07 June 2016

New banking tool to reduce non- performing loans out

In Summary

Advantage. Tool helps banks analyse a client’s creditworthiness on spot.

A new automated tool which enables banks to lower credit risks and administer loans to their clients in a much faster way have been introduced in Uganda’s financial market by Compuscan Credit Reference Bureau.

The tool, Compuscan’s Credit Bureau Scoring Solution, uses the banks data at the Credit Reference Bureau data base to analyse credit history of their various clients and reveals their creditworthiness on spot, which enables them (banks) to either grant credit to the applicant or decline based on his or her credit history in the data base.

Speaking at the launch of FINCA Uganda case study on the successful implementation of a credit bureau scoring pilot study in Kampala recently, the managing director of Compuscan Credit Reference Bureau, Mr Mike Malan, said the tool will improve efficiency in credit risks and controls in Ugandan banks.

“Compuscan’s Credit Bureau Scoring Solution is the first in Uganda of its kind and brings a combination of two tiered approach to credit decision making. The Solution evaluates the credit bureau information and introduces a layer of intelligence that is delivered through on-line systems which brings automation information on how credit has previously been granted,” he said.

Mr Malan said Compuscan’s Credit Bureau scoring solutions make credit granting safer and more structured by ensuring that accountability and control are easier to manage in the financial institutions.

“This solution significantly helps banks to improve the customer experience by turning the decision around so much faster,” he said.

Cases of non-performing loans in Ugandan banks still exist due to high rate of defaults on loan payments by borrowers.

Mr Malan explained that the higher the score one gets during evaluation the lower the credit risk of that particular customer and the lower the score, higher the risk of that client defaulting the loan payment.

He said when the score card for the banks client is at 800, that client is considered as a low risk customer and when the score of a customer is at 400, then that person is a high risk customer.

The managing director of FINCA Uganda, Mr Julius Omoding, said: “The use of data is increasingly becoming helpful in creating confidence in the financial services sector.”

He said the tool enhances a better customer experience for loyal, good paying customers and instant decline for high risk customers

“Being able to control risk by using Compuscore and Codix helps banks to reduce Non- Performing Loans (NPLs) and grant more credit to known better risk customers.”



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