Alhuda cibe - How analytics can help mfi's

1. How Analytics can help MFIs to sustain in
the recent Kenya regulations constraints?
MFI ANALYTICS INSIGHT
Sidi Yasser El Jasouli , 8th November 2016, Nairobi

2. 1. MFI Insight Analytics
2-MFIs Challenges and CAP Rate dilemma
3- Loan portfolio Management
4- Credit Scoring

3. 15th
anniversary
2 locations
1 continent
1 founder et 4 parteners
With more 50 years BI experiences
In Europe , Africa, USA et Asie
50 achieved
projects for more 15 clients
International partner network
( Paris , London , DRC , Kenya, Uganda, Morocco)
missions achieved in 6 countries différents
Over 3 continents
+20 consultants

4. 4
Technology Trusted by the top global players
Providing impact to the largest players with the state of Art technology

6. Source : Eric Lamarque, Finance Contrôle Stratégie Volume 2, N° 2, juin 1999
Commercial Bank Value Creation Chain:
Costly support activities
are rarely adapted to
emerging markets.
Traditional banks business
models are too heavy and
are not efficient enough.
The model of mobile phone penetration in Kenya:
Mobile Phone
Penetration in
2015: 88%
Fixed
Telephone
Lines in 2015:
4/1000
inhabitants
Source: Communications Authority of Kenya, Annual Report 2015
VS

7. New technologies in Microfinance:
• Business Intelligence
• Cloud Computing
• Mobile Banking
• Digital Fingerprinting
• Analytics
• SaaS

8. Reducing operational costs and maintaining a high credit portfolio quality
are the key elements to ensure the growth and sustainability of a financial
institution. The regulators requirements have never been as strong as they
currently are on these questions. Additionally, there are also
macroeconomic constraints to overcome in Sub-Saharan African countries,
indeed, maturities are shorter and the amounts lent are lower, so it is vital
to be as efficient as possible. A clever monitoring that incorporates
predictive models for a better credit portfolio management enables the
reduction of operational costs and increases performance in terms of
productivity.
The increasing regulatory reporting requirements of Central Banks and the
changing regulations (especially in terms of setting interest rates) require
internal audit tools to measure performance, monitor properly delinquency
and improve regulatory reporting.

9. CAP RATE LAW
QUALITYEFFICIENCY
• Increase staff efficiency
• Decrease operational costs
• Automatisation of processes
• Foster branchless channels
• End physical documentation
• Better service to customers
• Accurate reports
• Strong audit & monitoring tools
• Fraud reduction
• Adapted products
Challenges in terms of:

10. An accurate knowledge of
your portfolio and the
ability to make relevant
analysis is necessary to
enhance your operations
and take strategic
decisions.

11. • Loan Portfolio Performance monitoring
• Balance analysis
• Delinquency per Aging
• Outstanding Balance at Risk
• Concentration Analysis-(region –business)
• Vintage analysis
• Benchmark analysis &Trend analysis
• Per Branch
• Per product
• Per Industry
• Credit Scoring System ( application – Behavioral )
• Write-off and recovery tracking-
• Workflow management

12. • Agile solutions provide an
insights to all levels of the
hierarchy in the organizations
• Better monitoring lets you take
appropriate decisions
• Allows you to make forecasts
through accurate analysis with
various granularity levels

13. .The many available analysis and the aggregation of your different
databases into a unique one will be elements that can support your
operations and improve your organizational processes.
.Your value chain will be streamlined and the costs incurred to expensive
and inefficient support activities will be greatly reduced.
.The implementation of our solution in your organization will quickly impact
your operating costs which will be significantly reduced because of the
efficiencies gains.
. On the other hand a better management of your resources to tools which
will support you in forecasting future trends will greatly decrease the
delinquency in your portfolio.
.The combination of those factors will have a direct impact on your income
( trends shown on the graph are estimated on an annual basis).
Intangibles Results: Financial Results:

14. Challenges:
 It costs the same to manage a
$50 loan than a $1000 loan
 Short life cycle of loans
 Low average amount of loans
 Lack of financial data
The use of an adapted
credit scoring tool based
on alternative data.
An efficient Portfolio Management
& Monitoring tool.

15. Credit Assessment can be
done before lending out loans
using Financial Data and
Alternative Data and such as:
• Demographic Data
• Social Data
• Mobile Data

16. Risk Assessment Product Offer
Score Product Name
Overall Risk Suggested Loan Amount
Default Probability Suggested Collateral
Odds Annuity

17. • Credit Scoring Tools assists in cleaning
the assets by eliminating borrowers that
are not credit worthy and may affect the
portfolio delinquency and default
probability.
• Fewer calculations are needed for
carrying out data search