Experian, the leading South African consumer credit bureau, has launched its new online credit report and monitoring service – CreditExpert. Experian's CreditExpert will provide South African consumers with the power to manage, protect and improve their personal credit information.

CreditExpert offers fraud detection, monitoring alerts, ID verification and enables consumers to access their personal credit reports online, as often as they choose.

CreditExpert is set to become an important tool in the fight against identity fraud. The product provides a credit monitoring service that alerts consumers by email or SMS of critical changes that have taken place on their Experian credit report, which they can then access online to identify any possible fraudulent activity.

"Impersonation fraud occurs where somebody uses your name and identity to obtain credit they never intend to repay." said Nico Naidoo, Managing Director: Experian Credit Services. “More than 80 000 South Africans apply for credit every day. With so many people utilising credit, the risk of fraud has increased dramatically.

By monitoring your credit report with Experian, you will know immediately if abnormal activity has occurred. For example, if a lender has requested your credit report without your permission someone may be using your identity number to illegally obtain credit. When they do not repay the debt, it could negatively impact your credit report and you could be burdened with the debt.

Consumers registering with CreditExpert will be made aware of potentially fraudulent activity immediately. This way both consumers and lenders will be able to take action to stop it.”

Consumers are entitled to one free copy of their credit report annually – by registering with CreditExpert consumers are given one month unlimited access to their Experian credit report every year. With CreditExpert consumers can also log a query and update information online at their convenience.

Experian, the global information solutions company, has signed an agreement to supply Creative Telecoms & Technologies (‘Creative‘) with its proprietary software to enable Creative to establish a credit reference database and bureau service in Nigeria.

Creative is one of the leading Financial Technology Services companies in Africa, specialising in electronic banking, electronic payment and computer telephony software development. Creative will provide valuable decision-making tools to any company or financial institution extending consumer credit in Nigeria.

Creative will use the Experian software to offer the following services to these businesses:

• Positive and negative credit account information on individuals seeking credit
• Search matching based on name and address
• Information on previous credit applications

Nigeria, with approximately 140 million inhabitants, is the most populous country in Africa. With 25 Universal Banks (which deal with both retail and corporate customers) and more that 250 Micro Finance Banks, Nigeria is experiencing one of the fastest growth rates in the consumer and SME credit market in the whole of the African continent. Also, the phenomenal rise in cellular phone usage has led to the Nigerian telecommunications industry becoming one of the fastest growing markets in the world.

Commenting on the agreement, Roberto Giannantoni, Head of Credit Bureau solutions, Experian, said: “This operation fits our strategic objectives of expansion into exciting emerging economies around the world. Experian is one of the world’s largest and most successful providers of credit bureau services and solutions for third party operators. Experian operates credit bureaux in 16 international markets, including highly developed areas such as UK and USA and others.

“Creative is the right choice to develop a prosperous credit bureau business in Nigeria thanks to its financial capacity, its depth of local experience, its numerous clients within the financial industry and its excellent track record in managing large IT projects.

"The demand for fast, accurate information in decision making is growing rapidly in financial markets across the world, and Nigeria is no exception. Lenders need to base their decisions on relevant information about consumers, so automated and sophisticated credit information retrieval systems are key to managing credit risk. The predictiveness of decision-making solutions has been enhanced by the introduction of shared credit information via credit bureaux, resulting in better risk management for lenders and improved profitability. Credit bureaux are key enablers for the growth of a nation’s consumer economy and the quality of consumer credit portfolios, whilst protecting the privacy and credit exposure of individual consumers.”

Commenting on the agreement, Olatokunbo (Toks) Kotoye, the Chairman of Creative, stated: “Experian is clearly the world leader in the provision of credit bureau services and its decision to partner with us is a tremendous endorsement of the immense potential of the African consumer credit market, which has now reached a critical mass.

“A credit bureau is a vital risk management tool that is necessary to ensure that the consumer banking sector in Africa continues to expand in a sustainable manner. We are proud to lead this development.

“At Creative, we strongly believe that appropriately developed and deployed financial technology solutions must play a critical role in the growth of many developing economies in Africa. A world class credit bureau is a key solution that will facilitate and enhance the emergence of a large and vibrant middle class sector within all African economies.”

Experian Decision Analytics, part of Experian, has signed a global agreement with Clarima Banca, to implement its suite of core solutions to manage the complete credit cycle in the European Operations of Clarima Banca, the Consumer Finance subsidiary of Unicredit Group Italy.

Implementation of Experian Decision Analytics’ solutions will enable Clarima Banca to improve risk management decisions on customers as they apply for new accounts, manage all consumer and business data available with its reporting and monitoring capabilities, plus manage its collections strategy.

Clarima Banca owns and manages affiliates in several European countries and is rapidly expanding its activities in Eastern Europe and Asia. As this solution is to be implemented throughout these companies within the group, it must feature a common credit verification platform. Experian Decision Analytics’ automated credit decisioning system enables the bank to centrally control the lending policies, risk assessment, strategies and scorecards. Credit decisions will be delivered in a matter of seconds with tailored strategies for each vendor in the different countries. The system will be first implemented in Italy, followed by a roll-out to other Central and Eastern European countries.

Milo Marletto, Credit Director Banca Clarima, said: “We realised that Experian Decision Analytics met our criteria during a feasibility study, in which we tested how the solutions worked together seamlessly and can be tailored to satisfy our needs. This technology, along with its experience and international support, made Experian Decision Analytics our perfect partner”.

Miretta Menarini, Head of Telecom and Finance Houses of Experian Decision Analytics Italy, commented: “We are very proud of this agreement as it strengthens our fruitful collaboration with Unicredit Group and gives us the opportunity to expand our support locally to each of the countries where Banca Clarima operates”.

An accurate Masterfile Analysis is key to a successful scorecard, as:

A model is only as good as the data upon which it is built.

The masterfile usually contains application data (collected at the time of application) and subsequent performance data (details of the repayment behaviour) throughout the ‘outcome' period.

Masterfile Analysis can be split into three stages:

•  Data Extraction and Verification
•  Outcome Definition
•  Sample Definition and Creation

Data Extraction and Verification

This first part of the analysis concentrates on understanding the client's files. The data needs to be checked to assess if it is correct and as expected. Key accounts, such as rejects, take-ups (applicants accepted and who took up the loan) and not-taken-ups (applicants accepted but who didn't take up the loan) need to be identified and examined over time. Key statistics such as acceptance rate, response rate (take-ups/accepts) and starter rate (take-ups/total applicants) need to be determined for the portfolio. Charts plotting application criteria over time are produced in order to analyse stability and suitability for the scorecard. A Characteristic Distribution Document is produced and sent to the client for agreement.

Outcome Definition

The second stage is where the performance of accounts is examined and a good/bad definition is determined. In order to assess whether an account should be classified as good or bad, Roll Rate Analysis is carried out. Roll rate analysis measures the worst status of accounts after they have been running for only a short time (e.g. 12 months) and then compare this to what happens to these accounts after they have run a little longer (e.g. 24 months). It enables us to determine whether accounts that stay up to date in the first few months tend to roll on to end up in arrears (i.e. classified as bad) or are they likely to remain good payers? Similarly, do accounts that slip into arrears early recover to be up to date (i.e. classified as good) or do they end up still in arrears? Those accounts where it is difficult to predict the performance of the accounts are labelled as indeterminate. Now the good/bad definition can be established and presented to the client for agreement.

Sample Definition and Creation

In the final stage the period from which the sample should be drawn (sample window), and the number of accounts to be sampled is determined. There are a number of things to consider when deciding on a sample window:

•  It needs to be old enough to ensure accounts have sufficient time for their performance to mature, i.e. time to become bad.

•  There must be sufficient volumes of good and bad accounts in the sample window.

•  It should reflect the current portfolio profile as closely as possible.

•  Any seasonal variation or difference in applicant quality should be taken into account.

This is done by analysing over time the bad rate growth, dynamic delinquency (Vintage Analysis) and application volumes and statistics. Once the sample window is determined, we randomly sample good, bad, reject and not-taken-up accounts from that period to use for the scorecard development. Typically it is recommended that samples of around 5000 per category are used.

All the details of the Masterfile Analysis process is put into a Masterfile Analysis document and presented to the client.

Read next months Credinews to find out more about Masterfile Analysis and the Split Analysis. To read last months article on concepts of scoring, please click here.

Written by Cezanne Gentle, Scoring Analystic, Experian Decision Analytics.

Customer Management for Retail Banking

	edeus, a specialist start up mortgage lender, has reported that it has prevented mortgage fraud losses of £35 million in the first six months following the implementation of Hunter, the fraud detection solution from Experian Decision Analytics, part of Experian.

Like all mortgage lenders, edeus recognised from the outset that it was potentially vulnerable to fraudulent activity. It was therefore vital that robust measures to prevent fraud were employed as a priority from the start to mitigate the risks.

The edeus proposition is built on minimising manual processes and offering an efficient online service to brokers while having systems in place to prevent fraud losses.

edeus recognised Hunter from Experian Decision Analytics as the market leader offering the right combination of technology and flexibility. Hunter now sits at the heart of fraud management at edeus. “I knew about fraud risk but I was no systems expert,” said Chris Preston, Head of Credit Risk for edeus. “Luckily I knew a company that was! We worked together to determine our exact business requirements to ensure the system was tailored to our specific needs and Experian Decision Analytics provided much needed guidance during every step of setting up the system. They have provided an excellent service from start to finish. It is one thing having a great product on offer, but the benefits can only be optimised when backed up by the right service and the right people. Experian Decision Analytics achieved it all, as proved by the massive benefits we have seen already - £35 million of fraud prevented in just six months.”

Elio Vitucci, Managing Director of Experian Decision Analytics, said: “Newly opening mortgage firms in the UK and worldwide increasingly recognise that new lenders are targets for fraudsters ‘testing the system’ and trying to find weaknesses as new lenders often have ambitious growth targets and less business experience of fraud prevention. Hunter is a well-tested and time-proven solution that ideally fits the needs of the start-ups in the mortgage sector.”

The project timescale was also a challenge, with edeus needing a fully operational fraud detection system and fraud management team within a time frame of just six months.

In addition to preventing £35 million of fraud losses in six months, the system ensured a significant return on investment for edeus in the first year of operation, controlling operational costs by streamlining manual processes. Implementing the intuitive Hunter tools for fraud investigation helped to establish a strong reputation for edeus, with the fraud controls sending a clear message to potential fraudsters. About Experian Decision Analytics.

Another win for consumers - blacklisting amnesty extended

The 1st September 2007 saw the end of the amnesty opportunity provided by the National Credit Act to consumers listed at the credit bureaux.

Thousands of consumers benefited from this amnesty by paying outstanding judgments which resulted that the judgment information was removed from the credit bureaux.

The benefit that consumers enjoyed is the early removal of the judgment information from the credit bureaux as the information usually remains on the credit bureau for a period of 5 years or until the judgment is rescinded in a court, thus meaning that consumers could now qualify for credit where before they have declined before as a result of the judgment listing on the credit bureaux.

“There is more good news.” Says the Credit Information Ombudsman, Manie van Schalkwyk : “The deadline for the paid up judgement listings of up to R50 000 granted before 1st September 2006 has been extended from 1st September 2007 to 31st December 2007 . This means that if a consumer pays an outstanding judgement, which was taken before September 2006 and is below R50 000 BEFORE 31 December 2007, then that judgment information will be removed from the credit bureaux.” Van Schalkwyk further stated: “This is a wonderful opportunity for consumer to make use of the extended deadline by using their end-of-year bonuses to settle the outstanding judgement debt and by doing so remove the information from the credit bureau and start 2008 on a good credit note.”

At recent meeting, industry stakeholders (credit grantors and credit bureaux) agreed on having the deadline extended. All parties were unanimous of the idea that affected consumers should be afforded more time to benefit from the amnesty. This is also one of the ways the industry is demonstrating its goodwill towards consumers who were in trouble, but is in a position now to rectify the position.

Van Schalkwyk stresses that consumers should take note of the qualifying criteria to ensure that they receive the benefit of the amnesty. “We engaged in an advertising campaign in August which resulted in the credit bureaux receiving up to 12,000 telephone calls per day and the majority of callers did not qualify for the amnesty.” Judgments must be below R50,000 and must have been taken before September 2006.

Consumers who qualify must follow the following process

•  Contact the credit grantor who took the judgment with your account number
•  Verify the outstanding amount
•  Pay the full amount before 31 December 2007
•  Receive a letter from the credit grantor that the debt was paid in full.
•  And only then contact a credit bureau with this letter. The credit bureaux will validate the letter with the credit grantor and then remove the information from your credit profile.

A FREE OF CHARGE service is provided by the office of the Credit Information Ombud to consumers who feel that they have been listed incorrectly and unfairly at the credit bureaux.

The office can be contacted on 086 066 2837 or at ombud@creditombud.org.za . Consumers can also get useful general information and links on the Credit Information Industry by logging on to www.creditombud.org.za

	The Consumer Protection Bill aims to entrench consumer welfare and protection in South African society. In particular, to promote consistency, coherence and efficiency in the implementation of consumer laws.

The objectives of the Policy and the Bill are to:

Promote:

Prohibit

Provide for

(www.thedti.gov.za)

The 3rd Draft of the Bill is due to be considered at Cabinet by 5 December 2007. If Cabinet approves, it will go to state law advisors for certification. If approval is obtained by the end of the year, the 3rd might be published early in 2008.

The Bill would probably be introduced to Parliament in May 2008. Thereafter public hearings will be held. Approval and enactment of the Bill is likely to take place around September or October 2008.

The following career opportunities are available at Experian: Head of Scoring - This position requires strong analytical skills in the realms of Credit Scoring and a participative leader to achieve quality, service and productivity levels in order to maintain excellent delivery standards and client satisfaction. You will be expected to manage a team of Scoring Analysts and assist in the consultancy, development and monitoring of scoring models. Click here for more information.

Senior Solutions Analyst - The successful applicant will be responsible for project, technical and people leadership, scoring, software delivery, day-to-day project and client support and sales support through expert knowledge. Click here for more information.

Business Relationship Manager (Cape Town) - The purpose of this job is to manage accounts and to play a key assisting role in large accounts.The key responsibility of this role is to provide service and support to Experian clients ensuring client satisfaction. Click here for more information.

Development Manager - The successful applicant will need to manage and lead a team of developers and analysts focused on the design, planning and implementation of software information systems to support the vision and strategy of Experian. Ensure maintenance of existing software is performed in a timely manner to ensure maximum uptime and return on investment. Click here for more information.