1. Advancing Credit Services Through The
Application Of Credit Bureau Technology
By
Frank Lenisa, Marketing Director, Compuscan

2. Technology

3. Financial Inclusion Is High On The G20
Development Agenda
 G 20 Pittsburgh Summit communiqué September 2009
 We commit to improving access to financial services. We will up scale
successful models of small and medium enterprise (SME) financing
 G20 Toronto Summit communiqué June 2010
 We have launched the SME finance challenge fund
 G20 Korea Summit November 2010
 Financial inclusion one of the key items on the G 20 development agenda
 Financial inclusion is to be framed as an multi-year commitment

4. 2,7 Billion People Do Not Have Access To Basic
Financial Services
Source: WBG Financial Access 2009. Map shows percent of households with a deposit or loan
account in an institution (banks, savings banks, MFIs)

5. Advancing Financial Inclusion In A Responsible
Fashion Will Be Key To Successful And
Sustainable Initiatives
UNIQUE OPPORTUNIITY TO MAKE
PROGRESSSS
1. Financial institutions have the
Financial inclusion interest and incentives to strengthen
- Creates the demand for responsible finance to be their contribution to economic growth
delivered responsibly through financial access and
responsible financial products and
services.
2. Memory of the financial crisis is still
fresh and working on (re) building
accessible and responsible financial
systems is critical
Responsible finance
- Financial inclusion and responsible finance are 3. International community interest to
complementary goals . Responsible finance address these areas is high: G-20
contributes to financial inclusion by enhancing trust Communiqué on Financial Inclusion
and strengthening competition
4. Technology provides opportunity to
increase outreach like never before

6. Advantages Of Technology – Credit Services In
Minutes

7. Advantages Of Technology – Credit Services Via
The Internet

8. Advantages Of Technology – Credit Services Via
ATM
Cash where you
need it, when you
need it
Apply for you loan
now
– its easy –
payout within
minutes

9. Advantages Of Technology – Credit Services Via
POS Terminals

10. Advantages Of Technology – Credit Services Via
Mobile Phone
Millions are part of the
telecommunications grid –
using mobile telephone
technology and creating a
new opportunity to increase
outreach cost effectively

11. To Address The Needs Of The Unbanked And
Underserved Individuals And Firms, Financial
Inclusion Needs To Be Holistic
KEY DIMENSIONS OF FINANCIAL INCLUSION
PRODUCTS FEATURES CHANNELS
• Payments (ATM/debit • Affordability (costs, • Access points: Banking
cards, government minimum requirements, beyond branches
payments, remittances, e- fees)
payments) Savings (savings • Financial Infrastructure:
account, checking/current • Availability and Payment and settlement
account, pensions, youth Convenience (days to systems, credit reporting,
savings, program savings) complete transaction, collateral registries
documents required,
• Insurance (life, health, physical proximity) • Institutions: banks /
property, micro insurance, nonbanks, insurance
agriculture) • Quality (price companies, pension funds,
transparency , fair credit cooperatives, MFIs
• Credit (personal, consumer, disclosure, responsible
credit card, education, finance practices, risk • Clients: everyone who
mortgage, home management and has the demand for the
improvement, assessment with inclusive services, including the
microenterprise) credit information systems) underserved poor

12. Credit Bureaus - Critical Financial Infrastructure
 Credit bureaus are part of a set of institutions make up financial infrastructure that enable
effective operation of financial intermediaries
 Credit bureaus collect information on a borrower's credit history from various sources
including financial institutions, non-bank lenders, telecoms, courts and other sources. The
information is then merged and analyzed to form a comprehensive credit history record for
each borrower and is sold to lenders in the form of credit reports or credit scores
 Research has shown that credit bureaus are critical to the expansion of credit for both
individuals and small businesses, since access to credit information is needed when
applying modern financial technologies to credit decisions for these market segments

13. Information On Individuals And SME’s Are Core To
Credit Bureaus
 Traditional data - loan/repayment, public record and credit inquiry
 Non-Traditional - obligation/repayment from essential services
 Public Utility
 Telecommunications
 Insurance
 Alternative Data - typically maintained and offered by a trusted third party
 Property
 Fraud
 Electronic payments and other credit & public record information

14. Value Add Services From Credit Bureaus
 Raw credit data can be very useful in, however, the lender needs significant time, resources, and
expertise to analyze and interpret the data. Credit bureaus use various techniques and
technologies to create value added services, ranging for risk scores to software for automated
underwriting.

15. Credit Bureau Risk Score
 The credit bureau risk score is built from a broad spectrum of customer histories found in credit
bureau data database
 It is based on the information pooled across many creditors as well as public information sources and
thus include characteristics otherwise unavailable to the individual lender, such as total exposure,
number of outstanding loans, and previous defaults within the system. All of these are highly
predictive measures of future repayment.
 The score consolidates the information in the credit bureau and delivers a simple, intelligent guide to
assess the credit risk of new and existing customers
 The score provides a numerical value on the credit risk of a
borrower, which predicts future repayment probability
 The score is delivered in credit reports or delivery electronically
into lenders scoring systems or automated software applications

16. Application Processing Software
 A key driver of profitability in the lending environment is the ability to keep the cost of the new
business acquisition to a minimum
 Many financial institutions have turned to automated application processing systems as a
means of streamlining the credit granting process, through many delivery channels
 Common designs of these systems incorporates the following fundamental features:
1. Electronic Data Capture
2. Decision Rules Engine
3. Decision output
 Advanced decision systems are capable of managing almost all aspects of the decision-
making process, including customer segmentation, model building and strategy allocation,
etc.

17. Electronic Data Capture
 Typically an application processing system has a series of standardized data capture
screens. These screens allow the operator to capture the information necessary to process
the decision and, perhaps more importantly, store the customer data in a format that can
later be used for analysis.

18. Rule/Scoring Engine
 A rules based decision engine captures the application data electronically, then the
software automatically applies policy rules, such as minimum required lending criteria, and
scoring algorithms, including score cut-off criteria.
Rules: Product 1: Product 2: Product 3:
Shamwari > =1 Decline Decline Decline
Under administration > -1 Decline Decline Decline
Collection > -1 Accept Accept Decline
Judgements > = 2 in last year Accept Decline Decline
Adverse > = 1 in last year Accept Accept Decline
Worst month in arrears > = 5 in last year Accept Accept Decline
CompuScore > = 680 Accept Accept Accept
CompuScore > = 655 & < 680 Accept Refer Decline
CompuScore = 0 or null Refer Refer Refer
Disputed report > =1 Decline Decline Decline
Debt Restructuring> =1 Decline Decline Decline
ID Unverified > =1 Decline Decline Decline

19. Decision Output
 An automated application processing system assimilates all of the input data and presents the
operator with a recommended course of action, such as accept, refer, or reject
C O D IX - C R E D IT D E C IS IO N M A T R IX
OUTCO
PRODUCTS REASONS
ME
1 M O N TH LO AN A P P R O V E D F O R F U R T H E R P R O C E S S IN G
2 M O N TH LO AN A P P R O V E D F O R F U R T H E R P R O C E S S IN G
1 S T 3 P A Y M E N T P R O F IL E S N O T P A ID O N A N Y C C A A C C O U N T . H IG H
3 M O N TH LO AN
A R R E A R S A N D P O T E N T IA L F R A U D .
U N D E R A D M IN IS T R A T IO N . U N D E R C O L L E C T IO N . L IS T E D A T T H E
6 M O N TH LO AN S A F P S A S A P O S S IB L E F R A U D P E R P E T R A T O R . H O M E A F F A IR S
H A V E T H E ID N U M B E R . A F F O R D A B IL IT Y .
U N D E R A D M IN IS T R A T IO N . U N D E R C O L L E C T IO N . L IS T E D A T T H E
12 M O N TH LO AN S A F P S A S A P O S S IB L E F R A U D P E R P E T R A T O R . H O M E A F F A IR S
H A V E T H E ID N U M B E R . A F F O R D A B IL IT Y .
 The degree of complexity of such software solutions varies depending on the technical sophistication
of the user. Advanced decision systems are capable of managing almost all aspects of the decision-
making process, including customer segmentation and strategy allocation (e.g., terms, limits, and
product features) and even champion/challenger strategy setting to test the lender’s appetite for risk.

20. Technology For Account Management
 Monitoring and maintaining accounts is an important task. Typical services a credit
bureaus provides include:
1. Monitoring Services. These services advise a lender of any significant change to a
customer’s credit file, such as a default registered by another lender
2. Batch Screening. This service allows lenders to periodically update the risk profile of
entire portfolios by reviewing the current credit scores of its clients
3. Monitoring and Reporting. These services typically help smaller lenders with limited
internal analytical capacity to produce the management information required to track
credit quality

21. Event Driven Notification Application
 This service advises a lender of any significant change to a customer’s credit file, such as a
default registered by another lender, in real time.
 Enables lenders to flag at risk borrowers so that action can taken quickly
 The following types of alerts are returned to the member on a daily basis as & when the alert is
triggered

22. Event Driven Notification Application
 Functionality to allow lenders to select the alerts required
- Missed Payments
- Arrears from 0 to 1, 2, 3 or more [specify type: Home Loan, Revolving, etc.]
- Arrears goes from 1+ to 0
- Overdraft Facility becomes Paid Up, Closed, Written Off, Legal, Paid up Default
+ Increase in Current Balance
+ Decrease in Credit Limit / Original Balance
+ Increase in Credit Limit / Original Balance
- Account Maintenance (Status Codes, e.g. Closed, Written Off)
- A new status code for the account enters the system
- New Accounts Loaded
- A new account has been loaded, specifies account type

23. Collections Technology
 Tracing services uses the credit bureau data to identify the whereabouts of a customer
with whom a lender has lost contact.
 These products either trawl the current bureau databases to identify existing contact
information of which the lender may be unaware (e.g., telephone numbers or a new
address) or place a marker on the customer file so that if the customer subsequently
makes another application for credit the previous lender can be informed
 Applications to search the credit bureau database just using partial information on a
customer, where results are given in the form of possible matches.

24. Biometric Technology
 Biometric fingerprint technology is become more widely used in credit services as it can provide
secure automated methods confirm an identity based on unique physical or behavioural traits
 Biometric fingerprint technology is used as part of our loan administration software to indentify
borrowers when underwriting loans. Users of the software are also identified via Biometric fingerprint
technology
 For the credit bureau in Uganda biometric fingerprint technology is used to indentify all the borrowers
in that country and it is also linked the credit bureau files.
MICHAEL RITCHIE
MALAN

25. About Compuscan
 As a full private credit bureau, We collect, validate, load, verify, house and distribute consumer
and SME credit information
 We specialise in modern credit technologies , which include the following:
 Credit Application Processing Software
 Marketing services (lead enrichment, and response models)
 Collections applications for tracing
 Account Monitoring applications
 Loan Management Software
 Fraud & Identity Management technology
 Credit Scoring and Analytics
 Skills Training & Development
 We have been operational for 16 years providing Credit Bureau Services with a firm focus on
the African Continent

26. About Compuscan
 As a company we have over 4500 client branches or outlets using our credit information with
users from various sectors such as traditional banks, public and private companies, NGO’s as
well as Cooperatives/Credit unions
 We currently has a presence in nine African countries
 We operate Credit Bureaus in
 South Africa
 Namibia
 Botswana
 Uganda
 We are starting to operate credit bureaus in
 Kenya
 Nigeria under license with local business partners
 We have clients using other credit risk reduction services
 Zambia, Lesotho, Swaziland and Mozambique

27.  Thanks for your time!
 Q&A