Consumer To Drive Online Credit Report Business |
|
The aggressive gains that the online credit report industry will achieve over the next several years are due to the ever expanding consumer and small business markets and new government regulations that are creating a high demand for credit report information. The consumer segment of the online credit report market has estimated revenue of $500 million, expected to double by 2007. On the other hand the business credit segment of this industry is having a very slow growth.
The passing of the USA Patriot Act in 2003 has created a new market for fraud detection products that spans the entire financial sector. In 2002, the market leader Equifax stated that flat growth from its core credit information services was not going to slow it down. The company acquired Naviant, a market research firm in August, thus giving a boost to its Marketing Information Services division. In 2003, it received an $80 million to $90 million top line contribution from Naviant. Its partnership with Fair, Isaac, a developer of credit scoring system in 2001, has resulted in a substantial expansion of its online credit report business. It has added 3-in-1 Credit Report and Credit Inform to its list of services, which has increased its sales from consumer products 80% to $39 million in 2002. It expects its online credit report sales to be in the $60 million to $70 million range in 2005. At the start of their operations, their aim was to provide the consumers with their own credit information to better enlighten, enable and empower them. Equifax has also partnered with Regulatory Data Corp. to begin offering a new service that helps financial institutions comply with the USA Patriot Act. Revenue of $10 million to $20 million was generated in 2003 with this service. Equifax is now all set to take on D&B (Credit Reporting Agency) for small business credit information market in 2005. They now have the critical mass required to deliver comprehensive reports and portfolio reviews to 14 million of small businesses on whom they have the financial information. In 2005, Equifax expects to generate between $150 million to $180 million in sales from acquired businesses and online credit report. D&B is continuing to pursue its plans for growth strategy and it is going in for cost cutting and reinvestment in 2005. It has a surplus of $330 million due to the cost cutting and reinvestment during last year and it plans to reallocate this amount of money this year. Besides other areas, D&B executives want that there should be reinvestment in the company's online credit report business, which has recorded near flat growth in recent years. D&B has expanded its database of company information by its recent investments in the online credit report area, which includes the development of new products, such as real-time credit analysis tool Global Decision Maker, which garnered 121 licenses for the year, and the launch of Small Business Risk Insight. An enterprise version of its Risk Assess Management solution was also launched by D&B, which invested heavily in small business credit information solutions in 2002 and this will be the key to its performance of online credit report business. D&B also partnered with Fair, Isaac in July 2002 to develop small business risk assessment solutions and subsequently launched Small Business Risk Insight. European credit information sales were down 1% last year even after the acquisition of Data House, which added two percentage points of growth to the company's European segment. TransUnion also partnered with Fair, Isaac in November 2002 to launch new consumer services based on TransUnion credit information and FICO credit risk scores and it is set to realize revenue growth through the launch of online credit report. It also acquired Truelink, a developer of credit-based products for consumers and is providing it with credit reporting and monitoring services, which it then provides to its customer base of financial institutions and consumers. |
