Bad debt is a deep-seated fear that haunts every bank. And this fear is even more pronounced as the current credit crunch threatens a financial institution’s very survival. Knowing which individuals to lend money to is a fundamental task for every bank, and every bad decision leaves the institution more vulnerable. Hence, the formation of credit bureaus, which aim to help banks make sound lending decisions.
The Credit Bureau of Singapore’s mission is not unlike its counterparts in other countries. Launched in September 2002, the bureau aims to implement the Monetary Authority of Singapore (MAS)’s vision to improve on the island nation’s risk management capability.
The bureau keeps guard over a repository of data relating to the credit application and repayment records of the island’s consumers. This data originates from a wide variety of sources, namely creditors, lenders, utility companies, debt collection agencies and the courts. Only the bureau’s 17 members, comprising all banks and finance institutions in Singapore, are privy to this information.
The amount of data the bureau manages is enormous, diverse and growing at a steady rate, with the potential to boggle the minds of those who sift through it. Hence came the bureau’s challenge: to ensure its members used and analysed the information in the best possible manner.
Changing landscape
During its second year of operations, the bureau began offering a set of data analytics products. William Lim, executive director, Credit Bureau Singapore, describes this set of tools as a “static shop of data and information”. These products served the needs of the bureau’s members well enough during the early to mid-2000s; but the changing banking and credit landscape soon proved these tools inadequate.
“Members would come in and request an analysis of a credit card portfolio for a particular month. The bureau would produce the information for these members, such as share of wallet and the delinquency rate. But that system had its limitations, due to it being too static, not to mention time-consuming,” says Lim. Time to delivery would also be lengthened, and man hours consumed, if a member institution were to request for information that differed from its monthly staple. “Clearly, that was not the best way to make ourselves useful. Bottlenecks would ensue when seven different banks asked for varied criteria in the reports,” says Lim.
“Some banks may have changed their credit approval policy, and what distinguishes good credit hunger from bad credit risk is something that the banks will need to do very well,” says Lim. “That’s where we come in: to assist our members, who may each have developed a different set of criteria, in view of the current credit crisis.”
The bureau thus decided to enhance its data analytics platform in late 2007. The project did not commence earlier as the data needed to “attain critical mass” before it could “capitalise on a more intelligent platform”, according to Lim.
Flexibility
An analytics platform from SAP BusinessObjects was selected for deployment, as part of the bureau’s efforts to improve its service delivery. The new Web-based platform, named the Credit Pulse Hub, aimed to provide users with an easy-to-use interface for accessing the data, so individual users could perform data analysis at will.
No new repository of information was created. Instead, user-defined views of the information sitting in the multiple, existing databases were created. The quality of the data available did not prove problematic, says Lim, as the existing data was already “good and clean” with “no data massaging” needed. Data was merely ported across to another tape drive, so it would not affect the live data production environment. According to Lim, the main challenge associated with the deployment was ensuring users were allowed access only to data to which they were authorised.
“We had to make sure certain regulations were adhered to,” says Lim. “The data that users pulled out could only be their own, and within the parameters set down by the MAS.”
The new platform also focused on being flexible enough to cater to users with varied needs—from the credit officer, who logs in daily for a drilled down analysis and what-if scenarios, to the human resource officer, who might log in once in awhile to find possible reasons for a high attrition rate. Custom dashboards for mobile devices could also be configured, for users whose lifestyles dictated they access the platform while on the go.
“Because the platform is delivered through the Web, users can access it anytime and anywhere. It’s customisable according to the needs of a particular bank, or even a particular department within the bank,” says Lim. “You can view it online, distribute it or even download it to your proof list of users.”
Different styles
In the past, the bureau would also try its best to stick to a particular report template across all its users, in order to maximise manpower efficiency. This procedure proved inadequate, as the bureau soon found the banks to have varying requirements.
“Each bank has a different focus, with different types of reports needed. When that happened, it created a bottleneck in terms of workflow,” says Lim. “It would take us a long time to create that query and churn the output when, for example, seven banks require seven different templates.”
The new platform, on the other hand, allows each bank a “certain degree of autonomy”, says Lim. “They’re not going to have to call us in the middle of the night, due to different time zones, just to pull some data. They can now do so themselves, as long as it lies within the specified boundaries.” The availability of historical data on the new platform is also a plus point.
Users can now draw out reports from any previous timeframe, a vast improvement over the limitations of the monthly reports which the bureau used to churn out for its members.
Feedback
The Credit Pulse Hub is currently being used by four of the bureau’s member banks, which Lim declined to name, citing client confidentiality.
User feedback has generally been positive, mainly due to its ease-of-use and the sharp increase in the number of scenarios users can construct with the available data, in comparison to the static reports they used to receive.
The previous set of data analytics tools is still available to the bureau’s members, but Lim is hoping to gradually get all users migrated to the new platform.
Acknowledging the previous tools might still be useful for members enquiring after a particular product, Lim says: “There are some who still prefer paper reports, but hopefully that number will go down, as we progress.”
