Building an Effective Credit Information
System – The Credit Bureau Perspective
Sriram Kalyanaraman, Director Sales and Product Development
Equifax Credit Information Service, Mumbai
Aug’12
© Equifax Confidential and Proprietary
Global Overview
CANADA
Consumer #1
Commercial #2
UNITED KINGDOM
Consumer #2
Commercial #3
RUSSIA
Consumer #1
UNITED STATES
Consumer #1
Commercial #3
IBERIA
Spain Consumer #1
Portugal Consumer #1
ANDEAN REGION
Peru
#1
Uruguay
#1
El Salvador
#1
Honduras
#1
Ecuador
#1
CHILE #1
INDIA
Consumer
MFI
BRAZIL
Commercial
Consumer
#2
#2
ARGENTINA#1
Equifax is a global information solutions company
113 years history of leadership in credit information services worldwide with a full suite of credit solutions
Successful track record and reputation serving global markets across 17 countries
Largest US Credit Database and # 1 ranking in most markets where Equifax does business
Proprietary databases containing information on over 300 million consumers and 100 million commercial entities
worldwide and average of over 10 trade-lines per consumer
© Equifax Confidential and Proprietary
2
The Microfinance Exchange - India
Accurate and timely data collection by MFIs on prospects and
borrowers from the credit bureau member institutions which is Data
supplied by the MFIs to credit bureaus on a regular and timely basis.
Collation, correction and standardization of the data and ensuring that
the data is complete, searchable and standardized
Credit Bureau Products that are accessible, accurate and usable
across the lifecycle of a loan for better decision making resulting in
more and better quality assets
Key Updates
• Membership : 341 (MFI’s 95)
• Data 200 million + ( MFI 62 Mn)
• 4.28 mn enquiries processed in FY 2012-13
Access Platforms
• Web based access using proprietary tool.
• Online batch and system readable format
• Output available in multiple formats
Data Initiatives
• Built a data submission tool for the industry
• Ability to accept data without ID information
• Built database using MFI specific data elements such as joint liability group credit
attributes
Source: MFIN, RBI, Mint
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Equifax Services
• Unique search / match algorithm for MFI data
• Ability to do phonetics based name match Leverage family details Reports
provide delinquency string
Future Products
• Industry Reports
• Mobile Reports
• Scores
Risks and Challenges
• Over-indebtedness and multiple lending
• Pressure to sustain operations for incumbent players
• Limit on total loan / exposure of a borrower
• All Institutions not sharing data
• SHG data not available
Our proposed products for MFIs
LAUNCHED PRODUCTS
Credit Information
Reports
Enables Member to determine credit worthiness of a customer & help meets regulatory
compliance - No. of active loans, total outstanding balance across MFIs, past due status
Portfolio Review
Assessment of portfolio quality & behavior of existing customer across all lenders. A
powerful tool for regular monitoring of portfolio accounts for proactive risk management
FUTURE PRODUCTS- Evolved MFI Bureau Usage
Portfolio Alerts
Provides a series of credit based triggers to pro-actively determine a set of existing
customers which are showing either improvement or deterioration in financial status or
are looking for fresh credit in the market
Industry Reports
Comprehensive report that provides valuable insights on industry trends sliced and diced
across various dimensions such as geography, customer profile and other parameters;
An effective tool to benchmark current operations and guide
future business growth
Scores
Risk indicators that can be used for quick and accurate decision making which is
predictive and objective which reduces the dependence on internal criteria and optimizes
implementation of learning from market data.
Leveraging the deep product suite, new products will be rolled out based on market needs and readiness
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Illustration of Visual Analytics
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Key Enabler/Challenges: Search & Match
Complete data submission
• DOB
• ID
• Phone
• Address
• Address
• Zip
• ID
• Phone
Name
Zip
Name
Age
– Ensure all credit institutions participate in
the bureaus
– Ensure that all institution submit complete
data
Data Quality
– Address
 Address Format is not standardized
 Regional Language References
– Name
ID
• Name
• DOB
• Phone
• Address
 Vary from region to region
 Influenced by religion and caste
 Many instance of names with just Initials
Phone
• Name
• DOB
• ID
• Address
– ID Population
 Not every one has to have one
Socio-Economic Condition
– Joint Family
– Highly populated
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Key Challenges and the road ahead
CHALLENGES
Use of credit
bureaus
CURRENT GAPS
•
•
WHAT NEEDS TO BE DONE
Early in the lifecycle on effective use of credit bureaus
in decisioning – more information vs accurate
information
Use of data to make differential decisions rather than
classification into black and white
•
•
•
Score/Risk based pricing
Best practice transfer from banking
Risk ranking of bureau scores
Technology
•
•
Internet access in remote branches
Limited number institution using loan origination
systems and automated decisioning systems
•
•
Mobile Reports
Work with bureaus and software providers to
create low cost solutions for LOSs and end to
end decisioning systems
Data
Data Capture
Low understanding of the importance of data quality and
accurate data capture
•
Investment in technology to ensure the
branches are connected and there are basic
checks in place on data capture
MFIs to continuously work for improved data
collection
Sharing of SHG data by the banks and state
governments (SHG/MFI overlap 80%)
Awareness of data quality issues and
sensitization of the teams to the importance of
accuracy of reporting.
•
Data Submission
• Regular & timely submission of data
• Ensuring complete submission of data
• Accurate reporting of changes in the data
• Continuous changes in branches and account nos.
• SHG data not available in the data submission
Training and
awareness
Awareness of Information provided by Credit Bureaus and
its importance in credit decisions for MFIs for risk
management & regulatory compliance
© Equifax Confidential and Proprietary
•
•
Partnership with Bureau, MFI associations and
institutions like IFCI for creating awareness on credit
bureau importance & need for financial inclusion
How does the future look?
Consumer
Demographic
Data
Tri-bureau
Data
Employment
Data
Securities
Compliance
Data
Consumer
Surveys
Consumer
Credit Database
Identification
& Linking
Data
Monthly Updates:
•
•
•
•
•
•
•
15,000+ Data Providers
Fraud &
Authentication
Data
1.8 billion Trades
110M Collections
350K+ Bankruptcies
800K+ Judgments/Liens
Unique
Business
Models
12M Address Changes
144M+ Online Transactions
Telephone
Number
Data
© Equifax Confidential and Proprietary
Telephone
& Utility
Exchanges
Commercial
Exchange
Address
Hygiene
Data
Marketing
Response
Data