The Creditinfo Chronicle
Covid – 19 has hit the world with a “double shock”: an unprecedented contraction in supply and demand coupled with a health-economic conundrum. For Africa, and the UEMOA region, the immediate picture is bleak. However, there is hope if the financial sector uses the situation as a trigger for accelerated transformation of lending processes and products, taking the lead from other sub-Saharan markets and levering advantage of the robust financial infrastructure in place.
The privilege of living where I don’t feel threatened by systematic discrimination doesn’t mean I can turn a blind eye and pretend this is not impacting me. It is affecting my friends, my colleagues, millions of people I don’t know, and the world, we, as parents, leave to our children.
The world is currently facing unprecedented economic challenges resulting from the COVID-19 pandemic. This was initially reflected in drops in oil prices, followed by the falling stock market and more recently employment levels. Research by the UN suggests global GDP is likely to shrink by around one per cent this year and could contract further if restrictions on economic activity extend beyond the second quarter.
The Head of the company says a positive credit register is needed for boosting the Estonian credit market. Stefano Stoppani, Dubai-based Chairman of the Board of Creditinfo providing business information, solvency assessment and market analysis, intended to visit its offices in Estonia and the other Baltic countries in the beginning of March, but COVID-19 hampered with these plans. Europe is cautious in regulating both data protection and open banking. The aim of the PSD2 directive is to give third parties – licensed companies – access to a person’s bank account information. This is not done just because, but for providing better service, and obviously the account holder must authorize this. The third-party, for example, the creditor, can then see the income of the person and what the money is spent on. Information is needed to determine if the person is able to pay back the loan (s)he wants.
Data is the new oil, but quality is paramount
In 2017, The Economist ran a cover story portraying data as the new oil, (certainly not last week’s oil), calling it “the world’s most valuable resource”. Data is pervasive and is collected regarding virtually everything that happens. Essentially it comes down to one simple cycle, as described in that 2017 issue: “By collecting more data, a firm has more scope to improve its products, which attracts more users, generating even more data, and so on…” Information is power (for credit bureaus, the power to enhance market lending effectiveness). But there is a catch; because not any kind of data will suffice. In the world of credit, for it to be valuable, data must be complete, high quality, regularly transmitted and verifiable. High-quality data has a deeper, more transformative power. In this industry, data quality and completeness are critical for the successful impact of credit bureaus, and Creditinfo has, since its founding, had a clear focus on this area to support banks, MFIs and other institutions for constant improvement.
April 28, 2020. Creditinfo Lithuania today introduced the new debtor reporting system “Creditinfo CO”. The system will give businesses the ability to learn, free of charge and in one place, how many companies are late with payments to their debtors and for what total amount starting from lock down period caused by COVID-19. The aim is to provide businesses with useful information that can help them make decisions on a more informed basis – whether to negotiate with debtors on payment terms, prepare documents for an assignment of debt, or initiate a judicial recovery process. It is also worthwhile checking what length deferments and what size trade credits are being granted to business partners.
The current situation in Lithuania compels businesses to regard its partners with a deeper mistrust. The enterprises face challenges of their survival – how to ensure the continuity of activities, reorientate its services, and not lose the clients. Even those businesses which have a sufficient number of clients, feel worried about whether their partners are still trustworthy and will make payments on time.
Last October, King Mohammed VI of Morocco made a speech to mark the beginning of the new session of Parliament. In the yearly address which traditionally signals the general policy direction for the next 12 months, he called on banks and financial institutions to play “a greater role” in the country’s development. He specifically referred to “simplifying and facilitating access to loans…. and financing the creation of small and medium sized enterprises.”
The rapid spread of the Coronavirus is impacting economic growth and market volatility is increasing thus impacting the industry through weakening investment returns and potentially adverse impact on the capital position of financial institutions around the world. A sustained economic slowdown triggered by the outbreak will put negative pressure on revenues and lead to a material increase in credit risk and a potential spike in claims including for health, credit and event cancellation insurance.
The quality of predictive algorithms plays a crucial role in Creditinfo operations. We strive to help our Clients perform efficient credit decisions through smart and innovative use of data.
In these troubled times, credit providers are searching for actions to take to protect themselves from the worst of the economic storm. Many different options are available however what is often overlooked is the critical need for having accurate and timely visibility on your loan portfolio. This can be the difference between a defaulted credit contract or a recovery.
Never Has There Been Stronger Evidence for Mobile Loans in West African Economic and Monetary Union region
With many countries in the West African Economic and Monetary Union (WAEMU) region in lockdown, bank branches empty and movement constrained; the case for a true, robust mobile lending ecosystem is stronger than ever. In global markets where mobile lending is nascent or inexistent, and the credit market is relegated to physical interaction between underwriter and customer, physical confinement and countrywide lockdowns are the equivalent of death sentences. Credit markets are frozen because critical communication is impossible. On the other hand, where digital wallets and e-money are common, no such barriers exist.
With the stock markets falling and unemployment increasing as a likely outcome of the current virus-led situation, it is important for credit providers to start thinking about management of their portfolios. List of areas to review ranges from collections management, payment holidays to anti-fraud policies. The immediate focus should be on C.A.L.M (Cut-off Analysis and Limit Management). This article provides initial guidelines for those wanting to STAY C.A.L.M.
Íslandsbanki – one of Iceland’s three largest banks – launches new self-service affordability calculator and loan application system developed in collaboration with Creditinfo.
Íslandsbanki is a leader in financial services in Iceland. A universal bank with roots tracing back to 1875. The Bank offers comprehensive financial services to households, corporations, and professional investors in Iceland. It has a strong market share across all domestic franchise areas (Retail Banking, Corporate Banking, Capital Markets, and Wealth Management) and a 25% – 50% market share across all local industry segments.
With a team of 800 employees and a vision of being #1 for service, Íslandsbanki prides itself on being ranked first among banks in the Icelandic Customer Satisfaction Index for six out of seven years. The Bank was voted ‘Best Bank in Iceland’ by Euromoney four years in a row (2013- 2016) by the anker (2014, 2016 & 2017) and ‘Best Investment Bank in Iceland’ by Euromoney (2014).
Íslandsbanki customers can now apply for a mortgage, complete the affordability calculations and application process online, and get results from the affordability calculations in real-time. If followed up with a loan application, they also get confirmation within the day. This very same process would take up to two to three weeks before.
The affordability calculator works for multiple loan types (mortgage, car leasing, and other consumer lending). There is also a new feature for up to three unrelated individuals to apply for a mortgage together. This feature will make it easier for friends, unmarried/unregistered couples, parents, and their children to buy together and thus serves to simplify the buying process for first time buyers.
Creditinfo’s role in the process has been to develop the affordability calculations in collaboration with Íslandsbanki. The Bank connects to Creditinfo’s API but developed the front-end and user interface themselves. Creditinfo data sources used in the calculations can be seen below:
“This is an important step in our strategic partnership with Íslandsbanki. The implementation has been very successful, and we look forward to contributing to their clients improved journey,” says Dagný Dögg Franklínsdóttir, Head of Sales at Creditinfo Iceland.
“This process has so far been more or less manual so there has been a lot of waiting around for our customers, but now we have a fully automatic payment assessment,” says Linda Lyngmo, Project manager of digital solutions at Íslandsbanki. “Now everyone can apply for a credit assessment for mortgages, car loans or other loans on the Íslandsbanki website and get an answer about their payment capacity right away.”
Retail lending in Kenya has taken a unique path. It has skipped some stages typical for developed markets and climbed to heights that can be admired and envied. Ironically, this happened not due to economical advantages but rather due to certain historical deficiencies.