Salient points of the sixth edition of the World Consumer Credit Reporting Conference

Among the speeches (the full conference program is reported below) was that of Peer Stein, Director of Access to Finance consultancy services for International Finance Corporation (member of the World Bank group). Stein pointed out the need to define international standards and new rules, which are clear and shared among the financial market, in order to avoid future repetition of the current crisis on which its pandemic nature has also had a profound effect on the lack of transparency.

Credit reporting systems, according to Stein, play a significant role in economic and financial systems and are determining factors in the development of sound risk analysis models, in the further improvement of risk assessment techniques (through ever more robust methodologies and a greater coverage of information), and in the promotion of “responsible credit” to lenders and borrowers, supporting financial institutions in the financial education of customers in such a way as to make them ever more informed in their credit choices.
Stein also underlined how credit reporting systems represent an important component within a solid financial infrastructure which facilitates and sustains credit growth, both in terms of the volume of credit lines and of the consumers who have access to them. In his speech he went into detail on development trends in credit reporting on an international level. In particular, private credit bureaus are continuing to grow, above all in developing markets where the potential for development is still significant, considering that in these markets about two out of three of the population do not currently use banking services.
In his analysis, Stein also presented the salient points of recent surveys – sourced from ‘Doing Business’, an annual report from the World Bank – on existing infrastructures for information sharing and the regulatory setting of the credit reporting sector in various countries.

Other speakers at the Rio de Janeiro world conference included Robert Davis, Managing Director of CRIF North America, and Petr Kučera, Managing Director of the Czech Credit Bureau, the credit reporting system of the Czech Republic which is managed by CRIF. Davis presented the results of the CRIF research and development process, in particular in the field of advanced tool development for information processing and data mining and their use in the improvement of credit scoring tools. Kučera presented data and evidence on the effectiveness of the integration of credit history on natural persons with that of legal persons (in particular small and medium sized enterprises) in terms of better assessment of the borrowing capacity of companies, in particular in those countries/markets where small and medium sized enterprises make up the predominant part of the economic fabric.

In addition, the speeches of Pratt and Bruna offered particularly interesting information for retail credit operators.
Stuart Pratt, President of the CDIA, the USA Credit Bureau association, amongst other things highlighted how American lenders, supported by federal institutions, are preparing, with the help of Credit Bureaus, to integrate so-called non traditional data into retail customer credit reports (for example expenses such as telephone, electricity, gas and water bills, rental fees, etc). These data together with “traditional” data (i.e. credit history (financial commitments related to credit lines), which are already managed by the American credit reporting systems, are considered crucial in providing an overall view of household borrowing and for the responsible granting of new credit.
Jean Yves Bruna, Managing Director of Consumer Finance for Société Générale, presented information on the operations of a global player such as SocGen within an unsettled environment that the financial crisis is exacerbating. For example, markets which until today were considered as having a high potential, such as Italy, are about to take large steps to bring themselves closer to the mature markets such as those in Germany and France. This implies the necessity to adapt the strategy of consumer lenders to the new situation, and in this way the role of the credit reporting systems also changes: for example the need for lenders to gather even more information in mature markets, and the opportunities offered by cautious management of the customer portfolio, will bring an even more marked use of the Portfolio Management services made available by credit reporting systems.