Overview: Creditinfo Estonia’s Payment Default Registry in 2023
Creditinfo Estonia’s Payment Default Register was established in 2001 by Estonian banks, being the largest and oldest register in Estonia that gathers consistent and high-quality debt information. The register of payment defaults helps Estonian entrepreneurs make the right credit decisions and enables the application of the principle of responsible lending.
The largest contributors of payment defaults continue to be from the financial sector
In 2023, a total of over 700 companies entered payment defaults in the register. The TOP entrants by activity were:
- Credit institutions
- Financial service providers
- Collection service providers
- Telecom companies
During the entire year, more than 100,000 new payment defaults were added to the register by companies, of which 91% were private payment defaults. Payment defaults of legal entities were published in a total of nearly 9,200 cases.
There are tens of thousands of people with payment defaults in Estonia
As of the end of 2023, there were nearly 57,000 individuals with active payment defaults.
During the liquidation of the debt, the current default is marked as closed – in 2023, there were 111,000 private individuals with a closed payment default. A closed payment default indicates that the debt has been paid, but at the same time it warns the creditor that the person has had problems paying bills in the past and this allows for a more accurate assessment of his creditworthiness. NB! In the case of private individuals, closed payment defaults are published for up to 5 years after the payment default has ended.
As of the end of 2023, there were almost 20,000 legal entities or companies-institutions with active payment defaults.
There were nearly 33,000 legal entities with closed payment defaults. NB! In the case of companies, the information provided will be published for another 7 years after the end of the default.
There are more than 150 thousand active payment defaults in the register
By the end of 2023, there were nearly 130,000 active payment defaults in the Payment Default Register by individuals with payment defaults. The average payment default amount, or debt, of a private person is €2,514. There were almost 363,000 private individuals with payment defaults that were closed.
At the end of 2023, there were approximately 40,000 active defaults of legal entities. There were almost 65,000 closed defaults of legal entities.
The number of valid payment defaults has increased
In total, there were nearly 171,000 active payment defaults published in the Payment Default Register. If we add to this the information on payment defaults in the closed and disputed status, the total number of payment defaults in the Payment Default Register is 600,697, which has increased by approx. 9% compared to 2022.
At the same time, the effectiveness of the Payment Failure Register is maintained. Of all payment defaults that have reached publication, one in four, or 26%, is paid immediately within the first month, and half (47%) within the first three months after publication.
The disclosure has the greatest impact on the debts of the financial sector – 36% of all defaults disclosed by banks and leasing companies are paid already within the first month and almost 63% within the first three months.
Visit www.creditinfo.ee for more information.
Creditinfo Estonia’s sanctions’ monitoring solution for small businesses
With the ongoing aggression initiated by the Russian Federation in Ukraine, the need to implement international sanctions has to be embedded in the daily business activities of our companies.
We know that companies – operating in the fields of activity subject to such a special obligation – must do more due diligence to mitigate the risks associated with implementing sanctions, but the processes should be somewhat similar to all of the companies operating in Estonia.
Such companies, whose daily economic activities do not deal with continuous customer background research or transaction monitoring, can sometimes be in a difficult situation where they do not have enough know-how or manpower resources to assess the risk of whether one of their customers or partners falls under the established restrictions or not.
Finding such a necessary workforce is always possible, but as you know, making such a fixed cost can sometimes be impossible according to the company’s business model. In this case, one of the options is to delegate the control of said risks outside the company or to use convenient and straightforward, but at the same time reliable services to help with this task, which are available on the market.
For these cases, Creditinfo is offering small businesses the opportunity to mitigate their risks in two ways – by delegating the checking of compliance with sanction lists for their customers and partners entirely to us or by using a straightforward and convenient solution on our e-Krediidiinfo portal – WebScreening.
The web-based service WebScreening allows you to request the entry of a person of interest to you through a convenient and comprehensive user interface, both on international sanctions (European Union and the United Nations) and watch lists (so-called local sanctions and “black lists” of various countries, in some instances, for example, wanted persons) as well as persons with a national background ( PEP) from the lists.
With additional functions, it is possible to perform user management in the portal (if the company has more than one user) or view the archive of requests made. At this point, it is good to note that the archive of performed requests is convenient to use, for example, to check the performance of the employee’s duties and prove the requests made to the supervisory authority, if necessary.
Check out the service: www.creditinfo.ee/kyc
An excellent Account Information Service is based on the accuracy of the categorization of transactions
In 2021, Creditinfo Estonia received permission from the Financial Supervision Authority to start offering account information services in Estonia, which later expanded to the markets of Latvia and Lithuania. Today, we have been offering the account information service on the market for almost two years. The account information service is based on the PSD2 directive. We have access to the transaction data of customers of banks and financial institutions using a secure data transmission channel and customer consent.
Account information categorization is the first and most trivial account data processing that creates customer value. In addition to the primary value, categorization is also an input for all subsequent, significantly more value-creating services (for example, debt risk assessment). Without categorization, each time finding, analyzing and displaying value from account information becomes too resource-intensive, so the end user would have to wait a relatively long time to get a result from their data.
Unfortunately, categorization is worthless if the accuracy and quality of the categories are low. Of course, every transaction on a bank account is not an input for assessing a person’s credit risk. When determining credit risk, it is critically important that the accuracy of the categorization of transactions required for analysis is as high as possible. This is to prevent credit losses for companies and overdue debts for private individuals, directly affecting both interest groups’ reputations.
The main input from categorization is related to income
Visit creditinfo.ee/en for more information.
Ivo Vallau
Open Banking Product Manager, Ceditinfo Estonia.
Access to customer bank transaction data provides a basis for more intelligent business decisions
In 2021, Creditinfo Estonia received permission from the Financial Supervision Authority to start offering account information services in Estonia, which later expanded to the markets of Latvia and Lithuania. Today, they have been offering the account information service on the market for almost two years. The PSD2 directive regulates the account information service, that grants account information service provider (Creditinfo) access to the transaction data of end-customers of banks and financial institutions, using a secure data transmission channel and customer consent.
Intelligent business decisions can only be made when decision-makers have enough information when making the decision. Decisions made without comprehensive information may remain superficial or rely too much on intuition. A joint decision becomes smart by including relevant, up-to-date, appropriate and verified data for decision-making, analyzing it and drawing conclusions from it.
Companies that want to be competitive in the market and, at the same time, grow faster than the market must act consciously and operatively to take advantage of the exponentially increasing amount of data and to navigate the diverse data landscape. The word “action” means the application of well-thought-out multiple technologies, the careful selection of primary data and adaptation to large, innovative data sets that provide the company with necessary data inquiries and detail-specific analyses. The actions mentioned in the previous sentence are based on the data value chain – a framework for managing data from collection to decision-making.
Access to bank transaction data gives the financial sector and several other sectors an unlimited opportunity to use innovative data sets to improve their business processes. Data (including account data) collection, analysis, targeted use and data-driven decision-making directly relate to Creditinfo’s core business. Creditinfo has invested a lot of time and knowledge to ensure and support its customers in successfully using the account information data. Remember that the customer does not have to invest resources in implementing the necessary specific technologies and data analysis in addition to their core business to filter and acquire value from bank transaction data.
Creditinfo adds value to account data with information from other sources
Bank transaction data helps to make more intelligent and more informed decisions regarding the products, services and conditions offered to the end customer. Figuratively speaking, credit bureau data enlighten one corner of the room of a person’s financial behavior, and the information obtained from account transactions enlightens the other corner of the room of a person’s financial behaviour.
Account information, besides evaluating financial behavior, provides information about a person’s daily habits, experiences, preferences, hobbies and much more.
In summary, access to the data of the end customer’s bank transactions provides a foundation for making business decisions based on an even more extensive and significantly more diverse data set, in other words, making decisions even smarter. As a universal, comprehensive solution provider throughout the Baltics, Creditinfo is the only partner for its customers with access to credit bureau data, global KYC data, and bank account data.
Visit creditinfo.ee/en for more information.
Ivo Vallau
Open Banking Product Manager, Ceditinfo Estonia.
A Master’s Thesis that highlighted the importance of timely submission of the Annual Report
In May 2023, Creditinfo Eesti announced a prize fund to recognize students who have addressed research questions in the fields of money laundering and sanctions in their research. In cooperation with the COBALT law firm and the representatives of the State Money Laundering Bureau, the evaluation committee chose Victoria Helenurme, a master’s student from the University of Tartu, as the winner for her master’s thesis on the topic “Prediction of deletion from the business register due to non-submission of the annual financial report using the example of Estonian companies”.
Victoria Helenurm is from Tallinn and graduated cum laude from the University of Tartu, majoring in Marketing & Financial Management. Today, she works as a financial controller in a company offering energy-saving indoor climate and renewable energy solutions and sees her future in business.
We had an interview with her on the journey of her thesis topic:
The topic of your thesis was “Prediction of deletion from the business register due to non-submission of the annual financial report using the example of Estonian companies” – how did you arrive at this topic?
At the beginning of the summer of 2022, discussions began with people who eventually became my thesis supervisors. My main desire was to write a paper on a current topic in society. This year, the Estonian state penalties for not submitting the annual report became harsher, and in cooperation with my supervisors, we saw that there is a public interest in this area of research and also sufficient data for research.
Why was this topic worth researching?
If, as a person, we take a loan, for example, we are understanding the obligations that come with taking a loan. For me, founding a company or being on its board is a somewhat similar responsibility – as a manager, we have assumed the responsibility, among other things, to report on the progress of our company’s business to the public.
Unfortunately, while we are mostly exemplary in servicing loans, tens of thousands of Estonian companies fail to submit their annual reports on time.
I cannot say whether this difference is due to, among other things, the fact that the penalties for not submitting the annual report have been relatively lenient. But it is certainly worthwhile for us to become more aware that such behavior is problematic.
After all the state of our countries businesses is based largely according to the data of the Business Register. If we have thousands of active companies that do not fulfill their reporting obligations, the financial forecasts, risk analyses, business decisions, etc. of the state, lenders and other parties will suffer in its quality.
The submission deadline (6 months after the end of the financial year) is a very lenient deadline. The business landscape is more and more unpredictable, so the knowledge of the previous year’s business results that arrives half a year later is already outdated. As is typical of our e-government, we would expect that at least certain types of companies could be assigned a much earlier submission obligation to help update our economic data.
What facts became clearer as part of the research?
In my research, I tried to find an answer to the question of whether the deregistration of a company can be predicted purely by looking at how the company’s management has cared about the obligation to submit an annual report in its previous business life.
The Estonian financial world is very much a believer in financial ratios when assessing the business health of a company. I tried to see if it is possible to convincingly assess the business risk of deleting the company by completely setting aside the financial statement.
The studied dataset also proved this – a significantly more accurate forecasting method than financial ratios (prediction accuracy approx. 63%) was the observation of the past behavior of board members (prediction accuracy almost 82%). It can be said that if there is a member of the board of the company who has either delayed or failed to submit the financial year report in previous companies, it is a very clear business risk, which indicates the risk of deletion of the company in question.
How could this research topic be continued?
Although I myself rather do not plan to continue my studies in a doctoral program, I definitely see possibilities for expanding this research topic. The obtained research results could certainly be compared with our neighboring countries – to assess whether in Latvia, Lithuania, Finland, etc. there are similar relationships between corporate delisting and board members’ past due diligence.
Another immediate opportunity for investigation is provided by the amendments to the law that entered into force this year, which toughened the penalties for failure to submit an annual report, among other things. Repeating this research in 5+ years would give an idea of whether business behavior has improved in terms of reporting obligations.
We were very pleased with Victoria’s research, as her research clearly connected with the general theme of our competition – the data of the Business Register and national registers in general are the main factors when applying the KYC principle. Financial data from the company that is not submitted on time or is completely missing, is a clear danger signal when investigating the background of your business partner.
When it comes to risk management – both when creating a customer relationship and during the existence of a customer relationship, up-to-date data from the business register is very necessary. Does the company actually operate; whether the data there (especially the field of activity and financial data) are correct (especially when it comes to the application of enhanced due diligence measures). The given data helps to understand the customer’s activity profile.
If the client does not submit annual reports, it is clear that it may be a riskier client, and this should be taken into account when establishing or monitoring a business relationship in order to mitigate the risk.
Urmas Pai – KYC&Fraud Global Product Manager, Head of the evaluation committee
Creditinfo Estonia
Creditinfo’s Account Information Service Product
In the spring of 2021, the Estonian Financial Supervision Authority authorized Creditinfo Estonia to offer Account Information Service in the Estonian market. In the autumn of 2021, the Estonian Financial Supervision Authority also granted the authorization to provide Account Information Service to the Latvian and Lithuanian markets. This act added to our product portfolio a new, exciting product that benefits our customers in the short and long run. As of today, we have had the Account Information Service in our cross-Baltic product portfolio for two years.
About the Account Information Service
The opportunity to provide Account Information Service emerged when the European Union (EU) Parliament and the EU Council adopted a new directive regulating payment services in the EU internal market on November 25, 2015 (PSD2), which emphasized the expansion of open banking in Europe.
Open Banking refers to provide third-party financial service providers open access to transactional data of bank and financial institution customers, using secure data transmission channels and customer consent.
The Account Information Service is a part of the Open Banking initiative, defined as an online service where the service user (customer) is identified and authenticated via strong identification and authentification means. The service itself means transmitting customer’s bank account data through a secure channel to third party from whom the customer wishes to apply a credit product.
How does Creditinfo provide the Account Information Service?
Using Creditinfo Estonia’s solution, both individuals, which is regulated by the aforementioned payment service directive, and companies can transmit their account information to third parties.
Beside financial sector the possibilities of the Account Information Service can be successfully used in application processes in various sectors. Previously mentioned customer consent is obviously obligatory.
Different sectors that can benefit from account information:
- Public sector companies that provide subsidies to individuals and businesses, where the information in the account details creates significant value when determining subsidies;
- Insurance sector companies, which can use behavioral information from the bank account for determining insurance premiums or simplifying the insurance incident evidence burden;
- Other sectors where value from account information help to create better personalized offers for their products and services.
The strength of our Account Information Service is categorization.
The greatest value of the Account Information Service provided by Creditinfo Estonia comes from categorizing account transactions, which our clients (data recipients) can conveniently use in their business decisions.
Categorization is a solution that can and should be continuously improved over time. Precise and detailed categorization is a top priority for Creditinfo Estonia’s Account Information Service.
The data from the Account Information Service serves also as an input for our Account Information Service Report. The report helps to make more informed business decisions both internally and towards our client’s customers. The report highlights all the key ratios, indicators, “green and red flags” and much more that can be extracted from account information.
The report is designed in a way that can be customized to meet the client’s needs, which make it a tool for everyday business decisions.
More information about the service: https://creditinfo.ee/en/avoid-debts/psd2/
How are sanctions created? Overview on the example of the European Union
Even if it turns out later in the proceedings that you have behaved correctly, it is in no way reasonable to attract such negative media coverage; as well as experiencing the stress and resource consumption inevitably associated with such procedures. Therefore, it is always wise to prevent problems and look for solutions to mitigate such risks as early as possible, which AS Creditinfo Eesti can always help you with.
However, how are restrictive measures established, who is responsible for the fact that the EU can put someone on its lists at all, and is it inevitable to be on the sanctions lists or is it possible to get out of there somehow? Let’s take a closer look at this process here.
Initiation of sanctions in the European Union
The European Union is an association of independent countries operating on the basis of its founding treaty(s). One of the important principles is that the European Union has a common foreign and security policy, one of the important parts of which is, among other things, the imposition of sanctions in situations where it is desired :
- protect EU values, fundamental interests and security
- keep the peace
- consolidate and support democracy, the rule of law, human rights and the principles of international law
- prevent conflicts and strengthen international security
We have already covered the nature of sanctions and their relevance in relation to the situation in Ukraine in more detail on the Creditinfo channels beforehand, so we would currently only look at the process of how the idea of sanctioning at the EU level results in a mandatory legal act for all persons operating on the territory of the Community.
The creation of legislation necessary for the implementation of sanctions can be viewed at the EU level in three different aspects :
- Legislation to take over UN sanctions is being created
- Legislation is being created to implement UN sanctions in an expanded form
- Legislation to establish autonomous EU sanctions regimes.
The European Foreign Service (institutionally part of the European Union Commission) is responsible for the implementation of EU sanctions policy , whose responsibility is to prepare drafts for establishing or changing sanctions regimes.
Of course, this is done in close cooperation with the member states, for example it is very important to get input regarding the identifying data of sanctioned persons, which information is often available to national specialists, and including it in the legislation establishing the sanction (or its annex) will help to significantly reduce the number of false positive responses arising from the implementation of the legislation in the future.
Since all member states must give their consent to the imposed sanctions, the draft sanctions move to the institution with the member states’ representation, i.e. the Council of the EU. The next instance is therefore the corresponding working group of the Council of the European Union (RELEX) , where the specialists of the member states cooperate to reach an agreement on the text of the legislation.
If agreement is not reached, the agreement will continue in the working group formed by the permanent representatives of the member states at the EU (COREPER) , from there the draft will go to the General Assembly of the Council of the EU (forum of heads of government), where it will be adopted and the text of the legislation will be agreed upon. For mandatory compliance, the legislation will be in the EU gazette after its publication.
Ending sanctions
Existing EU autonomous sanctions legislation is reviewed regularly, but no less often than once every 12 months.
Since the EU follows the principles of the rule of law (Rule of Law), it is of course also possible for persons under sanctions to get rid of the status of a sanctioned person through legal processes.
There are two main options for this – to publish a motivated statement of wish to this effect directly to the Council of the EU, which will then process the corresponding application and make a decision regarding whether to leave the sanctions list or to remove it from it, or another, more widely used option, to turn to the General Court of the European Union ( General Court of the European Union).
For example, at this point it is perhaps even appropriate to bring up the most talked about decision of recent times about the victory achieved by Violetta Prigozhin, the mother of the late Yevgeni Prigozhin, regarding her delisting .
AS Creditinfo Eesti has continued to take on the concern of providing the necessary support to market participants in the implementation of international sanctions, and we are ready to help with various issues, both with advice and force. We believe that in this way, in cooperation with our customers, we can best contribute to the achievement of the common foreign and security policy goals of the EU.
Visit: creditinfo.ee
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
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
Creditinfo Estonia Management Change
EXTERNAL ANNOUNCEMENT
07/02/2023
Ms. Ege Metsandi, CEO and Chairman of the Management Board for Creditinfo Estonia is leaving her position at the company. During the next 6 months, Ms. Metsandi will be working closely with the interim Chairman and CEO, Mr. Elari Tammenurm, currently the Head of IT – Baltics, along with the Estonian team to ensure a seamless handover continues until a replacement is found.
Paul Randall, Group CEO for Creditinfo, advised, “During her 6 years of tenure, Ege has successfully developed the company, both financially and commercially. I want to personally thank Ege for her efforts, utilizing her experience and great insight in risk management to build the Creditinfo brand in Estonia.
Everyone at Creditinfo wishes Ege well for her future.” Ege added, “I leave a very strong and talented team behind at Creditinfo. I look forward to making certain of a smooth transition to keep up the positive momentum that we have established together over the last 6 years.” Established in 1997, Creditinfo Group provides credit information and automated risk management services around the world.
