Romanian Credit Bureau
TransUnion/CRIF Approach to Successful Implementation
and Value-added Services
Bucharest, February 10th, 2004
Senior Regional Manager
Table of contents
TransUnion, CRIF & IPACRI Credit
Credit Bureau Experience
Credit Bureau Solution overview;
Added-value credit bureau services
The USA’s leading consumer credit reporting agency.
Operate credit bureaux in more than 10 and have offices in over 20 markets.
One of the largest databases of consumer information in the world.
More that 4 million credit reports sold daily (1 million online, 3 million in
Receive 12,500 input files per month from 9,000 data contributors.
3.4 billion rows of data updated monthly on 200 million consumers.
33 thousand public records updated each day.
Strict policy enforcement to protect credit information confidentiality.
CRIF & TransUnion worldwide
•Canada •Czech Rep.
•China Representative Office •USA •Italy
•Hong Kong •Dominican Rep.
•Guatemala •Nicaragua •India
•Thailand •Costa Rica
•Singapore •Colombia •Kenya
•Australia •South Africa
A European, private- and bank-owned company with headquarters in Bologna (IT).
Over 500 employees in 6 countries; extensive growth in terms of revenues and
Leading European provider of information, decision systems, technology
and consultancy to evaluate credit risk and develop marketing strategies.
Started in 1988 as the Italian Credit Bureau for the retail and small-medium
business credit market (over 90% of market share).
More than 24.000 Users’ branches connected daily on-line. More than 60
million managed and updated lines of information in CRIF databases.
Over 400 scoring and decision solutions systems in 10 countries.
Services provided to Banks, Financial Houses, Insurance Companies and Utilities.
• IPACRI Romania
Established in 1994 as a joint venture with ELSAG (Italy).
ELSAG involved in the TRANSFOND project for Clearing and Settlement project.
Key competences in financial/banking market, postal systems, public
administration, wireless/PDA applications, document management.
IPACRI Banking and Finance experience covers namely retail banking, treasury
systems, credit and market risk management, e-and m-banking.
International exposure: Italy, Germany, Denmark, Saudi Arabia, USA.
Focus on integrated Credit Risk Management Solutions with special regard to
Basel II requirements.
Credit Bureau Experience
Credit Bureau Operations
Current TransUnion and CRIF credit bureau operations in more than 15 markets
USA, Canada, Mexico, Italy, Australia, South Africa, Hong Kong, Thailand, China….
Credit Bureau Scoring
US, Canada, South Africa, Bundes Schufa – Germany; Serasa – Brasil; Buro de
Credito – Mexico; ICB – Ireland; KSV – Austria (Feasibility study); BIK Poland;
Czech Credit Bureau (2Q 04)
Credit Bureau Feasibility Studies
Association Panamena de Credito – Panama; Tireasias - Greece
Other Credit Bureau related activities
KEY FACTOR: Cross-border Data Exchange; ACCIS
Eastern European Experience
Czech Credit Bureau
Launched in June 2002 (2 years of preparations); 5 founding members (90% of
the market); TransUnion, CRIF and a local partner selected by BA.
High hit-rate of 70%; c. 4,500 inquiries daily; expansion of the bureau to leasing
companies and construction savings banks (telecommunications).
Slovak Credit Bureau
Current establishment process; 3 largest banks as shareholders (TU-CRIF are
operators); EURISC System in outsourcing (Bologna); currently passed legislation
(consent not necessary for historical data inclusion)
Croatian Credit Bureau
Banking Association selected TransUnion/CRIF as operators in July 2003; Newco
establishment in progress (Feb 04); all Croatian retail banks to participate.
Other CEE markets
Credit bureau project activities: Romania, Russia, Hungary, Bulgaria, Serbia.
BIK Poland: Credit Bureau scoring
Types of Credit Registries
We can distinguish credit registries by the following criteria:
obligatory voluntary/with consent
consumers SME, corporations
16 European developed economies operate a private credit bureau
(6 CEE markets in various stages of development).
Statistics show that positive commercial CB improve credit activity/GDP from 45,1 to 75,7% in
33 observed markets (as opposed to negative bureaux).
Recently, absence of positive data sharing caused substantial financial market collapses in
Thailand, South Korea,…
Private Credit Bureau CEE situation
Credit Bureau 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
• For Borrowers (consumers and small business):
Get credit more easily
Obtain lower rates according to own risk level
Be protected against future over-indebtedness
CROSS-INDUSTRY POSITIVE CREDIT BUREAU STRONGLY
COMPLEMENTS THE RECENT NBR CREDIT GROWTH REGULATIONS !
Credit Bureau Benefits
Time for loan processing: 31% - more than 100% reduction
33% - between 25% and 100%
Costs of lending: over 60% - an decrease of at least 25%
Default probability: 70% - decrease by 25% or more
Source: World Bank study „CREDIT REPORTING SYSTEMS AROUND THE GLOBE, June 2000“
Credit Bureau Data Flow
• Data Flow Overview Control Committee
Request sent to CB
Client requesting a loan Client & Contract
or updated in
master CB db
Credit report retrieved
Bank sends an
data update (to close
Data update accepted
Or anomalies report generated
Bank Production data
TransUnion-CRIF proposed involvement
• Project management involvement
• Operations and organisational consultancy
• Assistance to the technical architecture and data-centre
• Credit Bureau system implementation
• Ongoing system maintenance
• Constant upgrades via other markets´ installations
• Development of ancillary value-added services
TransUnion/CRIF credit bureau system
• International Credit Reporting System (iCRS):
New generation credit reporting system for international clients
Benefits of current and near future implementations on several
markets (both new and current system replacements)
Modular architecture (allows incremental releases of functionalities in line
with market demand)
Built on open, standard technology architecture
Reusable, configurable product platform
N-tier, scalable architecture for small to large markets
Flexible system meets unique in-country requirements
Full compliance with valid legislation
TransUnion/CRIF credit bureau system
iCRS – TransUnion´s International Credit Reference System
CRIF´s European and CEE market knowledge and team support;
IPACRI local technological and operational support.
Modular System Functionalities
Divided into several stages (based on functional analysis):
1st stage provides basic functionalities (data update in online and batch mode;
data matching and normalisation features; credit report retrieval - online and
batch; reporting; accounting; user administration).
2nd…n-stage implemented in line with the market demand (focus on added value
services: ASP application processing, decision engine, detailed statistical reports,
anti-fraud support, credit bureau scoring, CPU-CPU connectivity, account
Application processing + generic scoring + decision engine
integrated existing solutions using Credit Flow and Strategy One products.
Data security and confidentiality issues
Secure private lines (VPN technology, data and transmission encryption, CA)
Detailed access logs; automatic monitoring of excessive use
Personal & organizational security:
Closed-end user group; reciprocity rule (only data contributors have access to
Strict contractual regulations (MFA, membership agreement: strict rules and
regulations, sanctioning system towards members)
Physical access rules; personnel requirements on CB staff
Composed of CB staff and users´ representatives
Monitors activity logs; makes inspections at users
Authority to impose immediate rectification, temporary disconnection, and
Operational & organisational consultancy
Long-term success of a credit bureau is more dependent on the following
operational issues than on the software solution itself.
For this reason, majority of efficient bureaux work in partnership with
established credit referencing agencies.
• Shareholding/corporate structure/decisioning issues; business model
• Legal support: Personal Data Protection, Consumer protection laws,
Anti-Monopoly, cross-industry data sharing, consumer consent, etc.
• Pricing structure (model) for Users
• Contractual agreements between members
• Organisation of Control Committee
• Help-desk/client centre organisation (operations manual, etc.)
• Support for consumers (issuance of reports for general public, compliance)
• Legal disputes handling (individuals; authorities)
• Public Relations & Media issues
Credit Bureau Data Usage
ACCOUNT APPLICATION ACCOUNT EARLY STAGE
ACQUISITION PROCESSING MANAGEMENT COLLECTIONS
Solicitation Approve / Limit increase / Prioritization
Decline decrease Resource
Setting initial Authorizations allocation
credit limits Outsourcing
pricing of loans
Value-added Credit Bureau Services
Basic and future functionalities of the Credit Bureau System:
CREDIT DATA SUBMISSION (ONLINE AND BATCH)
CREDIT REPORT RETRIEVAL (ONLINE AND BATCH)
APPLICATION PROCESSING SUPPORT
(INTEGRATION OF GENERIC/CUSTOM SCORING MODELS AND CREDIT STRATEGIES)
INTEGRATION WITH STRATEGY DESIGN & MANAGEMENT SW PACKAGES AND OTHER
PRODUCTS OF TRANSUNION AND CRIF
CUSTOMISED STATISTICAL AND USAGE REPORTS
AUTOMATED MONITORING FEATURES (ALERTS)
MONITORING OF TOTAL CREDIT EXPOSURE
CREDIT BUREAU SCORE IMPLEMENTATION
SUPPORT FOR INTERNAL RATING SYSTEMS (BASEL II)
Romanian Credit Bureau – Summary
Credit Bureau is NOT an IT project
Know-how transfer; Proprietary TransUnion/CRIF knowledge of banking systems in
many markets; Complex data normalization/validation checks,…
Handling Personal Data Protection & Anti-monopoly Laws…
Specific ability to overcome obstacles in „non-IT“ areas.
Proven CB solution providers for CEE markets
TransUnion/CRIF are the only players with experience in CEE markets (current CB
work in progress in 6 CEE markets); dedicated CEE team of professionals.
Synergies with Additional Services
Application processing, Credit scoring; Anti-fraud database systems, etc.…
Cross-border Data Exchange
CRIF is the initiator of Key Factor (information sharing among European credit
Strong local market support
IPACRI Romania is an established local company providing services on the
Romanian financial market.