FICO, local banks seek ways to curb loan delinquency

MANILA, Philippines - FICO, a global leader in analytics and decision management technology is in talks with local banks to introduce an innovative system aimed at addressing credit cards and loan payments delinquencies.

In a press briefing, Daniel McConaghy, FICO Asia Pacific president and general manager, said while there is still no delinquency crisis in the Philippines, it is high time for banks to put up a mechanism that would mitigate any rise in payment delinquencies of their customers.

“There is a growing sense of urgency among local banks to mitigate delinquency risk now,” he said.

FICO country manager for the Philippines Burton Crapps said there is a need to put in place an effective model to minimize risks, pending the establishment of a national credit bureau.

“Given the nascent but rapidly-growing retail lending sector, Philippine banks have a unique opportunity to get it right from the start,” he said.

He said FICO has unrivaled expertise and capabilities to work with banks to manage collections and recoveries. It can help banks determine credit scores to determine a borrower’s ability to repay a loan or credit card.

Aside from three new banks they expect to deal with in the next weeks, Crapps cited big local banks have already been using their model. These are Bank of Philippine Islands, Bank of Commerce, Banco de Oro, East West Banking Corp. and Metrobank.

Crapps said they are planning to put up a company that would handle their business in the Philippines.

“As the economy grows, banks’ credit and lending would naturally grow. There should be enough infrastructure to help deal with managing risks and delinquencies,” he said.

FICO is not new in the Philippines, having worked with nine clients since 2010.

Established in Asia Pacific in 1997, FICO’s clients include two-thirds of the top banks in China, Australia, Singapore, Japan, Malaysia, India and Korea.

About 65 percent of the world’s credit/debit cards are managed using FICO adaptive control systems.

In the US, Crapps said the so-called FICO scores are being widely used to determine the ability of an individual to pay up his debts.