Credit Post-Covid
Historically, every time that there was a crisis, lessons were learnt. The Authorities, be they political or financial, rushed in to introduce and implement corrective regulations and legislation to either block legislative loop-holes or correct oversights that permitted players in their respective fields, but especially in the financial sector, to take advantage of same for their own individual benefit with little regard for the rest.
The lessons and improvements implemented by regulators and financial institutions since the from the last financial have stood the banks and financial services in stronger position when facing the financial crisis which is following the health crisis. Banks are reacting by using data insights through monitoring and early warning solutions to address problem debts before they escalate.
A few years later, with the introduction of strict regulatory measures, the requisite confidence and stability in financial markets was gradually established. Central banks are now closely monitoring these, issuing directives on a regular basis to further stabilize and impose tighter controls to prevent a repeat. Regulating banks is difficult, unfortunately, and there is always the risk that a similar crisis raises its head again.
This is a very simplistic reference to the Financial Crisis of 2007-2009, which forced changes and tighter controls on the global financial markets.
Changing the scenario to the present day, COVID-19 pandemic, although different, in that it is more of a medical beast, has impacted the global population and, as a result, the global economy has turned out to be messier than the Financial Crisis of 2007-09. Individuals who own and control both global economic and non-economic practices are the victims this time. Through its secondary effects, the pandemic, may also be considered as a financial crisis. The policies put in place to control and ultimately curtail the pandemic, have so far had limited success in curbing the spread, but they did manage to create havoc with the global economies. Some industries, such as food distribution, benefited from rising demand, while others, such as telecommunications and pharmaceuticals, were unaffected and continued their operations, although maybe at a slower pace but certain sectors took a heavy beating.
The airline, travel, hospitality, leisure, and entertainment sectors have been hit the hardest with dramatic reduction in activity and with closures being the norm.
The airline industry, on its own, according to a KMPG report, estimate a revenue loss worth USD200 billion in 2020 and to prevent a total collapse, government assistance, worth USD200 billion is being considered.
However, the airline industry is just the beginning. One has also to consider other businesses that are directly and indirectly linked. Millions of individuals are affected – loss of jobs or reduced hours of work translate into less consumer spending, higher risks, defaults and similar. At this point, the Great Depression comes to mind, but the true impact of the pandemic will be gauged towards the end of 2021 and throughout 2022.
In these turbulent times, with losses expecting to continue until 2022 and possible, even beyond, risk management is crucial and extremely critical for all industry players. Despite, corporate bankruptcies still being rather low, further pandemic waves with the relative lockdown and restrictive policies would deplete remaining cash reserves and eventually increase bankruptcies.
The new normal will set in at different speeds as lockdowns are lifted, but this will also depend on the recession in each country and on the effect of restrictions on demand and supply. Recoveries may vary by sectors, but severe economic necessities may induce Governments to loosen their restrictive policies in an effort to kick-start certain activities, in particular, the airline industry and travel, which indirectly would also re-activate the hospitality, leisure and entertainment sectors.
It is now more critical than ever that financial institutions and other market participants, recognize the value of using tools like a Credit Bureau. These credit bureaux deliver insights in the data such as credit scoring and financial transparency, that can identify riskier projects/individuals/businesses, and thus prevent defaults to the benefit of the lender and national stability, in general.
Now is the time to gain a better understanding of our local marketplace, and the speed in which information changes. We have to comprehend how our local marketplace will perform in the post COVID era. It is better to be informed than to continue blindly as the future is changing and businesses and individuals must adjust and act accordingly.
In the immediate future, credit risk assessments, will be based on real-time monitoring of sectoral and sub-sectoral situations, making historical data in previous known environments less important – COVID has taught us a tough lesson
Remy Damato,
Credit Reporting Manager, Creditinfo Malta.
Creditinfo Group enters collaboration with Společnost pro Informační Databáze (SID) in Czech Republic
Czech Republic, Prague, April 22nd 2021- Creditinfo Group, the leading global credit information and decision analytics provider, and Společnost pro informační databáze (SID), service provider of SOLUS Credit bureau, have agreed to partner in the areas of data transformation, decisioning engines, data analytics and scorecards development. The agreed partnership enables SID to use the global credit risk management expertise of Creditinfo Group as well as its solutions and analytical capabilities to better service members of SOLUS Credit bureau, one of the two largest credit bureaus in the Czech market.
“We are proud to have been chosen by SID as it’s partner for members of the SOLUS credit bureau and are looking forward to leverage our global experience as well as presence of our group IT development, global data analytics, and consultancy centre in Prague for Czech banks and financial services players, members of the SOLUS credit bureau” says Seth Marks, Regional Director of Creditinfo Group.
“With Creditinfo Group we materially strengthen our portfolio of software, decisioning and analytical solutions available for both SOLUS members and for the wider Czech financial sector. Connecting its global experience with our strong local presence in the Czech market enables our existing and new customers to further increase efficiency and including improved credit risk decisioning speed, says Ján Hurný, CEO of SID.
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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, 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
About SID
SID is an exclusive service partner and facilitator of SOLUS credit bureau, one of the two largest credit bureaus in the Czech Republic with more than 50 members from banks and financial services. SID enables efficient data exchange among bureau members thus strengthening their insights and decisioning capabilities. More information are available on www.sid.cz and www.solus.cz
Creditinfo Group Awarded World Bank Tender
São Tomé and Príncipe, São Tomé, 19th, April 2021 – Creditinfo Group, the leading global credit information and decision analytics provider, today announces that it was awarded a tender by the Central Bank of São Tomé – represented by AFAP (Agencia Fiduciaria de Administracao de Projectos) who will be handling a project on the delivery and support of Public Credit Registry, financed by the World Bank.
Sao Tome is working with the World Bank with the aim of improving the financial infrastructure in the market, increase access to finance and enhance market stability. Creditinfo has already supported many markets in achieving this goal and was identified as a trusted and reliable partner.
Creditinfo will provide CBS (Credit Bureau Solutions), including Value-Added Products such as the Statistical Score, MyCreditinfo, Benchmarking and Monitoring – the latest and modern cutting-edge products and services in the credit industry, to help the Central Bank of São Tomé in implementing the Public Credit Registry.
Samúel Ásgeir White, Director of Direct Markets, Creditinfo Group is excited about this opportunity. “The important part is the knowledge transfer and our active approach – direct help to the Central Bank of São Tomé, with the whole implementation process of our modern services in São Tomé and Príncipe, since we have years of experience from the Central Banks around the world that we provide the same products and services to,” he said.
The competition was organized by AFAP as a fiduciary agency responsible for the management of the World Bank’s financial support, in favor of the Central Bank of São Tomé and Príncipe as a borrower, with Creditinfo being elected as winner, among 4 bidders.
On behalf of AFAP, Carlos Bonfim, technical advisor, intervened to congratulate on the conclusion of the contract with Creditinfo, a company whose references allow the prospect of a satisfactory result regarding the updating of the credit risk center of the Central Bank of São Tomé and Príncipe. He ended by expressing the wish that the quality of the partnership between all stakeholders will continue, in order to create a favorable cooperation climate for the implementation of the project.
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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, 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
About AFAP
AFAP was created in 2004 with the aim of managing funds made available by the technical and financial partners of the Government of São Tomé and Príncipe, of which the World Bank stands out in particular. It has an effective and motivated team and is respectful of the best practices for regulating tenders, and today has a portfolio of projects and partners in constant growth. Within the framework of its performance, the main projects such as the installation of fiber optics in Sao Tome Principe to provide high-speed internet services, education and health for all, improvement of the energy system can be cited as an example of success. electricity, namely hydrocentrals, introduction of alternative energies as well as rehabilitation of main roads, etc.
For more information, the following AFAP website can be viewed: www.afap.st
How Creditinfo supports Fintechs
The COVID-19 crisis had a profound financial and social impact across the globe, with several different industry sectors impacted. Curfews limited the effective utilization of physical branches, forcing financial services firms to turn to online channels. Few organizations were ready to make the transition to ‘digital lending’ smoothly, but this is where the Fintechs excelled. Capitalizing on their technical competencies, agility, and focus on specific niches they triggered substantial advances in online lending – ranging from streamlined, friction free customer experience to KYC processes.
Instead of focusing on internal operational efficiencies like traditional banks, Fintechs driving digital lending started to construct an ecosystem of services that evolved around their customers. Regulators, who have been observing the significant growth of digital lending started to weigh in; either requiring compliance with existing regulations or developing new regulations to be met. These steps had a wide-ranging impact from data quality to having a prudent credit risk management framework, including analytics, risk management tools, policy and procedures.
Creditinfo is well positioned to support Fintechs, helping them remain focused on providing an outstanding customer digital lending experiences, while ensuring a proven credit risk management framework. Our approach consists of 4 key services:
- Data: the first step to perform a credit risk assessment is done by collecting all relevant Depending on circumstances, this can be traditional (Credit Bureau) or non-traditional (transactional) data. Data quality checks need to be performed to derive the maximum insight from it. Operating in 45 countries and providing Credit Bureau services in 23 of them, we define industry standards on data quality. We know how to combine traditional and non-traditional data to be used in decisioning that meets your risk appetite.
- Analytics: deriving insight from data is our expertise. Our highly predictive models underpin objective, prudent credit risk decisions. By combining non-traditional and traditional, we are able to improve predictive power by over 50%.
- Decisioning: implement your scorecards with ease in our decisioning system. Streamline and eliminate manual processes to ensure quick and consistent decisions to your customers, providing you a competitive edge.
- Business know-how: we know how to adapt global best practices within your local environment. We are ready to discuss with you how we have improved lending for one of our customers by over 20% or reduced non-performing loans by 15%.
Please get in touch with us to discuss how we can make a positive step change in your business.
Phone model, mobile internet and missed calls might determine whether you get credit
Press Release
Ever more personal data will in the future determine whether people can get a loan or buy goods on installment. If a person consents, before a decision is made about granting them credit they may be asked for permission to examine not just repayment of past loans but also other private information: what model of phone they have, whether they actively use mobile internet, whether they often do not answer calls. It may even be suggested that they play a real-time game whose outcome will determine whether they as a customer are creditworthy.
While companies that give credit have typically relied only on information gathered by financial institutions, now more and more personal data will influence decision-making. Whether credit is granted, how much, and on what terms may depend on whether a customer is ready to share that information.
“There’s no doubt that personal data can only be used with the person’s consent,” Creditinfo Head of Decision Analytics for the Baltic states, Maxim Fetisov immediately stresses. “But practice shows that openly sharing additional information increases a creditor’s trust, lets them more accurately assess each customer’s trustworthiness, and even allows customers to expect more favorable credit terms.” Research conducted by Creditinfo has shown that knowledge about a customer’s personal habits gives creditors just as many insights as formal data.
A recent conference “Scoring Kitchen” by Creditinfo, which rates the creditworthiness of companies and individuals in more than 50 countries, addressed what is new in the scoring process. For example, a study was done together with telco company on how people’s financial reliability relates to their everyday behaviour. Analysis of the data revealed that even how long people use one telecom operator’s services shows which ones are financially more trustworthy: the longer someone uses the same telco’s services, the more financially reliable their loan-payment history is too. And on the contrary, customers who frequently change operators generally demonstrated a higher level of riskiness.
Those without 4G and who use mobile internet little fall into a higher-risk group
Creditinfo analyst Allan Anyona, who took part in the study, also notes that individuals who are less financially reliable tend to have more modest internet plans and rush to connect as quickly as possible to free Wi-Fi networks at home and elsewhere.
Moreover, it was observed that the more advanced the network connection a potential customer’s phone supports, the greater their creditworthiness. So customers using phones that support 4G network requirements are seen more favorably than those whose phones only work on a 2G network or do not make such information available.
Many missed calls points to a frequent debtor
Creditors get useful insights as well from data about whether a potential customer often fails to answer incoming calls. People were divided into five categories: those who fail to answer calls very often, often, an average amount, rarely, and very rarely. It turns out the most financially reliable were those in the last two groups. The riskiest customers, meanwhile, were among the people who “miss” calls more often than others.
“We assume that people experiencing financial difficulties avoid answering calls as they do not want to talk with creditors or with relatives to whom they may also be in debt,” the Creditinfo Group analyst explains.
With smart devices revealing more and more information about consumers, creditors are eager to actively look at other habits too – like the use of a mobile wallet. The more punctually a customer tops up their mobile wallet limit and the bigger their income, the higher their credit rating will be. Conversely, the smaller someone’s income is and the longer they use credit provided by a telco, the more cautiously other lenders will view them. So those people should not be surprised if they are not allowed to buy a more expensive item on installment or are refused a bigger credit limit on a payment card.
Games show how you will behave with real money
Seeking to get a more objective assessment of a customer’s creditworthiness and to automate the decision-making process, psychometric data are being used ever more actively. A future customer may be asked to play a quiz that takes 5-7 minutes. It may be a series of questions, like: how would you use an unexpected gift of €200 – would you spend it on entertainment or save it? Studies show that the customers who meet their financial obligations most responsibly tend to choose the answer ‘I would save it’ in the game, while the riskiest customers more often choose ‘I would spend it on entertainment’.
“We realize that over time skilled players learn to choose those answer that creditors view more favorably. But in calculating any individual’s rating, dozens of other factors are also assessed, like their insurance history, repayment of earlier loans, payment of utilities bills, and so on,” CEO of Creditinfo Lithuania, Aurimas Kačinskas notes.
The pandemic also altered how companies are rated – there are new factors
The CEO of Creditinfo Lithuania says the challenges of the pandemic in 2020 are also changing the rules for rating businesses. New factors have arisen that impact credit scores. For instance, a new indicator for the impact of Covid-19 has altered the current ratings of companies all over the world. It shows how the coronavirus pandemic has impacted every area of business (e.g., tourism, hotels, manufacturing, transport, etc.) and how companies’ creditworthiness relates to the geographic location of their operations, demand for the goods they produce, and possibilities for quickly recovering after restrictions and quarantine end. Businesses’ ratings are also heavily influenced by a ‘Collection’ indicator that reflects whether a company punctually settles with its creditors.
“We have no doubt that the new factors that are coming up will have an increasing significance for companies’ credit scores – in a time of economic turmoil, it’s very important for creditors to objectively assess every customer’s riskiness and make the most accurate decisions possible,” Maxim Fetisov, Head of Decision Analytics in the Baltics says.
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About Creditinfo
Established in 1997 and headquartered in Reykjavík, Iceland, 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 analytics solutions.
With more than 33 credit bureaus running today, Creditinfo has the largest global presence in the field of credit bureau and 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 – all with the aim of increasing financial inclusion and generating economic growth by allowing credit access for SMEs and individuals.
For more information:
Media Contacts:
Caterina Ponsicchi,
Marketing Director, Creditinfo Group
Creditinfo West Africa Hits 20 Million Contracts
Creditinfo West Africa today marked a major milestone by hitting the 20 million contracts threshold and growing, in the regional Credit Information Bureau (BIC) making it a historic day for Creditinfo West Africa, the entire UEMOA region and Creditinfo Group.
Six Corporate Image Improvement Tips for CFOs
It is customary to assume that the reputation and image of a company is mostly a prerogative of the general manager and the marketing unit. Credit is also given to employees who are in direct contact with the customers, yet financial decision-makers mostly go unnoticed. In this article, I will share some ideas about the huge influence Chief Financial Officers may have on the good corporate image.
Players in Baltic Markets (Latvia, Estonia) and Iceland Measure Risk better, benefitting from Covid-19 Impact Score Developed by Creditinfo.
Credit providers need to understand how COVID crisis affected their counter-parties and customers in order to better manage risk exposure and reduce losses. Current scoring models are unable to fully answer these needs as they were developed on pre-crisis data and need time to adjust to new conditions.
What can Telcos learn from Digital Lenders?
On Tuesday 28th July, Safaricom (the largest mobile provider in Eastern and Central Africa), launched a new service offering consumers the opportunity to buy a 4G-enabled smartphone for as little as 600 KSH (6 USD) per month for nine months, with an initial deposit of 1,000 KSH (10 USD). This is a high-impact initiative for the country, where the average monthly disposable income is just 8,500 KSH (85 USD) according to a 2019 report from the Kenyan National Bureau of Statistics.
Creditinfo’s “CIP Score” Between evolution and improvement: a powerful tool for risk management in a more digital financial environment
The core business of commercial banks and other lenders, at the most basic level, is to sell money. To loan an amount with a negotiated re-payment schedule with interest, is a process that allows the economy to finance itself. But for this cycle to be sustainable in the long term, it must be carried out with both vigilance and responsibility. The “credit risk” of a client, their probability of reimbursement, and differentiating between “good” and “bad” clients are basic yet essential elements to loan in a profitable and durable manner.
