The credit bureau industry has an infrastructure designed to promote responsible lending and borrowing. In this interview, the Managing Director/CEO, CRC Credit Bureau, Tunde Popoola, tells the Group Business Editor, SIMEON EBULU, that no economy has succeeded in granting access to credit for consumers and small businesses without an efficient credit reporting system. He also speaks on other developments in the industry.
What is the level of technology that drives credit bureau business?
Normally, the credit bureau relies on very robust and powerful software application to be able to do and deliver services to the public and to the businesses that we serve. Since 2008, when we started and with the experience that we’ve had over time, we discovered that we need to improve on the software application to meet the challenges of the time in terms of friendliness, providing capacity for a large variety of customers and in terms of even appeal and the ease to enhance efficiency of our operations.
So, we eventually went round to look for the best in the world and we eventually came up with a new software application called silver blade 2.0. So, that is replacing the credit verdict software application that we use currently and the major benefit of that to our customers is firstly, to enhance the efficiency of our operations.
The ease with which we are able to pull data to get information from the bureau is very important. So, this one has like a speed of light unlike before when it used to take about 10 to 15 seconds, now within two to three seconds, we can get our information from the platform.
There is what we call the widget that gives you a whole view of what is going on. You can see what is going on your usage. With that you can do historical trending of your usage, the product you are using, the number of usage you have done. So that created some level of animation which we did not have on the one that we are dumping now. And, of course, we have what we call internal scoring solution. You can use the data that you have to develop an internal scoring solution for yourself. That also is part of the feature of the new software application and the power it has to really empower customers to do more on the platform. So, these are just the basic features and the benefits that it confers on all of our customers.
Can you tell us about your products?
We have a very interesting product different from what we call ‘typo credit cost’. This is going to be the first Central Bank of Nigeria (CBN) approved credit scores in Nigeria. Nigeria doesn’t have credit scores. If you listened to the CBN Governor when he came, he said Nigeria is going to have a national scoring platform so we have took up that challenge and we went to look for best credit Solution Company in the world called FICO.
We brought them in and that product will get to the market in April. So, this is something that is very unique, something that we believe can revolutionise our lending because when you have scores, it makes life easy for everyone who is in the business of lending or in the business of granting credit to score clients who they want to do business with. So, they can have a threshold of score; the scores normally is between 3,850, so they can have a threshold and say for instance anybody below 600, we believe they pose as high risk to them and then deal with those above 600.
They may also use the threshold to determine some other additional criteria. If, for instance, you are between 500 and 600, that’s fine but we will need additional collateral for you; whereas for somebody who score 600, they may not need additional collateral because that one is less risky.
What are the criteria for this scoring?
They are normally, your credit history, what you’ve been doing with your credit in the last three to four years; how you have been meeting your repayment obligations; the number of credits you have been enjoying or that you have enjoyed in the past and then, the number of enquiries that has been made on you from time to time. These are four fundamental factors.
Are you doing this with the CBN or it’s a service you are offering that others buy into?
It’s a service we are offering to the lending industry. You need the approval of the CBN to do this kind of thing and so, we have our CBN approval to do the credit scores.
Will you be willing to lend this service to your competitors?
Well, they will have to develop their own. It is company specific. It is already a franchised product and it exclusively for CRC.
What’s your view about the economy?
I think we have never had it as bad as it is and that is the reality on ground. In terms of Gross Domestic Product (GDP) growth, I think we are at the lowest level now. In terms of capital market activities, it’s also down. In terms of drivers of the economy, things are really down. First, the budget is not yet operational even though it’s been approved. Second is that we are going through fuel scarcity challenges, and the level of electricity as available is less than 3,000 as we go ahead. So, these issues are what is affecting a lot of Nigerians; both the common people and the rich people. But the budget has been approved provides a lot of hope for us as a nation. It is a budget that is targeted at reflating the economy.
And I think the government got it right by saying that when you are in a period of this nature, that is almost close recession or depression, you have to bring money into the economy. I think that’s what the government is trying to do and that is on point. What is also on point is the level or amount and proportion of the budget that has been earmarked for two major things; first for physical infrastructure, especially on roads, railways and other socio and economic infrastructure is also unprecedented and that will stimulate productivity in the economy. That will bring money in the hands of people especially wage earners who are going to be involved in all of these.
The CBN met last week and decided to cut the Monetary Policy Rate (MPR) from 13 to 12 per cent. What is your view on that?
The MPR was increased after it’s been stable for a period of time. And don’t forget that is also in response to the trend in inflation. The inflation became double digit before the meeting and the primary purpose of the CBN is to maintain stability. So, they needed to do something to control the quantum of money that is out there. And that’s they have to really do that. So once you do that, what it means is that loan becomes a bit expensive and that discourages lending because the threshold will go up with that. But I see that as just a very short measure I guess because what we have been seeing is the economy is been driven only by monetary policy in the last 10 months or so but now the fiscal policy is coming into being and they are supposed to go hand in hand which we didn’t have before now.
You spoke of the benefits of credit bills. Given that level of efficiency, why do banks still insist on meeting so many stringent securities and all of that?
Let me say that Nigeria is going through a silent revolution in access to credit and a lot of people may not know but I think it’s important to do an analysis of what is been going in the lending industry in the last five years. There is a revolution going on especially on access to credit; two, on the way and manner the lending institutions now book transactions; and on who has access and who do not have access. All these have been highly impacted by the presence of credit bureau infrastructure. Before now, up to 2009/2010 when we commenced live operations, it is very difficult for you to even have loans as consumers. Credit Bureau infrastructure is targeted at enhancing access to credit for consumers and SMEs. So you can go back and look at what’s been happening before 2009/2010, especially the last three years when credit bureau had become full blown. We all realised that first; a lot of consumers do not have loans to borrow.
When are we going to get to a situation where I say, this is my card, I’m a journalist, I have integrity, give me a loan …?
I think we are partially there. I believe that for a lot of salary earners who are really interested in having access to credit, they do have access. I think the problem we have is the informal sector. Those who are working with one-man business and they don’t have and banks are unable to place a liability on the institutions that they work for.
So, those are the ones I consider extremely difficult to get access to loan. But you know in an economy, there are four infrastructure that drive access to credit and Nigeria is just getting about two, right. The other two are still missing, especially for the SMEs. First of all, the credit bureau, that is becoming a culture now in Nigeria; so we don’t have problem with that. The second is the legal system, the ability to have a robust legislation and laws that empowers creditors to easily be able to take actions and recover their loans when there is a problem. You and I know what we go through in the judiciary in Nigeria. And that’s why lenders make you to go through a lot of things to tidy up loose ends because they know that when it comes to the issue of going to court, it will take forever before they can secure judgment and then repossess or get you to pay