© 2006 CRIF

International Credit Bureau Experience:

Focus on Eastern Europe

BACEE Credit Bureau RoundtableBudapest, April 21st 2006

Petr KuceraManaging Director – CCB Czech Credit Bureau

CRIF Group

© 20

06

CR

IF

2

Table of contents

CRIF Introduction

Why a Credit Bureau?

CEE and CIS markets: benefits from CB

Credit Bureaux development:

the road map

CRIF: Competence and Flexibility

International Credit Bureau

Experience: Focus on

Eastern Europe

© 20

06

CR

IF

3

CRIF international dimension

• CRIF is one of the main international groups specializing in the development and management of credit reference agencies and decision support systems for the retail credit markets

• CRIF is the leader in Italy, with over 440 client banks and financial institutions and 85% of Italian branches connected daily online with its services

• CRIF has been successfully expanding credit bureaux

activities in the CEE region (to-date involvement in 4

registries (Czech Republic, Slovakia, Croatia, Russia)

• Through alliance with TransUnion, we jointly manage the

largest number of bureaux worldwide among international

specialised operators.

CRIF Introduction

© 20

06

CR

IF

4

Tampa

Mexico City

BolognaMilan

LondonPrague

Bratislava

Moscow

National Bureau of Credit Histories

© 20

06

CR

IF

5

Bureaux – CRIF worldwide market place

Different types of our Bureaux involvement

Credit Bureau: in the emerging markets it is strategic to support and speed up the economy growth;

Insurance Bureau: essential in mature markets to streamline operations

and strengthen fraud detection; B2B Bureau:

essential in mature markets as a strong companies’ support for completing public information and for the early detection of payment delay.

CRIF worldwide marketplace

© 20

06

CR

IF

6

CRIF worldwide market place

Czech Credit Bureau:

• Today:Banking Credit Bureau (June 2002)Non Banking Credit Bureau (launch July 2005)Shared Credit Bureau (launch January 2006)Portfolio Monitoring Services

• Tomorrow:Credit Bureau ScoreCredit Application ProcessingCredit Anti-Fraud SystemsSME, B2B extension

CRIF worldwide marketplace

© 20

06

CR

IF

7

CRIF worldwide market place

Slovak Credit Bureau:

• Today (operating since 2004):Banking Credit Bureau

• Tomorrow:2006 - Non Banking Credit BureauCredit Bureau ScoreCredit Application ProcessingCredit Anti-Fraud Systems

CRIF worldwide marketplace

© 20

06

CR

IF

8

CRIF worldwide market place

Russian Credit Bureau:

• In partnership with TransUnion and NBCH

National Bureau of Credit Histories

• Sept ’05 – Launch of Credit Bureau &

Application Processing for Credit Cards

and Personal Loans

• Approx. 400 Banks Members

CRIF worldwide marketplace

© 20

06

CR

IF

9

CRIF worldwide market place

Croatian Credit Bureau:

• Kick off 20 September

and go live in May 2006

• In partnership with TransUnion

and HROK - Hrvatski Registar Obveza Po Kreditima

CRIF worldwide marketplace

© 20

06

CR

IF

10

Our Credit Bureau Partners

Buro de Credito

IRISH CREDIT BUREAU • Ireland

• Mexico

• Sweden

• Russia NBCH

• Germany

• Germany

• Brazil

• Poland

• Croatia

• Canada

• Repùblica Dominicana

© 20

06

CR

IF

11

Provider of complex decision support solutions

Credit Reporting (Individuals and SMEs)

Business and financial information (Company profiles, Financial data,

Judgements, etc.)

Business Intelligence and decision support systems (Scoring and Rating)

Software and Processing services for management

StrategyOne CreditFlow

Collection - InformationPlanning &

Development

Customer Acquisition

Portfolio Management

Debt Collection

CRIF Introduction

© 20

06

CR

IF

12

Positive Data Credit Bureau Benefits

Limitations of a negative Credit Bureau which can be overcome with a positive Credit Bureau model

No distinction of “shade of black”

Missing global view on credit positions of a person

Not sufficient information on risk of overindebtedness

No individual “early warning signs” in worsening macroeconomic situation – leads to general default levels

Substantial reduction of new business generation without positive data.

Possibility to override internal policy or result from credit scoring function with positive record in the Credit Bureau

Examples from abroad:

14 EU member countries operate positive data bureaux

Efforts to switch from negative to posivite in a number of countries (Hungary, Hong-Kong, Latin America, etc.)

Establishments in process only consider postive bureaux (Croatia, Russia, Ukraine, Romania, Serbia, Bulgaria, etc.)

International CB models

© 20

06

CR

IF

13

Why a Credit Bureau in CEE and CIS market? Why a CB ?

Com

merc

ial and R

eta

il M

ark

et

Large Co’s and

‘A’ Clients

Retail and

Small Business

market

Current Clients

Under-Served Market

Emerging & Transition Market issues:

Low competition level

Focus on Corporate lending

Low focus on SME lending

No relation with SME & Consumer

© 20

06

CR

IF

14

CB role in emerging market

Understand the basic principles of CB qualities

Aggregate main phases and start the data sharing process

Design the most appropriate corporate structure by thinking globally and acting locally

Technical infrastructure

Quality - auditing process

Commercial policy and evolving plan

CEE and CIS markets: benefits from CB

From

3 to

10 years!!

From

6 to

12 month

s

© 20

06

CR

IF

15

Benefits for Credit Grantors:

Assess overall indebtedness level of clients

Avoid “Credit Shopping”

Reduce transaction time and costs

Apply rates according to risk level

Increase operation volumes at the same risk level

Helps avoid lending to consumers who cannot or will not repay (History)

Why a CB ?

Why a Credit Bureau in CEE and CIS market?

© 20

06

CR

IF

16

Benefits for Borrowers (consumers and small business):

Get credit more easily

Obtain lower rates according to own risk level

Be protected against future over-indebtedness

Lower costs of borrowing (Lower risk=lower interest rates)

Security of personal data (Information is only accessed with consent for

specific purposes)

Why a CB ?

Why a Credit Bureau in CEE and CIS market?

© 20

06

CR

IF

17

Bank A :

A mortgage from a local bank

where salary is paid

- Paid monthly

- Up to date

Fourth - Public

information & Other:

- No court judgements

- Applied twice for credit in last 2 years

- Never lies on application form

- No adverse government records

Leasing company B:

A leasing car loan

- Paid monthly

- Up to date

Bank C: 

An unsecured credit card from a new, foreign bank

- Paid monthly

- High interest

Why a CB ?Challenging puzzle

© 20

06

CR

IF

18

Bank A :

A mortgage from a local bank

where salary is paid

- Paid monthly

- Up to date

Fourth - Public

information & Other:

- No court judgements

- Applied twice for credit in last 2 years

- Never lies on application form

- No adverse government records

Leasing company B:

A leasing car loan

- Paid monthly

- Up to date

Bank C: 

An unsecured credit card from a new, foreign bank

- Paid monthly

- High interest

Why a CB ?Challenging puzzle

© 20

06

CR

IF

19

Bank A :

A mortgage from a local bank

where salary is paid

- Paid monthly

- Up to date

Fourth - Public

information & Other:

- No court judgements

- Applied twice for credit in last 2 years

- Never lies on application form

- No adverse government records

Leasing company B:

A leasing car loan

- Paid monthly

- Up to date

Bank C: 

An unsecured credit card from a new, foreign bank

- Paid monthly

- High interest

Why a CB ?Challenging puzzle

© 20

06

CR

IF

20

Bank A :

A mortgage from a local bank

where salary is paid

- Paid monthly

- Up to date

Fourth - Public

information & Other:

- No court judgements

- Applied twice for credit in last 2 years

- Never lies on application form

- No adverse government records

Leasing company B:

A leasing car loan

- Paid monthly

- Up to date

Bank C: 

An unsecured credit card from a new, foreign bank

- Paid monthly

- High interest

Why a CB ?Challenging puzzle

© 20

06

CR

IF

21

Suggested Credit Bureau data content

Positive and negative information

Private individuals; sole traders; SME & corporate data

Type of contracts

Instalment operations: (Personal/consumer loan; Mortgage loan; Construction savings loan; Investment loan; Operational loan; Leasing; Export/import loan)

Non-instalment operations: (Credit line on current account; Factoring)

Credit cards & revolving operations: (Credit cards; Charge cards; Revolving loans)

Other public & private external databases

CEE and CIS markets: benefits from CB

© 20

06

CR

IF

22

Credit Bureau services evolutionFrom the delivery of credit reports …

OutputOutputRA18 - Copyright Crif ------------------------------------------------------------ ANAGRAFICA 800010790 -------- NUM. 01 DI 01 ---------COD.FIS. BNCRRT60R15G337C PARTITA IVA N.ISCR.CCIAA DICOGNOME E NOMEDENOM./RAG.SOC.SESSO M NATO IL 15 / 10 / 1960 A PROV. PRRESID. VIA CASTIGLIONE,6CAP. 40124 COMUNE BOLOGNA PROV. BO NAZIONE I------ RIEPILOGO EURISC E CREDIT BUREAU SCORING - INDICAZIONI ISTITUTO -----

------------------------ N. POSIZIONI SEGNALATE 9 ------------------------ RC/IS | RF/DE | RN/AF | AC | EA/ES_ RATEALE : 2 | 0 | 0 | 2 | 1_ NON RATEALE : 0 | 0 | 0 | 1 | 0_ CARTE : 1 | 0 | 0 | 2 | 0TOTALE ENTI SEGNALANTI : 8DI CUI SEGNALANO SOFFERENZE : 1 DI CUI SEGNALANO PASSAG. PERDITA: 0_ CREDIT BUREAU ESTERI / ALTRE B. DATI CRIF INTERR.: 1_ IMPEGNI DI PAGAMENTO : 0_ EVENTI RILEVANTI SEGNALATI A CARICO DEL SOGGETTO : 0------------------------------------------------------------------------------

PF: 4=RIT. 7/8=PREC/SUCC 6=SOCI/SOCIETA' S+INVIO=SELEZ.SEZ. INVIO=SCORRIM.SEQ

APPLICATION FORM ----------------------------

BranchBranch

Credit BureauCredit Bureau

Applicant Id and Matching Codes,

Number of Contracts,

Global Exposure, Credit Behaviour,

No. of Banks and Financial Institutions, …

InputInput

CB development: the road map

© 20

06

CR

IF

23

… … to the management of to the management of Decision ProcessesDecision Processes

PUBLIC PUBLIC DATABASES DATABASES

PUBLIC PUBLIC DATABASES DATABASES

CREDIT CREDIT BUREAU DATA BUREAU DATA

& BUREAU & BUREAU SCORESCORE

CREDIT CREDIT BUREAU DATA BUREAU DATA

& BUREAU & BUREAU SCORESCORE BUSINESS BUSINESS

RULESRULES

BUSINESS BUSINESS RULESRULES

APPLICATION APPLICATION SCORESCORE

APPLICATION APPLICATION SCORESCORE

Database Integration,

Policy Rejects, Credit Policies,

Business Rules, Scorecards, Decision Matrix, …

Credit BureauCredit Bureau

OutputOutput

APPLICATION FORM ----------------------------

BranchBranch

InputInput

CB development: the road map

© 20

06

CR

IF

24

Our experience with outsourcing of decision processes

BEHAVIOURAL PORTFOLIO

MANAGEMENT

CREDIT BUREAU

APPLICATION PROCESSING

FOR PRIVATE CONSUMERS AND SMALL

BUSINESS

BENCHMARKINGPLANNING

MARKET DEVELOPMENT

NEW MARKETSNEW BUSINESS AREAS

CB development: the road map

© 20

06

CR

IF

25

To run a World Class Credit Bureau

CRIF support is available in the following areas:

Benchmark

Consulting

Gap Analysis Certification

Legal

Security

Operations

Marketing

Technical

© 20

06

CR

IF

26

The right people for you

Thank you