathers extensive geographic, demographic and lifestyle information on consumers and businesses. The data is used in conjunction with advanced analytical systems to enable clients to profile their customers, undertake highly targeted campaigns and measure their marketing success rates and return on investment.
Interactive
Interactive enables consumers to manage and protect their personal credit files and to make more informed purchasing decisions. Experian provides credit reports directly to consumers, together with credit scores and tools for preventing identity theft. It also provides businesses with lead generation by connecting them with consumers over the internet.
Market position
Experian is the global leader in its
industry, with strong market positions.
The Group is nearly twice the size
of its nearest peer and considerably
broader in its capabilities and global
reach. This diversity and balanced
spread of revenues provides Experian
with a degree of protection against
fluctuations in economies, as well as
significant competitive advantage.
Competition for Experian’s products
and services often comes in the form
of niche, localised providers. There
is no single competitor that operates
across all four principal business
lines, although the Group has a
number of competitors within these
activities.
Credit Services
In consumer credit information, Experian is one of three providers in the US; the others are Equifax and TransUnion. Experian is the clear market leader in both the UK and Brazil, and has leading positions in many other countries.In business information, Experian has leading positions in the UK and Brazil, and in a number of other markets. Dun & Bradstreet is the only global competitor in this field.
Decision Analytics
Experian is the market leader in the provision of credit-related analytics and software in all geographies other than the US, where Fair Isaac is dominant. There is also competition in individual markets from smaller, localised players.Marketing Services
In the US, large marketing competitors for traditional direct marketing services include Acxiom and Harte-Hanks. Competition elsewhere tends to be fragmented and specialist, particularly in new media.Interactive
Experian’s direct-to-consumer, credit information business is the clear market leader in both the US and UK. In the US, competition is provided by Equifax, TransUnion, Fair Isaac and other smaller specialists, but Experian is more than twice the size of any of these competitors. In the UK, competition is provided by Equifax and smaller niche players.Growth drivers
Experian has many growth opportunities and investing for future growth is a cornerstone of its strategy. Despite marketplace challenges caused by the global recession, the Group has continued to deliver strong financial performances due to the flexibility and diversity of its business model.Credit-related activities
In the short term, Experian is a beneficiary of increased demand for its countercyclical products, which help lenders calculate and preserve capital and manage loan portfolio risk.In the medium term, growth prospects for Experian’s credit-related activities are underpinned by a number of factors: global demand for consumer and business credit; increasing demand for analytics that help institutions and consumers to predict and manage lending risk and prevent fraud; standardisation in technology platforms amongst global financial services clients; and growth in demand for Experian’s products from outside the financial services industry, including telecommunications, utilities, public sector and the US healthcare payments sector.
Marketing-related activities
New communication channels are driving growth in Experian’s marketing-related activities. There is a growing requirement from around the world for marketing campaigns that can be targeted more precisely, executed more quickly, coordinated across multiple channels and delivered with a measurable return on investment. This is stimulating increased demand for the type of expertise, data and sophisticated software and analytical tools in which Experian has invested.Strategy
In order to capitalise on the market opportunities available to Experian and to drive long-term shareholder value, the Group has centred its strategy on three elements:1. Focus on data and analytics
Experian’s core expertise lies in the ownership and operation of comprehensive databases about consumers and businesses. From these it is able to extract significant extra value by applying its own proprietary analytics and software. This combination of data and analytics is a key differentiator.Experian’s principal business lines are characterised by their market-leading positions, high barriers to entry, global reach and potential for long-term growth, as well as their attractive financial characteristics.
The Group is therefore focusing its investment on developing these core capabilities in order to build market-leading positions in credit risk management and targeted marketing. It is also taking advantage of synergies across its credit and marketing activities, where it can leverage a significant number of data management processes to serve clients in both areas.
2. Drive profitable growth
Experian has excellent positions in its two end-markets of credit and marketing and its aim is to drive organic revenue growth by leveraging its scale and focusing on ‘best-in-class’ performance.The Group’s strategic framework for driving profitable growth has the following components:
- Increase global reach: by expanding its global network and extending its existing capabilities into new geographic and vertical markets.
- Innovate to stay ahead: by promoting its culture of innovation and investing in new data sources and enhanced analytics to deliver significant value to clients.
- Drive operational excellence: by leveraging its global scale and common platforms to allow it to deploy global products quickly into new markets.
3. Optimise capital efficiency
Experian is committed to maintaining a prudent, flexible and efficient balance sheet. The Group aims to use its strong cash flow to reinvest in the business to retain competitive advantage and to make targeted acquisitions that fit its strategy and meet its financial hurdles. As credit ratios improve, Experian will evaluate additional opportunities for returning surplus cash to shareholders via dividends or share repurchases.Key resources
People, data and technology are the resources that Experian considers to be fundamental to its business.People
The management of talent is particularly critical to Experian’s success and the Group invests over 40% of revenues in attracting, developing and retaining people. Employees are drawn from as diverse a pool as possible and the ethnic profile broadly reflects that of the populations in which Experian operates (more detail can be found at www.experiancrreport.com).Succession planning ensures that appropriate leadership resources are in place to achieve Experian’s strategic objectives, with plans regularly reviewed by the nomination committee. About two thirds of senior leadership appointments are the result of internal promotions.
The Group assesses and rewards employees according to their contribution to the growth of the business. Success at Experian is also about personal fit with the culture and with the behaviours that are valued by the organisation. These behaviours are tracked and measured as part of a globally consistent performance appraisal system.
In return, Experian invests heavily in ensuring employees have the right environment and skills to perform to the best of their ability. Employees are also actively involved in the planning and direction of their work, at all levels in the organisation.
Employee surveys and forums provide valuable insights into the views of employees and their level of engagement with the business. Experian’s second Global People Survey in 2009 achieved an 84% employee participation, up from 73% the previous year, with improvements across all survey categories. Experian’s performance is now at or above the norm in ten out of 14 of categories when compared with its closest peer group of global financial services companies.Data
At the core of Experian’s strategy, and underlying its success, are comprehensive databases of credit and marketing information on consumers and businesses. The Group strives for market leadership in each of the three key measures of data capability - breadth, depth and quality.Experian invests heavily each year to maintain complete, accurate and up-to-date information, while continuing to add new data sources that may be of value to its clients. The major database update of information from the UK Voters’ Roll was achieved in record time this year.
Experian is also the trusted steward of much sensitive information. It has the obligation to protect this for clients, who are the source of much of the data, and for consumers, who are the subjects of the data. The Group therefore operates very rigorous security and control policies, which are reviewed on a regular basis.Technology
Experian’s information technology (IT) systems are used to store, process and deliver the data that forms the foundation of the business. The Group employs almost 1,200 IT specialists.Innovation is at the heart of Experian and much of the technology provided to clients is developed, maintained and supported by in-house teams across our various locations. Significant efficiencies have been achieved in the year through consolidation of infrastructure facilities and resources.