Emerging markets focus on establishing right model for new credit bureaus
Selecting the right credit bureau model will determine the robustness of the information and the bureau’s success. February 25, 2011 | Aldo JosonAs banks around the region release their financial results, an emphasis on lending growth—be it government-mandated or market-driven—is coming to the fore. But even as the global economy improves and gears up for expansion, flattening margins are tempting banks to forego quality in favour of quantity. Here credit bureaus have a role to play to help banks manage risk and inform their decisions, although levels of market maturity will determine what the priorities of these bureaus are. And while developed markets are still concerned about how to consolidate, filter and leverage on available data, emerging markets are focussing more on the need to choose among competing models for managing credit bureaus. Across the region, some countries are trying to achieve the ideal setup where the credit bureau manages lending risks and ensures that lending is more informed and less biased. Ken Sansom, president of the global credit information group for Experian in Asia Pacific says that while the end goal is universal, starting points are different. “The credit bureau environment is different market by market,” says Sansom. Countries such as Cambodia, India and Vietnam want to enhance or establish their own credit bureaus, while Mongolia has just issued its credit bureau licence and the Philippines’ central bank is pushing for a second one. New bureaus will face competing models for operating credit bureaus regarding the type of data that they store, and Sansom notes that countries setting up new bureaus should shun the easier-to-set-up negative file reporting credit bureau model and implement a full-file reporting model that contains both positive and negative data. Negative file reporting credit bureaus only report adverse account information—such as when people default on payments on their credit cards—leading to a partial view of a person’s credit history and a less robust predictio... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: consumer, Emerging Markets, Operational Risk & Security, Retail Banking, Risk and Regulationconsumer,Emerging markets,OperationalRiskSecurity,retail,Risk and Regulation, consumer,Emerging Markets,Operational Risk & Security,Retail Banking,Risk and Regulation, Keywords:Credit Bureau, Data Storage, Experian, Ken Sansom Credit Bureau, Data Storage, Experian, Ken Sansom
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