Download Lower predictiveness

Credit Bureau – EMEA
Business Overview
Roberto Giannantoni
© 2006, Experian-Scorex Proprietary and Confidential
#1
The Solutions
Key
Experian-Scorex local intelligence
Consultancy
Strategy Optimisation
Fraud
Strategy Management
Customer Management
Analytics
Customer Acquisition
Credit Bureau
Global solutions
supporting global clients
© 2006, Experian-Scorex Proprietary and Confidential
#2
Role of credit bureaus in financial markets
 Decreases information asymmetries between
borrowers and lenders
 Allows lenders to more accurately evaluate risks and
improve portfolio quality
 Eases adverse selection problem and lowers the cost
of credit for a good borrower
 Increases credit volume/ improves access to credit
 Supports introduction of credit scoring and automated
underwriting, lowers lender operational costs and
improves profitability
© 2006, Experian-Scorex Proprietary and Confidential
#3
Private Credit Bureaus have grown rapidly
50
45
Eastern
Europe
Middle
East
Latin
America
Asia
40
35
30
25
20
© 2006, Experian-Scorex Proprietary and Confidential
2001
1998
1996
1993
1990
1987
1981
1977
1969
OECD
1963
5
0
1957
Africa
1927
15
10
#4
Classification of Consumer Credit Bureaus
Types of
Information
Sources of
Information
“Positive
& Negative”
“Negative
Only”
“Full”
(information shared by
banks, retailers, NBFIs,
mobile operators)
High
predictiveness
(e.g. US, UK, Italy,)
Lower predictiveness
(e.g. Australia)
“Fragmented”
(e.g. information shared
among banks only or retail
only)
Lower predictiveness
(e.g. Poland, Czech
Republic)
Lowest predictiveness
(e.g. Korea, Morocco)
© 2006, Experian-Scorex Proprietary and Confidential
#5
Use of positive information results in lower default rates
Argentina
Brazil
Estimates are based on information on large loans from public credit registries in Argentina and Brazil. Graph represents predicted default
rates at 60% approval rate. Based on Majnoni, Miller, Mylenko and Powell (2003) “Public Credit Information Systems: Evaluating Available
Information”, World Bank
© 2006, Experian-Scorex Proprietary and Confidential
#6
Broader information sharing expands credit
Percent of Applicants who Obtain a Loan
74,8
11% increase in access
75,4
83,4
90% increase
in access
39,8
Negative
information
only
Negative and
positive
information
Retail
information
only
Retail and
other lender
information
Source: Barron and Staten (2000). Note: Figure shows the simulated credit availability assuming a target default rate of 3%
© 2006, Experian-Scorex Proprietary and Confidential
#7
Private credit registries are associated with lower financing constraints
Estimates based on data on 5000 firms in 51 countries
% of small firms reporting
high financing constraints
Probability of obtaining a
bank loan for a small firm
49%
40%
27%
Without credit
bureau
With credit
bureau
28%
Without credit
bureau
With credit
bureau
Source: Love and Mylenko (2003)
© 2006, Experian-Scorex Proprietary and Confidential
#8
Europe and Central Asia
Positive vs. Negative Reporting
EUROPE AND CENTRAL ASIA
PRIVATE CREDIT REPORTING
PRIVATE CREDIT REGISTRY:
© 2006, Experian-Scorex Proprietary and Confidential
POSITIVE
DOES NOT EXIST
NEGATIVE
NO INFORMATION
#9
Today
Norway
USA
Russia
Denmark
Netherlands
Germany
UK
France
Spain
Romania
Bulgaria
Turkey - KKB
Italy
Kuwait - Ci-Net
Saudi Arabia - AlJisr
South Africa
© 2006, Experian-Scorex Proprietary and Confidential
#10
Experian-Scorex Consulting Experience
 Europe
 Asia Pacific
 South America
 Middle East
 30+ countries…..
© 2006, Experian-Scorex Proprietary and Confidential
#11
Summary of Bureau Solutions
Consumer
Business
Vehicle
Insurance
Property
UK
X
X
X
X
X
USA
X
X
X
X
X
Italy
X
SME’s
South Africa
X
Netherlands
X
Spain
X
France
X
Denmark
X
X
Norway
X
X
Ireland
X
X
Bulgaria
X
© 2006, Experian-Scorex Proprietary and Confidential
X
Via Informa
SME’s
#12
Summary of Consumer Bureau Solutions
Credit
Reference
Positive
Account
Sharing
Customer
Monitoring
Tracing
Bureau
Scoring
Verification
Mail
Screening
Fraud
Prevention
Authentication
Total
Indebtedness
Consumer
Access
Services
UK
X
X
X
X
X
X
X
X
X
X
X
USA
X
X
X
X
X
X
X
X
X
X
X
Italy
X
X
X
X
X
X
X
South Africa
X
X
X
X
X
X
X
X
Netherlands
X
X
X
X
X
X
X
Spain
X
X
France
X
Denmark
X
X
Norway
X
X
Ireland
X
X
X
Bulgaria
X
X
X
© 2006, Experian-Scorex Proprietary and Confidential
#13
Romania – Expert Credit Bureau
•
•
•
•
Presented today new Positive/Negative platform
Future integration with Value Added services
Working on address cleansing features
5 active clients
© 2006, Experian-Scorex Proprietary and Confidential
#14
Balance
Business need for information to enable profitable and responsible
applicant and customer management
with
Consumer right to privacy but also demand for fast and modern
delivery of goods and services
© 2006, Experian-Scorex Proprietary and Confidential
#15
Value Added Solutions










Customer monitoring
Consumer tracing
Bureau Scoring
Verification
Mail Screening
Application Fraud Prevention
Authentication
Total indebtedness
Consumer Access Services
Consumer Education
© 2006, Experian-Scorex Proprietary and Confidential
#16
Effective across sectors
 Personal
loans
 Automobile finance
 Credit cards
 Mortgages
Telecommunications
© 2006, Experian-Scorex Proprietary and Confidential
 Utility
supply
 Overdrafts
 Insurance
 Rental
 Internet Services
#17
Conclusions
•
•
•
•
•
Economy pushes for new sales channel
Knowing our customer is a must
Margins are under pressure
Customer centric approach
Euro Zone needs
© 2006, Experian-Scorex Proprietary and Confidential
#18
Tomorrow’s dream
• Experian-Scorex Global Bureau Score
• Euro Bureau
• Experian Scorex Global Fraud Database
© 2006, Experian-Scorex Proprietary and Confidential
#19
Credit Bureau – EMEA
Business Overview
Roberto Giannantoni
© 2006, Experian-Scorex Proprietary and Confidential
#20