The Creditinfo Chronicle
Creditinfo: “The BIC reform will make it possible to take a big step towards financial inclusion.”
Reform of BICs, impact of inflation on solvency, feedback from the Checkinfo service – an overview with Sidimohamed Abouchikhi, Regional Director for Francophone Africa of Creditinfo Group, and Director of the Board of Directors of Checkinfo.
Finance News Hebdo: In this inflationary context, what assessment do you make of individuals’ and businesses’ insolvency risks?
Article translated in English as first seen on Finance News Hebdo For more inofmormation visit: www.checkinfo.ma
Creditinfo designated “High Overall Maturity Score” ESG rating by Anthesis
Transport business in the Baltics is in recession, with only Lithuania experiencing a slightly brighter picture
Coface records recovery in air transport, but pre-pandemic figures not yet reached.
The transport sector is the one with the highest improvement in risk scores in the latest Coface Quarterly Survey, although the global macroeconomic outlook remains uncertain. Coface experts note that air transport forecasts and new aircraft orders are providing greater optimism. Transport business is rated higher in Western Europe, the Middle East and Japan, while in Central and Eastern Europe (CEE), including the Baltic states, the transport sector continues to be rated the highest risk. The transport sector in Estonia and Latvia is facing more challenges this year, while in Lithuania the situation has started to improve since Q2, with a decrease in bankruptcies and an increase in the forecasts for businesses.
According to Coface experts, the higher scores in the transport sector are mainly due to the recovery of the Chinese economy and global tourism, as well as to public policy decisions, such as the priority given to rail traffic in Germany. However, overall risks to the transport sector remain very high due to high energy costs and demand still below pre-pandemic levels.
Head of Coface Baltics, Mindaugas Sventickas, points out that it is air transport that has been the activity most affected in the global transport sector, and that it is now recovering rapidly. This is due to the gradual economic recovery from the second half of 2021 onwards, significantly influenced by the opening up of Japan (end of 2022) and China (early 2023), which has facilitated travel conditions for international tourists.
The Coface survey shows that while the number of commercial flights has increased and is now even above pre-pandemic levels, seat occupancy rates remain lower. For example, in the Asia-Pacific region, total passenger traffic in April 2023 increased by 171% compared to April last year, thanks in particular to China. Despite the strong growth, demand in this region remains lower than in 2019 (-18% in April 2023 compared to April 2019).
New orders for Airbus and Boeing aircraft are rising: aiming to fly greener and save fuel
In Western Europe and the United States, Airbus and Boeing have also reported an increase in aircraft orders, reaching 774 Boeing and 820 Airbus aircraft in 2022. At the 2022 Paris Air Show, a number of new orders were announced, with Air IndiGo ordering 500 A320 aircraft and Air India ordering 250 Airbus and 220 Boeing aircraft. According to the experts at Coface, this acceleration in the aerospace industry has prompted the decision to improve the risk assessment of the transport sector in some countries, e.g. France. Many of the production processes of Airbus are carried out in France, with production sites spread over Germany, Spain and the United Kingdom. This has contributed to a better assessment of the transport sector across Western Europe.
“It is also worth noting that the main players in the air transport industry are pursuing a strategy that takes environmental concerns into account. On the one hand, this motivates manufacturers to innovate in order to develop ‘cleaner’ aircraft. On the other hand, it encourages airlines to upgrade their fleets to use less energy,” comments Sventickas.
Cargo transport by sea decreases by almost one third
The situation is different in maritime transport, where activity is slowing down slightly after two exceptional years. Declining sea freight rates, high energy costs and stagflation are adversely affecting the financial performance of sea carriers. The revenues of Maersk and CMA CGM in Q1 2023 decreased by 26% and 30% respectively compared to Q1 last year, although they remain significantly higher than in Q1 2019.
This drop in revenue is primarily due to price effects (a fall in freight rates), while the drop in volumes is smaller, with a 3% annual decrease in the container index for January–April 2023. This drop in volumes is partly passed on to rail and motor transport, which is primarily used for the transport of cargo from ports.
Passenger transport in the Baltic States has not yet reached pre-pandemic levels
When analysing air passenger flows in the Baltic states for the period 2019–2023, the highest passenger traffic is traditionally observed in Q3 of each year. After the pandemic, air passenger traffic in all of the Baltic states, although slowly increasing, has not yet reached the levels recorded in 2019. For example, in Q3 2019, the number of air passengers in Estonia reached 954,000, in Latvia 2,299,000 and in Lithuania 1,821,000. In the same period last year (Q3 2022), the figures were 841,000 (88%), 1,711,000 (71%) and 1,677,000 (92%) respectively. According to Eurostat and Coface, the total number of passengers carried by air in the Baltic states in 2022 was 13,434, compared to 6,094 in 2021, 4,657 in 2020 and 17,548 in 2019.
The situation in rail passenger transport is slightly better. For example, in Q3 2019, the number of passengers in Estonia was 2,105,000, in Latvia 5,256,000 and in Lithuania 1,287,000. In the same period last year, the figures were 1,837,000 (87%), 4,835,000 (92%) and 1,292,000 (100%) respectively. The total number of passengers carried by rail in the Baltic states in 2022 was 27,289, compared to 21,069 in 2021, 22,085 in 2020 and 31,986 in 2019. In Q1 of this year, the figure for the Baltic countries was 6,485.
Sventickas notes that the Lithuanian transport sector is distinguished from other Baltic countries by more optimistic forecasts for 2023: “Although the situation in the Lithuanian transport sector deteriorated in the first quarter of this year, we have seen some positive trends since the second quarter of this year: the transport of freight by sea and water has stabilised and the transport of freight by land has returned to almost pre-pandemic levels. Since February this year, the forecasts of transport companies in Lithuania have become more stable, while previously they had been declining for several months.”
Creditinfo: Optimism of Lithuanian transport companies is good news for almost 200,000 employees in the sector
According to 2022 data, Lithuania’s transport and storage sector generated 11.2% of the country’s GDP, which is 2.6 times more than the average for other EU countries. In total, there are currently 8,568 transport and logistics companies in Lithuania, employing 171,300 people, i.e. a quarter more than in 2019.
Jekaterina Rojaka, Head of Business Development and Strategy at Creditinfo Lietuva, points out that the majority (72%) of companies in the transport sector in Lithuania are involved in road freight transport. According to the data of July this year, even 6,195 out of 8,568 transport companies registered in Lithuania indicate that their main activity is transportation of goods by land. Transport accounts for over 55% of Lithuania’s total exports of services. The number of air and water transport companies is 21 and 37 respectively; 2,233 companies in the sector provide storage and transport-related activities and 82 companies provide postal and courier services.
“During the pandemic, the risk exposure of Lithuanian transport companies increased due to travel restrictions, changes in the demand for goods, and then the rise in fuel prices,” says Rojaka. “In 2022, there was a sharp increase in the number of bankruptcies in the transport sector, which started to stabilise this year. In the first half of this year, bankruptcies in the transport sector accounted for only 6% of all company bankruptcies, compared to 24% in the trade sector and 20% in the construction sector. In total, 35 transport service companies have gone bankrupt since the beginning of the year, compared to 50 companies in the sector that went into bankruptcy in the same period last year.”
Rojaka says that although the number of bankruptcies of transport companies has decreased, the number of new companies has slowed down slightly: last year, despite bankruptcies, new companies were actively registering, while in the first four months of this year that number has contracted by 2%. According to a representative of the credit bureau, transport companies have started to borrow more, and the average debt of a company has increased by approximately 35%. There is also a lower number of companies with a low risk of bankruptcy, that is 58.1%, compared to the overall assessment of Lithuanian business of 69.5%. The share of companies in the transport sector experiencing financial difficulties in 2022 is lower than the national average, and amounts to 13.2% (compared to 17.6% for the economy as a whole).
“With the slowdown in domestic consumption in the EU, transport service providers continue to face challenges this year, with competition in the sector increasing due to limited demand, and service fees shrinking. Waterborne transport has seen a particularly sharp fall: The Baltic Dry index contracted by 57% over the year, and this year similar trends have been observed in road transport,” explains Rojaka. “The best short-term prospects for the sector at the moment are for airlines, which are steadily both increasing the number of flights and trying to rebuild the revenues lost in the pandemic. With inflation gradually slowing and demand stabilising, the situation for land and water transport companies should improve next year.”
Creditinfo Lithuania.
Visit: www.lt.creditinfo.com
Retrospective of the semi-annual statistics of the Register of Payment Failures in Estonia
The Payment Default Register managed by Creditinfo Eesti reflects the debts of private individuals and companies and thus helps to make smart credit decisions. It is the first and oldest register containing debt data, which was established in 2001 by Estonian banks.
There are tens of thousands of people with payment defaults in Estonia
As of the end of the first half of 2023, there were 57,694 individuals with valid payment defaults. Compared to the period a year ago, the number decreased a bit.
When the debt is liquidated, the current payment default is marked as closed – at the end of the first half of 2023, there were 109,766 private individuals with closed payment defaults.
A closed default shows that the debt has been paid, but at the same time it gives the creditor a warning that the person has had problems paying bills in the past and it allows for a more accurate assessment of their creditworthiness. In the case of private individuals, closed payment defaults are published for up to 5 years after the payment default has ended.
The number of companies with payment defaults is increasing
As of the end of the first half of 2023, there were 21,121 legal entities or companies-institutions with valid payment defaults. Thus, there has been an increase of 3.3% compared to last year.
There were 32,836 legal entities with closed payment defaults. In the case of companies, the information provided will be published for another 7 years after the closing of the payment default.
There are more than 150 thousand active payment defaults in the Register
There were 128,405 active payment defaults in the Payment Default Register of private individuals at the end of the first half of the year. The closed payment defaults for private individuals with payment defaults reached to 350,120.
There were 44,472 active defaults of legal entities at the end of the first half of the year. There were 65,816 closed defaults of legal entities.
The number of active payment defaults has increased
In total, there were 172,877 active payment defaults published in the Payment Default Register. If one also adds information of closed payment defaults, the total number of payment defaults in the Payment Default Register is 588,832, which has increased by approx. 6.6% compared to the end of 2022.
By Creditinfo Estonia.
Visit: www.creditinfo/ee/en
Risk Management Framework
Risk management is an essential function for any bank, as it helps to protect the bank’s financial position, reputation, and long-term viability. An effective risk management framework consists of several key components that work together to identify, assess, and manage risks.
Risk Governance
The first key component of an effective risk management framework is risk governance. This involves establishing clear risk management policies, procedures, and guidelines that align with the bank’s overall strategy and objectives. The bank’s board of directors and senior management should be actively involved in setting risk management policies and overseeing the bank’s risk management activities.
Risk Identification
The second key component is risk identification. The bank should have a comprehensive risk identification process in place to identify all potential risks associated with its business activities, products, and services. This includes identifying internal and external risks such as credit risk, operational risk, market risk, and compliance risk.
Risk Assessment
Once risks are identified, the bank should assess the likelihood and impact of each identified risk to determine its potential impact on the bank’s overall operations, financial position, and reputation. This includes assessing the potential impact of risks on the bank’s customers, employees, and other stakeholders.
Risk Mitigation
The bank should develop and implement risk mitigation strategies to manage and reduce the likelihood and impact of identified risks. This may include implementing internal controls, establishing risk limits, and developing contingency plans.
Risk Monitoring
An effective risk management framework should include ongoing risk monitoring to ensure that the framework is functioning as intended. This involves continuously monitoring the bank’s risk management activities to identify emerging risks and ensure that existing risks are being effectively managed.
Risk Reporting
The bank should have a robust risk reporting framework in place to provide timely and accurate information on risk exposures and mitigation activities to the board of directors, senior management, and other stakeholders. Effective risk reporting helps ensure that the bank’s management team has the information they need to make informed decisions about risk management activities.
Risk Culture
Finally, an effective risk management framework should foster a risk-aware culture throughout the organization. This involves ensuring that all employees understand their roles and responsibilities in managing risks and are held accountable for their actions. A strong risk culture helps to ensure that risk management activities are integrated into the bank’s day-to-day operations.
In conclusion, an effective risk management framework is essential for banks to identify, assess, and manage risks. The key components of such a framework include risk governance, risk identification, risk assessment, risk mitigation, risk monitoring, risk reporting, and risk culture. By implementing an effective risk management framework, banks can effectively manage risks and protect their financial position, reputation, and long-term viability.
Joe Bowerbank,
Business Development, Creditinfo Group.
Digital Transformation in Credit Risk Management: What You Need to Know
The rise of digital technologies is transforming the financial industry, and credit risk management is no exception. With the increasing use of digital channels for financial transactions, there is a growing need for credit risk management strategies that can effectively manage risks in these channels. In this blog post, we will explore the concept of digital transformation in credit risk management and discuss some of the key trends and best practices in this area.
What is Digital Transformation in Credit Risk Management?
Digital transformation in credit risk management involves the use of digital technologies to manage credit risk more effectively. This includes the use of advanced analytics and machine learning to analyze large amounts of data in real-time, as well as the development of digital platforms that enable faster and more efficient credit risk management processes.
One of the key benefits of digital transformation in credit risk management is the ability to analyze data more effectively. By using advanced analytics and machine learning algorithms, financial institutions can analyze large amounts of data in real-time, identifying trends and patterns that may be indicative of credit risk. This can help financial institutions make more informed lending decisions, reducing the risk of default on loans and other credit products.
Another benefit of digital transformation in credit risk management is the development of digital platforms that enable faster and more efficient credit risk management processes. For example, some financial institutions are developing digital platforms that enable borrowers to apply for loans online, with the platform automatically analyzing the borrower’s credit risk and providing a decision in real-time. This can significantly reduce the time and cost associated with traditional lending processes, making it easier for borrowers to access credit.
Key Trends and Best Practices in Digital Transformation in Credit Risk Management
There are several key trends and best practices in digital transformation in credit risk management that financial institutions should be aware of:
Use of advanced analytics and machine learning: Financial institutions should leverage advanced analytics and machine learning algorithms to analyze large amounts of data in real-time, identifying trends and patterns that may be indicative of credit risk.
Development of digital platforms: Financial institutions should develop digital platforms that enable faster and more efficient credit risk management processes. These platforms should be user-friendly and easy to access, making it easier for borrowers to apply for loans and access credit.
Integration with other digital platforms: Financial institutions should integrate their credit risk management platforms with other digital platforms, such as mobile banking apps and online marketplaces, to provide a seamless and integrated experience for borrowers.
Investment in cybersecurity: Financial institutions should invest in cybersecurity measures to protect against cyber threats and ensure the security of customer data.
Conclusion
Digital transformation is transforming the financial industry, and credit risk management is no exception. By leveraging digital technologies such as advanced analytics, machine learning, and digital platforms, financial institutions can manage credit risk more effectively, reducing the risk of default on loans and other credit products. As the financial landscape continues to evolve, it is likely that new digital technologies and best practices will emerge, requiring credit risk management professionals to stay up-to-date with the latest trends and developments.
Gary Brown,
Head of Commercial Development, Creditinfo Group.
Credit Bureaus: Cross Border Data Sharing
In today’s globalized world, cross-border data sharing is becoming increasingly important for credit bureaus. By accessing data from multiple countries, credit bureaus can improve the accuracy and completeness of credit reports, assess the creditworthiness of non-citizens, and expand market opportunities for lenders. Let’s explore these benefits in more detail.
Improved accuracy and completeness of credit reports
Accessing data from multiple countries allows credit bureaus to gain a more comprehensive view of an individual’s credit history. For example, if someone has lived or worked in multiple countries, their credit history may be spread across different credit bureaus. Cross-border data sharing allows credit bureaus to combine this information into a single credit report, providing lenders with a more complete picture of the borrower’s creditworthiness. This can lead to more informed lending decisions and better risk management for lenders.
Assessment of creditworthiness for non-citizens
For non-citizens or individuals with limited credit histories, cross-border data sharing can be especially important. Without access to credit data from other countries, it can be difficult to assess their creditworthiness. Cross-border data sharing allows credit bureaus to access credit data from other countries, providing a more complete picture of the borrower’s credit history. This can help lenders make more informed lending decisions, expanding opportunities for creditworthy borrowers.
Increased market opportunities for lenders
By accessing data from multiple countries, credit bureaus can also help lenders expand into new markets. For example, a lender in one country may be interested in providing loans to individuals or businesses in another country. Without access to credit data from that country, it can be difficult to assess the creditworthiness of potential borrowers. Cross-border data sharing can provide lenders with the information they need to make informed lending decisions, opening up new opportunities and expanding their market reach.
Compliance with international regulations
In some cases, cross-border data sharing may be required by international regulations or agreements, such as the GDPR in the European Union. By complying with these regulations, credit bureaus can avoid legal and reputational risks. Additionally, complying with international regulations can help build trust with consumers and businesses, as it shows a commitment to ethical and responsible data practices.
In conclusion, cross-border data sharing is becoming increasingly important for credit bureaus. By providing access to a wider range of data sources, credit bureaus can improve the accuracy and completeness of credit reports, assess the creditworthiness of non-citizens, expand market opportunities for lenders, and comply with international regulations. As global data sharing becomes more common, it is likely that cross-border data sharing will become a standard practice for credit bureaus around the world.
Creditinfo completes strategic acquisition of Ugandan and Namibian credit bureaus
Latest acquisitions cement credit expert’s position as leading solutions provider in Africa.
Kampala and Windhoek/London, 25th May 2023 – Creditinfo Group, the leading global service provider for credit information and risk management solutions, today announces the acquisition of two credit bureaus in Uganda and Namibia. As part of the acquisition, Creditinfo has taken on all employees working in the credit bureaus, which were previously owned by Experian. Creditinfo will combine their invaluable local expertise with its own extensive experience in delivering private credit solutions to African and European nations to help millions access finance.
Creditinfo has a unique mix of market knowledge that it will draw on to complement the work of the strong management teams already in place in Namibia and Uganda. Its experience working with more traditional lending markets in Europe combined with its knowledge of the different trends in lending markets in sub-Saharan Africa – such as the drive-in mobile wallet use in Kenya – will help both Namibia’s and Uganda’s credit bureaus go from strength to strength.
Coupling this experience with its advanced software and analytics products, Creditinfo will deliver its world-leading credit bureau solutions to help the two bureaus facilitate access to finance for both individuals, SMEs, and corporates in the regions, whatever their social and economic needs.
Paul Randall, CEO at Creditinfo said: “We are committed to sustainably growing our business and identifying ideal opportunities to add strong and profitable credit bureaus to the Creditinfo Group, while helping more local citizens and businesses access finance. Uganda and Namibia are ideal partners for us in this respect and all our new employees are a credit to the Creditinfo name. As the leading credit bureau provider in Africa, we eagerly look forward to working together to provide the best service possible in each country”.
Mark Charles Mwanje, Country Manager of Uganda said: “We are delighted to join the Creditinfo Group. We believe their years of expertise and knowledge will be a great asset to our existing team of dedicated and talented employees. We look forward to joining forces to help the local people and our growing economy.”
Karin Jansen van Vuuren, Country Manager of Namibia said: “Working with Creditinfo provides us the chance to tap into new opportunities for further growth. The company’s in-depth experience will be instrumental in helping banks and other lenders to extend credit, while ensuring we’re still a private credit bureau run by local people for local people, with all their best interests at heart.”
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About Creditinfo
Established in 1997 and headquartered in London, UK, Creditinfo is a provider of credit information and risk management solutions worldwide. As one of the fastest-growing companies in its field, Creditinfo facilitates access to finance, through intelligent information, software, and decision analytics solutions.
With more than 30 credit bureaus running today, Creditinfo has the most considerable global presence in this field of credit risk management. For decades it has provided business information, risk management and credit bureau solutions to some of the largest, lenders, governments, and central banks globally to increase financial inclusion and generate economic growth by allowing credit access for SMEs and individuals.
For more information, please visit www.creditinfo.com
Credit Bureaus and why they will remain important in the years to come
As the financial industry continues to evolve, credit bureaus need to continue to adapt. There are many compelling reasons why credit bureaus will continue to play a vital role in the future of lending and credit. In this blog, we’ll explore the benefits of credit bureaus and why they will remain important in the years to come.
1. Efficient and standardized credit data
Credit bureaus provide an efficient and standardized way to collect and store credit data. This allows lenders to quickly access the credit history and credit scores of potential borrowers, which is essential for making informed lending decisions. Without credit bureaus, lenders would need to spend more time and resources gathering credit data from various sources, which would slow down the lending process.
2. More accurate credit models
Credit bureaus are constantly refining their credit models to improve accuracy and predictiveness. By analysing large amounts of credit data, credit bureaus can develop more sophisticated credit models that consider a wide range of factors, such as payment histories, outstanding debts, and length of credit history. These models provide lenders with a more accurate picture of a borrower’s creditworthiness, helping to reduce the risk of defaults and delinquencies.
3. Increased access to credit
Credit bureaus play a critical role in expanding access to credit. By providing lenders with access to credit data, credit bureaus make it easier for individuals and businesses to obtain loans and credit cards. This is particularly important for people with limited credit histories or who have had past credit problems, as credit bureaus provide lenders with a way to evaluate these borrowers’ creditworthiness.
4. Protection against fraud and identity theft
Credit bureaus also play a key role in protecting consumers against fraud and identity theft. By monitoring credit reports for suspicious activity, credit bureaus can help detect and prevent fraudulent activity. Additionally, credit freezes and fraud alerts can be placed on credit reports to prevent unauthorized access to credit data.
5. Continued relevance in a changing industry
While the financial industry is evolving rapidly, credit bureaus will continue to be relevant in the future. As new technologies and data sources emerge, credit bureaus will adapt and incorporate these changes into their credit models. Additionally, credit bureaus will likely face increased competition from fintech startups and other companies, which will push them to innovate and improve their offerings.
In conclusion, credit bureaus are essential to the lending and credit industry. By providing lenders with access to credit data, credit bureaus make it easier for individuals and businesses to obtain loans and credit cards. Additionally, credit bureaus play a critical role in expanding access to credit, protecting consumers against fraud and identity theft, and adapting to a changing industry. As the financial industry continues to evolve, credit bureaus will remain a vital part of the lending and credit ecosystem.
Gary Brown,
Head of Commercial Development, Creditinfo Group.
Creditinfo Kenya partners with Letshego Kenya to launch lending app
Letshego Kenya launches “Letsgo Cash” in partnership with Creditinfo Kenya to take financial inclusion to a higher level.
· Minimum loan amount of KES 1,000 and a maximum of KES 100,000 and a loan repayment period of 30 days.
· LetsGo Cash increases access and supports customers who need quick and easy access to funds for emergency purposes.
· LetsGo Cash supports digital financial inclusion and enables the underserved and informal sector players to build their own credit records.
Nairobi, Kenya, 3rd May 2023 – Letshego Kenya Limited, a subsidiary of Letshego Holdings Limited (Letshego Group), has partnered with Creditinfo Kenya to launch LetsGo Cash, a self-service and short-term instant loan that gives customers access to KES 1,000 up to KES 100,000.
LetsGo Cash is payable in 30 days and geared towards consumers who need quick and easy access to funds for emergency purposes, including family emergencies, medical needs, home repairs, car breakdowns or funds to support entrepreneurs and small businesses. Creditinfo Kenya’s team brings decades of experience and practical knowledge in credit risk management to support the delivery of LetsGo Cash.
Letshego Kenya’s Chief Executive Officer, Adam Kasaine said: “LetsGo Cash is another way we are increasing access to product funds for more Kenyans. This is inclusive finance in action – it’s quick and hassle-free cash at a competitive price, accessible via your phone or web.”
The innovative LetsGo Cash is a potential game-changer, as it is accessible anytime, anywhere and is more competitive than traditional short-term cash advance providers, providing customers with immediate financial relief and the opportunity to participate in the digital economy in a sustainable and responsible manner.
Creditinfo’s Regional Manager for East Africa, Kamau Kunyiha added: “Creditinfo is proud to support LetsGo Cash assist customers who need quick and easy access to emergency funds the most, while also helping the underserved to build their own credit scores at the same time. Customers’ applications are submitted with a few swipes on a mobile phone, and the time to cash can be as short as a few minutes.”
LetsGo Cash provides a convenient, safe and affordable financial service to the underserved and informal sector players thereby helping to increase financial inclusion. It also helps them build their own credit record, since the better they manage their loan, the better their credit record, and the more cash they have access to going forward. This ensures that more people can access the service, including first-time borrowers who can now enjoy the benefits of a secure, regulated lending solution. Once approved, the money is disbursed directly into the customer’s mobile wallet. It can then be used as the customer desires, including for emergencies, such as purchasing prepaid electricity and water, paying bills, or sending money to friends and family.
LetsGo Cash can be accessed on Letshego’s LetsGo Digital Mall and downloadable via Android and Apple Play Store, or with one click, clicking on www.letsgo.letshego.com as well as via the USSD *435# on their mobile phone.
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NOTES TO EDITORS:
About Letshego Kenya Limited
Letshego Kenya Limited is the largest credit-only microfinance institution in Kenya and a licensed financial services provider in Kenya, providing loans to individuals across both the public and private sectors, as well as supporting Micro and Small Entrepreneurs (MSE). Since the conclusion of the successful acquisition by Letshego Holdings Ltd in February 2012, Micro Africa Group became a wholly owned subsidiary of Botswana-based Letshego Holdings Limited – an inclusive finance group with more than 21 years’ experience in Africa, and a current footprint of 11 Sub-Saharan Markets. Its contribution to the group has been to leverage the microfinance banking competencies and existing customer base, expand Letshego’s geographic coverage, and diversify its solution offering.
The company is founded on, and continues to strive towards, the principle of finding the most effective way to implement microfinance banking in an African context and transform the livelihoods of customers who carry out viable economic activity. Letshego Kenya Limited has a staff compliment of over 150 employees, spread across 25 branches. The company provides loans to over 20,000 customers who enjoy an expanded access through strategic partnerships, innovative technology and digital delivery channels. For more information on Letshego, please visit www.letshego.com/kenya
About Creditinfo
Established in 1997 and headquartered in London, UK, Creditinfo is a provider of credit information and risk management solutions worldwide. As one of the fastest-growing companies in its field, Creditinfo facilitates access to finance, through intelligent information, software and decision analytics solutions.
With more than 30 credit bureaus running today, Creditinfo has the most considerable global presence in the field of credit risk management. For decades it has provided business information, risk management and credit bureau solutions to some of the largest, lenders, governments and central banks globally to increase financial inclusion and generate economic growth by allowing credit access for SMEs and individuals.
For more information on Creditinfo, please visit www.creditinfo.com
AS Creditinfo Eesti appoints Elari Tammenurm as new CEO
Estonia, 9th May 2023 – Creditinfo Group, a global service provider for credit information and risk management solutions, today announces the appointment of Elari Tammenurm as the new Chief Executive Officer (CEO) of its Estonian branch. Elari will support and maintain Creditinfo’s legacy as a leading partner for business and risk management decision making and drive the sustainable growth of AS Creditinfo Eesti.
Elari joined Creditinfo in 2019 as Director IT in the Baltics, progressing to Management Board member and Head of IT Baltics. Now as CEO, Elari will be responsible for the largest and oldest credit bureau in Estonia.
In his role, Elari will work with various internal and external stakeholders to ensure the company’s approach to strategy and growth remains first class in terms of meeting customers’ expectations and needs.
Elari Tammenurm, CEO of AS Creditinfo Eesti said: “Today everyone has access to vast amounts of data; however, the abundance of data can make it more difficult to make well-informed business decisions in an ever-changing business environment. In my new role, it’s my goal to further ensure the facilitation of this process through delivering world class solutions to the Estonian market including various new Decision Analytics and Scoring related products. This will allow us to continue driving valuable and positive outcomes for our clients and enable greater access to finance and economic growth in Estonia.”
Paul Randall, CEO of Creditinfo Group, said: “With roots in financial services and IT strategy, Elari knows how to solve our clients’ unique business challenges. His knowledge of the company, our people, our industry, and our clients is a huge advantage for AS Creditinfo Eesti’s innovation and growth as we continue to expand in the Estonian market. We’re proud to have Elari leading the way.”
END
About Creditinfo
Established in 1997 and headquartered in London, UK, Creditinfo is a provider of credit information and risk management solutions worldwide. As one of the fastest-growing companies in its field, Creditinfo facilitates access to finance, through intelligent information, software and decision analytics solutions.
With more than 30 credit bureaus running today, Creditinfo has the most considerable global presence in this field of credit risk management, with a significantly greater footprint than competitors. For decades it has provided business information, risk management and credit bureau solutions to some of the largest, lenders, governments and central banks globally to increase financial inclusion and generate economic growth by allowing credit access for SMEs and individuals.
For more information, please visit www.creditinfo.com / www.creditinfo.ee
The Role of Artificial Intelligence and Machine Learning in Credit Scoring
Executive Summary
The use of artificial intelligence (AI) and machine learning (ML) in credit scoring is revolutionizing the lending industry. By leveraging vast amounts of data and advanced algorithms, lenders are able to more accurately predict credit risk, improve operational efficiency, and expand access to credit for underbanked individuals and small businesses. This white paper explores the benefits and challenges of AI and ML credit scoring, and provides guidance for lenders on how to successfully integrate these technologies into their lending processes.
Introduction
Traditional credit scoring models rely on a limited set of data points, such as payment history, outstanding debt, and length of credit history, to assess creditworthiness. These models are effective for many borrowers, but they can be limiting for individuals with thin credit files or non-traditional sources of income. AI and ML credit scoring models, on the other hand, can analyze a vast array of data points, including non-traditional data sources, to develop a more accurate and comprehensive picture of a borrower’s creditworthiness.
Benefits of AI and ML Credit Scoring:
1. Improved accuracy: AI and ML algorithms can analyze a wide range of data points, including non-traditional data sources such as social media activity and utility bill payments, to develop a more accurate picture of a borrower’s creditworthiness. This can result in more accurate credit scores and better loan decisions.
2. Expanded access to credit: Traditional credit scoring models can be limiting for individuals with thin credit files or non-traditional sources of income. By analyzing a broader range of data points, AI and ML credit scoring models can expand access to credit for underbanked individuals and small businesses.
3. Increased efficiency: AI and ML credit scoring models can automate many aspects of the lending process, reducing the need for manual underwriting and improving operational efficiency. This can result in faster loan decisions and a better borrower experience.
Challenges of AI and ML Credit Scoring:
1. Data privacy and security: As AI and ML credit scoring models rely on vast amounts of data, data privacy and security are critical concerns. Lenders must ensure that they are collecting and using data in compliance with applicable laws and regulations, and that they have robust cybersecurity measures in place to protect sensitive borrower data.
2. Bias and discrimination: AI and ML algorithms are only as good as the data they are trained on, and if that data is biased, the algorithms can perpetuate that bias. Lenders must be mindful of potential biases in their data and take steps to mitigate any potential discrimination in their lending decisions.
3. Explainability: AI and ML algorithms can be complex and difficult to interpret, which can make it challenging for lenders to explain their lending decisions to borrowers. Lenders must be able to provide clear explanations of their credit scoring models and lending decisions to borrowers.
Conclusion
AI and ML credit scoring has the potential to revolutionize the lending industry, providing more accurate credit scores, expanding access to credit, and improving operational efficiency. However, lenders must be mindful of the potential challenges, including data privacy and security, bias and discrimination, and explainability, and take steps to mitigate these risks. By investing in AI and ML technologies and developing robust risk management practices, lenders can successfully integrate these technologies into their lending processes and provide better loan decisions and a better borrower experience.
Samuel White
Director of Direct Marekts, Creditinfo Group.
ESG and the Banking Industry: Why Sustainability Matters
As the world grapples with environmental and social challenges such as climate change, social inequality, and governance failures, the importance of ESG (Environmental, Social, and Governance) considerations has never been more apparent. For banks, ESG is becoming an increasingly important aspect of doing business, as it can help to manage risks, enhance reputation, meet regulatory requirements, drive innovation and increase access to capital. In this blog post, we’ll explore each of these points in more detail.
- Risk management: ESG risks are significant and multifaceted, ranging from physical risks such as climate change-related natural disasters to transition risks stemming from legal and policy risks from greenhouse gas emissions and governance or social issues such as human rights abuses. By integrating ESG considerations into their risk management frameworks, banks can better anticipate and manage these risks, which can have a positive impact on their financial performance. For example, banks that fail to properly assess and manage climate-related risks could face stranded assets or lawsuits, which could impact their bottom line. Regulatory frameworks in Europe have taken note of this and the European Banking Authority now requires banks to disclose multiple data-points regarding ESG risks in their risk reports (Pillar III).
- Reputation: ESG is increasingly important to customers, investors, and other stakeholders who want to see banks acting as responsible corporate citizens. Banks that take ESG seriously and demonstrate their commitment to sustainability and social responsibility are more likely to attract and retain customers, as well as to access funding from ESG-focused investors. For example, a bank that invests in renewable energy projects or supports social programs in its local community is likely to be viewed more favorably than a bank that does not prioritize ESG. Mismanaging ESG factors to increase reputation may have negative effects, which became evident in some high-profile cases in 2022, both in the EU and US.
- Regulatory pressure: Regulators around the world are increasingly focusing on ESG issues and requiring banks to integrate these considerations into their business practices. For example, the European Union has introduced regulations such as the Sustainable Finance Disclosure Regulation (SFDR) and the Taxonomy Regulation, which require banks to disclose ESG-related information and align their investments with environmental objectives. Banks that fail to comply with these regulations could face fines or other penalties, which could impact their financial performance, reputation, and limit access to capital.
- Innovation: Banks that prioritize ESG are more likely to drive innovation and develop new products and services that address environmental and social challenges. By supporting the transition to a low-carbon economy and promoting social inclusion, banks can help to create a more sustainable and equitable future. For example, a bank that issues green bonds or sustainable investment products can help to finance renewable energy projects or other environmentally beneficial initiatives, potentially at better rates. Similarly, a bank that offers financial services to underserved communities can help to promote financial inclusion and social equality.
- Green bond issuance offers several benefits for banks, such as accessing a growing pool of socially responsible investors, improving their reputation as sustainable financial institutions, and supporting the transition to a low-carbon economy. The growth of the green bond market has been impressive, with a record-high issuance of $269.5 billion in 2021, up 4.6% from 2020. The cumulative issuance from 2007 to 2021 surpassed $1.5 trillion, with the US, China, and France being the largest issuers. The increase in green bond issuance is driven by investor demand and regulatory measures promoting sustainable finance.
In conclusion, ESG considerations are becoming increasingly important to the banking industry to manage risk, enhance reputation, meet regulatory requirements, and drive innovation. Banks that prioritize ESG are likely to be better positioned for long-term success, as they can help to create a more sustainable and equitable future for all stakeholders. As individuals, we can also play a role in promoting ESG considerations by supporting banks and financial institutions that prioritize sustainability and social responsibility. By working together, we can help to build a more resilient and sustainable global economy.
This may be one of the most important feature of ESG in banking, where the green bond space has grown exponentially over the last years.
By Gary Brown
Head of Commercial Development – Creditinfo Group.
Webinar: Baltic Market Overview
Register and join Jekaterina Rojaka, COO Creditinfo Lietuva , as she hosts another session on the Baltic market overview.
During this session, you will get the latest updates on the following:
- Improving sentiments – will it strengthen economic growth?
- Rising interest rates – what is the impact on the market?
- Sectoral perspective – losers and winners
Please complete the registration form below to receive the event link. The session will be in English – http://ow.ly/MSjh50NHVVX
Lithuanian debts increased by €6.8 million since the beginning of 2023
According to Creditinfo Lithuania’s latest analysis, Lithuanian debts have increased by €6.8 million since the beginning of the year, reaching a total of €364.8 million.
Of this amount, male’s debts stand at €261.8 million, while female’s debts are at €103 million. This is almost €6.8 million more than at the beginning of this year (€358 million). The total number of borrowers has also risen by 5,000 in the first quarter of this year, with the current total standing at almost 201,000.
Creditinfo Lithuania has recorded almost 201,000 debtors in its systems for March, with a total of 235,300 individuals having 235,300 debts in Lithuania.
After a more detailed examination of the debtor data, it was found that over 129,000 males and 72,000 females are currently in debt, making up 64% and 36% of all debtors respectively. Additionally, 32,500 males and almost 20,000 females have multiple debts, with 25.3% of male debtors and 27.7% of female debtors holding two or more debts.
On average, males owe €2,029, which is 30% more than the average debt owed by females (€1,435). This trend, coupled with the higher number of male debtors, results in men holding 78% of the total debt amount, while women hold only 22%.
During the first quarter, an additional 5,000 individuals in Lithuania fell into debt.
In March, the total number of individuals in debt amounted to 201,000, marking an increase of 5,000 from January’s 196,000. The total value of debt owed by all debtors also rose from €358 million to €364.8 million, with the total number of debts recorded in the credit bureau system increasing by 5,300. The largest number of new debts to households registered in the first quarter of this year, after debts to the financial sector, were for utilities and energy, with a total of 1,518 debts (12%).
“The analysis suggests that the majority of new debts recorded this year can be attributed to the energy and heat price crisis. Rising fuel costs have resulted in increased indebtedness, with people seeking short-term financing in order to balance consumption and expenses,” explains Aurimas Kačinskas, the Head of Creditinfo Lithuania. “Not everyone has had sufficient time to alter their financial habits, which has resulted in the growing number and value of debts.”
Men aged between 35 and 45 are considered to be the most high-risk debtors
Despite fluctuations in the number of borrowers and their levels of indebtedness, the typical borrower profile has remained consistent in recent years. Men aged 35-45 are the riskiest debtors, with debts amounting to €75 million, accounting for almost 29% of the total amount owed by men. The second riskiest group is men aged 45-55, with €61 million in debt, representing 23.3% of the total amount owed by men. In third place are men aged 25-35, who hold €55 million in debt, accounting for 21% of the total amount owed by men. Men aged 55-65 hold €43 million in debt, while those over 65 hold €17 million. Men under 25 hold the lowest amount of debt at almost €15 million.
Among female debtors, the under-25 age group has the lowest amount of debt, while other age groups have the following distribution: €29 million (45-55), €26 million (35-45), €20 million (55-65), and €17 million each (25-35 and over 65).
According to Mr Kačinskas, it is important for citizens to assume their financial obligations responsibly and meet them on time to maintain a positive credit history, which determines their access to financial services, loans, credit cards and payment provisions.
