Malaysia’s Credit Guarantee Corporation (CGC), a government and commercial enterprise joint venture, has used FICO’s decision management technology to improve its ability to judge the creditworthiness of small businesses so it can provide them with loans.
This direct lending is an expansion of CGC’s usual role of providing loan guarantees to businesses, many of which lack the collateral and track record to obtain regular financing. Since its deployment of FICO® Blaze Advisor® decision rules management system and custom analytic models in August 2016, CGC has reduced non-performing loans to just 3 percent of the loan book and has had only one default.
For its achievements, CGC has won the 2017 FICO Decisions Award for Decision Management Innovation.
The introduction of the decision management solution was necessary to ensure a more accurate prediction of customers risk and pricing, to improve the turnaround time and reduce defaults. Previously most of the business rules or loan eligibility criteria were checked manually by CGC for each of its micro, small and medium business applicants, which made for a slow and non-standardized process. However, with the launch of the new direct lending products these business rules and loans would grow in number and require rapid and reliable processing.
“The decision management automation provided by FICO has been a leap forward for our business,”
said Perbagaran a/l K. Kuppusamy, Chief Risk Officer at CGC.
“Previously we were requesting bureau and demographic data, receiving it in a physical format and then aggregating it so that our risk team could assess the data based on bureau rules and determine eligibility for particular schemes.
With FICO Blaze Advisor and FICO analytics, this time-consuming and tedious process has been cut from weeks to two or three days, and we have a more accurate risk assessment of each customer.”
FICO developed multiple segmented analytic models which analysed 1000’s of variables specifically for CGC’s portfolio to achieve a better way of assessing risk.
Integration was built between the CGC origination system, the credit bureau and an anti-money laundering solution to automate eligibility criteria as well as score the applicants’ risk. In addition, CGC customers’ behavior patterns were taken into account to judge and rate the existing customers. This formed the behavior models determined by the customer’s track record, period of engagement with CGC and other criteria.
“The complexity of the solution Credit Guarantee Corporation built and deployed made it stand out among this year’s FICO Decisions Awards contestants,”
said Daniel Mayo, chief analyst for financial services technology at Ovum, one of this year’s FICO Decisions Awards judges.
“CGC’s ability to play a developmental role in supporting the country’s economic development agenda can only be enhanced by this project.”
“Empowering an organization such as CGC to be as entrepreneurial as its customers has been truly satisfying,”
said Dattu Kompella, managing director in Asia for FICO.
“CGC’s achievement in its decision management clearly shows how automation can deliver a transformative change among businesses – streamlining processes, saving time, and improving overall efficiency.”
Featured image via fico.com