CIC eyes alternative data to expand credit access


THE country’s public credit registry and repository of credit information called for alternative and non-traditional data to help the unbanked and underbanked sectors gain access to credit facilities.

In a recent webinar, Credit Information Corp. (CIC) President and CEO Ben Joshua A. Baltazar said traditional credit data is mainly reliant on credit repayment activity and may exclude the so-called credit-invisible, underserved and newcomers in the financial system.

“Alternative and non-traditional data—which includes data from non-conventional sources such as online transactions, telecommunications and utilities—are complementary to the traditional data that the CIC currently receives from its covered financial entities,” Baltazar said.

“[These] can provide a 360-degree view of a borrower’s credit profile at all stages of their credit life cycle and thereafter provide entry points for those that are underserved to build their credit,” he added.

Currently, the CIC is working on an open policy on Special Accessing Entities (SAE) and Accessing Entities (AE), which may use CIC data with other sources to come up with a complete picture of a borrower’s credit profile.

Banks’ struggles

IN the same webinar, FinTech Alliance.PH Chairman and RCBC Executive Vice President and Chief Innovation and Inclusion Officer Angelito M. Villanueva also said financial institutions—whether banks or online lending companies—have struggled to extend credit data to the unbanked due to lack of sufficient data.

The Alternative Data Usage Survey by the Bangko Sentral ng Pilipinas (BSP) also showed that 78 percent of the 146 surveyed financial institutions said they “realize” the tangible benefits of using alternative data.

“The goal of the CIC is to get everyone on board with traditional credit data, but we do understand the limitation of that as it will not be reflected unless a loan is actually extended,” Baltazar said.

“In order for borrowers to have a track record under the traditional credit data, we will rely, encourage and collaborate on the use of nontraditional and alternative data as an onboarding measure—complementary to the traditional data,” he added.

Reaccreditation rules

WEEKS ago, the CIC also issued the standards and rules for reaccreditation of SAEs or credit bureaus.

SAEs are duly-accredited private corporations engaged primarily in the business of providing credit reports, ratings and other similar credit information products and services, as defined by Republic Act 9510 or the Credit Information System Act (Cisa). They are entitled access to basic credit reports from the CIC database subject to pertinent provisions.

Published through CIC Circular 3, series of 2021, the said standards and rules took effect on October 25 and shall apply to current SAEs whose accreditations are set to expire. These were named by the CIC as CIBI Information Inc., CRIF Philippines and TransUnion Information Solutions Inc.

“These rules are applicable to reaccreditation of SAEs for the “basic tier,” which shall be the default accreditation tier of all SAEs. We’re planning to create additional accreditation tiers to sustain our operations and reach our targets on revenue generation,” Baltazar was quoted in a statement as saying. “We will issue additional rules and regulations on this.”

Requirements, agreement

THE rights and obligations of an SAE under the basic tier shall also be governed by the subscription agreement to be entered into by and between the CIC and the SAE.

Current SAEs seeking to be reaccredited shall submit their latest General Information Sheet (GIS), clearance from the Securities and Exchange Commission (SEC), Board Resolutions on the authorization of the SAE to apply for reaccreditation and the authorized signatories for the subscription agreement, audited financial statements and business plan for the next three years, among others.

“It is important to note that SAEs are subject to annual volume commitments on paid access of CIC basic credit reports. They also need to present the projected annual growth of their credit report usage,” Baltazar said. “We want to make sure that the CIC data is being maximized and to improve our overall quality of service for our stakeholders.”

Likewise, the SAEs are required to submit detailed information on the technical descriptions and/or specifications of their internal security policies, communications and technology infrastructure and procedures to ensure the confidentiality, integrity and security of the credit data to be processed.

Value-added services

WHILE the processing, accessing, dissemination and storage of credit data obtained from the CIC shall be wholly-done by the SAEs within the Philippine jurisdiction, the use of cloud technology may allow them to conduct related activities off-shore.

“Dissemination of the credit data abroad shall be allowed in cases where it is to the benefit of overseas Filipino workers, Filipino migrants, Filipino citizens and Philippine residents living abroad,” Baltazar said. “We want to give them the chance to prove their creditworthiness and be assessed fairly when availing loans and other financial services through the CIC Credit Report.”

He added the need for SAEs to develop and provide value-added products and services using the CIC basic credit report such as credit scores.

“Failure to develop and provide value-added products and services for the duration of the accreditation may be a ground for their suspension or revocation,” Baltazar said.

Accreditation granted to the SAEs shall be valid for up to five years, commencing from the date as stated in the subscription agreement unless sooner lapsed, revoked, or suspended and upon payment of the yearly subscription fee of P5 million.

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