The Credit Data Revolution - Africa

published by Christy Roux

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Regulations driving positive change
Following the gazetting of the banking regulations in 2008, the Central Bank effected credit information sharing;
This mandated financial institutions to submit information regarding their borrowers credit history to a centralised location known as CRBs;
CRBs deliver insight into the risk associated with potential or existing customers;
This insight and information enables lenders to gauge between good and bad borrowers.
CIS has led to fundamental market shifts, as well as changes in how we approach business and connect with consumers.
Kenya: a world leader in digital financial services
The use of mobile money was born in the Philippines, but Kenya was the first country to experience its full potential;
Kenya can arguably be considered a front-runner in financial inclusion efforts;
With increased access stemming from growth in non-traditional financial service markets as well as a burgeoning e-mobile industry.
The changing face of CIS
From flat to multi-dimensional data
Holistic and dynamic view of existing and potential customers
Reporting on positive and negative data
With the inception of CIS, credit bureaus have access to millions of lines of different and dynamic data sets.
When businesses and consumers have
access to more multidimensional information,
they can make more informed decisions and
achieve great things.
The TransUnion Africa database comprises well over 1.5 billion lines of data across Africa - volume and velocity at which it continues to grow is exponential.
The true value presented by CIS
With CIS initiatives, we are moving away from ‘default listing' to a ‘holistic customer insight’ mindset;
We can now establish an end-to-end customer view that can predict risk propensity and behaviour;
This evolution was borne from the desire of credit providers to reduce the cost of acquisition as well as minimise delinquency;
When lenders have access to a greater perspective; to deeper, more granular data sets they gain a far more in-depth view of a customer which allows for enhanced risk-based pricing.
Mobile advancements have been integral in changing how credit bureaus approach business and connect with both providers and consumers across the market.
Kenya: a successful case study
Financial services access increased from 27% to 67% in just seven years, from 2006 to 2013;
Much of this rise in financial services access can be attributed to the rise of mobile technology as well as greater access to credit information through CIS-friendly regulations;
TransUnion's automated mobile-driven strategy, enables consumers access to the information they need instantly.
Previously, consumers had to travel to a credit bureau to get credit information;
So, it’s safe to say that almost all Kenyan homes have their own ATMs, their own online banking, their own private access to their bank of choice. Not possible?
But of course… with the rise of mobile money and other mobile financial solutions, almost all Kenyans hold the power of their banking needs in the palm of their hand.
To look back again, about 20 years ago, the term ‘microcredit’ started to give way to ‘microfinance’ as practitioners realised all segments of low-income people needed a range of financial services;
Today, a broad range of institutional types such as commercial banks, microfinance banks, credit-only MFIs, SACCOs, SMEs and mobile money providers offer a wide range of financial products and services;
Growth and innovation in new sectors
The growth of the SME sector highlights that CIS not only works to grow traditional lending industries such as commercial banks but also burgeoning and relatively new industries such as retail and insurance.
We replicate the footprints of our key strategic partners and understand their focus, their growth initiatives and the micro- and macro-economic factors within which they operate -
Positioning us as the leaders in credit and risk information services worldwide.