SAS pushes credit scoring solutions

MANILA, Philippines - Software maker SAS is strengthening its foothold in business analytics with the aggressive push for its credit scoring tools to predict credit worthiness of bank customers.

SAS’ solutions for banks and financial institutions span the range of risk management, customer management, finance and operations.

Credit scoring, or what SAS defines as “applying the knowledge of past experience and current behaviors to predict the credit worthiness of new or existing customers or applications,” is part of the company’s portfolio for credit risk management.

Naeem Siddiqi, SAS specialist for credit scoring, said the solution allows banks to manage customers’ data and use these to create more efficient processes for predicting borrowers’ credit worthiness.

With a financial crisis sweeping the world, many banks are implementing stringent control mechanisms to cut cost, minimize delinquency, and bring loan defaults to manageable levels.

Give it to Philippine banks, said Siddiqi, that even without a credit bureau for the longest time, the fundamentals here are sound for lending and there is no massive loan defaults unlike in the United States. Bankers generally rely on proven methods on determining the credit worthiness of borrowers.

The recent crisis, however, reinforces the need for better analytics, better banking and bringing science and technology into the business of lending.

“The knowledge is widespread, the technology readily available. When banks are ready to deploy the technology, the software you get here is the same software you get anywhere in the world,” said Siddiqi.

Generally, he said SAS helps banks and financial institutions put in place methodologies, frameworks and applications for them to compete in these challenging times.

Can small and medium enterprises (SMEs) afford these applications?

“Definitely,” said Sawfin Saw, SAS director for financial industry sales. “In fact, we are encouraging them.

Saw added that they have been in talks with not just banks, but also lending companies, cooperatives, SMEs, telcos, trust companies and others that have financial arms or are involved in the business of lending to try their end-to-end solutions for credit risk management.

“It doesn’t matter how big you are, the application can be customized to the needs of clients. We customize and scale. It’s really the value that we bring in to the organization that counts,” she said.

In a presentation, SAS demonstrated that credit scoring actually encompasses management of the credit customer’s life cycle — from prospecting to taking in new customers, maintaining established customers, and even winning back former customers.

Building the credit scoring framework in itself is a detailed process that seeks to drive delinquency to product innovation in a manner that is less time-consuming, accurate and scientific.

SAS is optimistic that with the signing into law last year of Republic Act 9510 or the Credit Information Act, which could pave the way for the setting up of a credit bureau in the Philippines, credit information could eventually be pooled and shared by financial institutions and facilitate credit worthiness checks.

Sidiqqi believes there is widespread awareness among Philippine financial institutions on the need to set up a credit bureau as well as the need to use existing technologies and applications for the creation of a healthy ecosystem for credit information in the country. – Eden Estopace