JAMEELAH SHARRIEFF-AYEDUN, Managing Director and CEO of CreditRegistry, in this interview with BusinessDay ’s FRANK ELEANYA, shares insights on the opportunities Nigeria has in using mobile phone data to deepen financial access to unbanked population in the country. Excerpts
Tell us about CreditRegistry and the impact you have made so far in the financial services sector?
CreditRegistry is the pioneer and leading credit bureau operator in the country duly licensed by the Central Bank of Nigeria (CBN). Our bureau is the world’s first and only modern credit reporting system with integrated biometric technology for consumer identification. Operating since 2003, we are trusted with Nigeria’s largest credit information database covering banks, manufacturers, retailers, telcos, and other service providers.
At CreditRegistry, we are focused on contributing to the growth of the Nigerian economy by deploying innovative software, data and analytics to financial service providers and businesses. We do this in order to promote trust between businesses and their customers, drive financial inclusion and credit availability, and stimulate economic activity and expansion. Our solutions include marketing solutions, customer acquisition, risk management and collections services.
What advantage has being a public company (Plc), since 2007, brought to your services in terms of creating more access to credit?
Our goal is to create mutually advantageous connections for consumers, businesses, and entrepreneurs. Our organization is fortunate to have supportive stakeholders. For example, some alliances (locally and internationally) we have is as a result of being an organization with solid corporate governance structure. Creditregistry has an elected board of directors, nearly 150 shareholders, and it is licensed by the CBN with additional regulatory oversight from SEC, NOTAP, FRC and NASD. Furthermore, we have annual independent audits conducted by reputable auditors Ernst & Young and previously KPMG. With the guidance of our directors, we have established world-class best practices designed to deliver value and achieve our vision to be a connection for working class citizens and entrepreneurs to establish trust with businesses and lenders for all to benefit economically.
Recently the CBN mandated banks to lend to retail, do you think this will help deepen financial inclusion and what role do you see your company playing in it?
With the recent mandate from the CBN, this can certainly help deepen financial inclusion especially with the introduction of our marketing and credit scoring models. More lenders are introducing digital lending platforms which has the potential to reach the unbanked. This year, CreditRegistry released the third version of our credit score branded “SMARTSCORE” which allows lenders to make quick, efficient and reliable decisions in their lending efforts.
With SMARTSCORE, lenders can quickly and efficiently assess the risk of lending to millions of customers, make better informed credit decisions, price risk appropriately and increase revenues. We have deployed this statistical tool to organizations doing high-volume automated lending online and via mobile applications, and we are currently working with many more organizations to accelerate financial inclusion.
What is your view about the lack of uniformity in public documentation or biometrics and does it impact your services?
While banks and data furnishers continue to improve the quality of customer and credit data, the introduction of the BVN, which the credit bureaus helped introduce, has greatly helped to address identity challenges. Improvements on data quality and biometric enrollment is an on-going effort and with the support of CBN and NIBSS, we have seen progress. There are other data elements in consumer data that are used to identify individuals without BVN.
In 2012 you achieved 100% coverage of commercial banks in excess of 12 million records and later in 2014, 40 million records. Yet banks still insist on collateral before disbursing loans? What do you think is the real challenge here?
As of today, CreditRegistry has millions of customer and credit records. What we have done is to consistently provide up-to-date information with as much depth as possible on each customer to ensure that creditors make informed decisions that enable them disburse credit with reduced risk.
Ten years ago, digital lending was not common in Nigeria. Now with the market shift to aggressively grow retail lending through digital platforms the reliance on physical collateral is gradually being replaced with reliable reputational collateral, especially on small loans. SMARTSCORE, our statistical credit scoring model, analyzes customer behavior within our large dataset to come up with reliable and much faster ways for businesses and lenders to identify and target the best customers for their products and services, thereby enabling large-scale consumer lending.
How are you addressing the evolving digital banking landscape and customer expectations?
Traditional banks are rising to the challenge that digital and online lenders have provided by launching their own digital banking and engagement platforms. Our statistical models help both traditional and digital lenders during the various customer engagement cycles to be more efficient and to reduce customer acquisition expenditure. There are certainly gaps that need to be addressed within the industry with the provision of relevant consumer credit training and consulting in order to deepen knowledge and to ensure that lenders successfully leapfrog to reliance on analytical solutions to lend profitability to millions of consumers. We have significantly invested to play an integral role in addressing these gaps in order to help our clients succeed. We also plan to empower consumers to take charge of their information and to connect them with useful opportunities.
Digital banking implicitly relies on less physical contact with customers so the challenge for lenders is to focus on an effective customer experience while retaining robust lending operations. This is where CreditRegistry excels. Trevor Ryan, our Customer Experience Officer (CXO), has a wealth of knowledge and experience delivering digital banking strategies that are profitable. He is championing these transformative initiatives with our lenders to create seamless customer experiences regardless of the channels they use.
What policies does the country need to grow credit access to include millions of Nigerians living in remote areas?
The Central Bank of Nigeria (CBN), in collaboration with the Credit Bureau Association of Nigeria ( CBAN), is taking active steps to work with other regulatory agencies (e.g. NCC) to increase data coverage of individuals whose risk behavior can be modeled in order to enable them to participate in the formal financial system. For example, by using mobile phone data, more unbanked individuals will be empowered to access financial services.
We know that the traditional brick and mortar infrastructure is an expensive strategy to serve the rural population; hence, utilizing mobile phone data will increase penetration to that population. As in other economies the challenge is to combine financial services with mobile telephony to meet the need and demand for financial services irrespective of location. This ultimately gives more people access to credit while reducing the risk and cost in the process. These savings are passed on to the borrowers.
Lenders need access to low-cost longterm funds in order to make credit affordable and attractive for businesses and consumers. The federal government can play a major role here and should, as a matter of policy, establish institutions to buy back low-risk debts, such as mortgages, in order to free up capital for lenders. Certainly, mortgage credit, which is very underdeveloped in Nigeria, is one of the biggest catalysts for economic expansion and wealth creation. State governments could strive to make registration of properties quick, easy and affordable so that tens of trillions of Naira in Nigerian real estate can be unleashed as collateral. This mere act can infuse significant cash into the Nigerian economy. The economic activities derived from affordable credit and large-scale lending will expand businesses, boost employment for the people and increase tax revenue to benefit the government. It’s a win-win-win.
What are some of the trends you are seeing in credit scoring and how are you planning for them?
Some of the trends with credit scoring include the use of alternative data such as telecom, savings, utility, rental and other non-financial data sources. Incorporating alternative data into scoring models enables wider coverage of the unbanked. CreditRegistry SMARTSCORE ranks how responsible a borrower is with credit. Credit applicants with higher credit scores are less risky and should enjoy more favorable credit offers, and vice versa. Individuals can access their credit scores via our Credit connection portal. The portal also provides consumer credit education.
Artificial Intelligence (AI) and Machine Learning are current hot topics in the market also. Jes Freemantle, our Chief Data Scientist, and his team are constantly reviewing approaches to credit scoring but are mindful to ensure the right solutions and services are delivered to meet the needs of lenders, consumers and businesses.
Tell us how you approach data protection for the millions of customer records that you keep?
The data privacy laws enshrined within the Credit Reporting Act 2017 ensures that customer credit data is accessed for permissible purposes with their consent during the credit application process. The law permits the exchange of this information with licensed credit bureaus for the protection of the consumers and the health of the Nigerian financial system. Our formalized dispute processes also empower consumers (“data subjects”) to challenge and correct inaccuracies in their credit reports. As a credit bureau, data protection and security are critical requirements of our operations. CreditRegistry employs encryption, security authorization, multiple data backups and other data center processes to secure and protect data for operational continuity.
