1. Outsourcing in data management: Credit Application Processing
Giovanni Catinari
Business Consultant
CRIF Decision Solutions
Warszawa, 9th September 2005
© 2005 CRIF Group

2. Table of contents Introduction to credit application processing
Credit Process Automation: the Outsourcing solution
CRIF software for credit application processing
A possible scenario for Polish Cooperative Banks
Main Benefits
Some achievements
© 2005 CRIF Group

3. Credit Application: different perspectives
Consumers concerns:
Get a fair evaluation
Avoid complex procedures and bureaucracy
Obtain credit quickly
Bank’s objectives:
Consistent assessment of credit risk
Grant credit only to creditworthy applicants
Efficient management of all the necessary steps
© 2005 CRIF Group

4. structure automate speed-up streamline
Credit Application: outstanding issues
Consumers concerns
Bank’s objectives
The main issue for credit Institutions nowadays is then to
structure
automate
speed-up
streamline
all the task needed to be performed in order to grant credit
“A desired result is achieved more efficiently when activities and related resources are managed as a process” Principles of ISO 9000
© 2005 CRIF Group

5. Main Objectives of Credit Process Automation
Objective 1: Cost Optimisation
(Workflow & Resources)
Reduce amount of work and resources needed to perform the process
Reduce time required W T
Objective 2: Achieve Business Goals (Quality of Decisions)
Optimise the results of the process by constant
improvement of the decision processes
© 2005 CRIF Group

6. Manage and finalize a PROJECT
Credit Process Automation: the outsourcing solution
IN-SOURCE
OUTSOURCE
Manage and finalize a PROJECT
Buy a SERVICE
Need for:
Project management
IT skilled resources
Statisticians /risk management …
Focus on core business
Use service only when needed …
© 2005 CRIF Group

7. Credit Process Automation: the outsourcing solution
IN-SOURCE
Relevant (and uncertain) fixed costs have to be sustained (both for solution development and maintenance)
It takes time to build the solution starting from scratch
High impact on resources (several kinds of skills needed,…)
Suitable for Banks of considerable dimensions  high volumes needed to repay the investment
© 2005 CRIF Group

8. Credit Process Automation: the outsourcing solution
OUTSOURCE
Well known variable costs instead of fixed costs  correlation with market and business trends
Flexible and customisable on different levels (solution grows along with the Bank’s needs)
Low or null IT impact (web based), eliminate labour issues
Suitable for all kind of Banks but especially for small/medium institutions
Possibility of using up-to-date technology and methodology at a fraction of cost
© 2005 CRIF Group

9. Credit Workflow Management System
Crif software for Credit Application Processing
Credit Workflow Management System
Decision engine
© 2005 CRIF Group

10. Crif software for Credit Application Processing
Crif software are particularly suitable to be used in Application Processing Servicing on an outsourcing basis, because:
They are Multiple Institutions software  possibility to manage different customers and their respective internal organizations
They can manage different product types (loans, credit cards, mortgages,…)
They can manage different segments (consumers, microbusiness, SME,…)
They are easily integrated with external data sources …
© 2005 CRIF Group

11. Crif software for Credit Application Processing
Crif software supports Banks in managing the entire credit application processing.
In credit granting the following main activities have to be managed.
Application data retrieval, customer identification
External Data Base inquiry (Credit Bureau,..)
Score Calculation
Applications
Clients
Individuals (Consumer)
Companies
Result notification/Contract Printing
Data Storage (monitoring)
Strategy Execution  decision making
Final Decision
© 2005 CRIF Group

12. Decision Strategy Configuration Process Configuration
Crif software for Credit Application Processing
Crif software is moreover easy to use, thanks to its graphical interfaces that allow users to perform most of the configuration without the need for peculiar IT skills…
Decision Strategy Configuration
Process Configuration
© 2005 CRIF Group
…The Application Processing Service can be smoothly managed by organizations with light IT resources

13. Other public external databases KZBS internal databases
A possible scenario for Polish Cooperative Banks
Other public external databases
Workflow Designer
Strategy Designer
Bank 1
Branch 2
Bank 1
Branch 1
WORKFLOW ENGINE
DECISION ENGINE
BIK
Credit Bureau
WEB ?
MIG
Databases
KZBS internal databases
Bank 2
Branch 1
© 2005 CRIF Group
Every single banks’ branch is connected via Internet, using nothing else than a common browser, to the application processing system, which logs in the user and enable him to fulfil the application evaluation in all of its steps
Bank N
Branch N

14. Other public external databases KZBS internal databases
A possible scenario for Polish Cooperative Banks
Other public external databases
Workflow Designer
Strategy Designer
Bank 1
Branch 2
Bank 1
Branch 1
WORKFLOW ENGINE
DECISION ENGINE
BIK
Credit Bureau
WEB ?
MIG
Databases
KZBS internal databases
Bank 2
Branch 1
© 2005 CRIF Group
KZBS to play the outsourcer role:
define and implement a start up standard process
activate the service for Banks users
customise service on a one-to-one basis for advanced banks
Bank N
Branch N

15. A possible scenario for Polish Cooperative Banks
START UP APPLICATION PROCESSING
ILLUSTRATIVE
Application data input, customer identification
External Data Base inquiry (Credit Bureau,..)
Pre - screening
Score Calculation / Strategy execution
Decision Notification and Contract Printing
Pre screening strategy on Credit Bureau data
Application
Rejected
User inputs Applicant’s and contract data using Web Browser N
Serious delinquency?
Low Risk? N Y Y
Evaluation strategy
Score calculation and policy rules application
© 2005 CRIF Group
Applicants’ credit reports are retrieved automatically from the Credit Bureau
Application Rejected
Notification to user
Application Accepted
Notification to user
Contract printing

16. PROCESS CUSTOMISATION ADD NEW PRODUCTS - SEGMENTS
A possible scenario for Polish Cooperative Banks
PROCESS CUSTOMISATION
Each Bank will be able to choose its own evolution path, according to its needs and priorities
ADD NEW PRODUCTS - SEGMENTS
POLICY RULES CHANGE
Each Bank will be able to have its own strategies, processes and data kept separated from other users’ ones
START UP SOLUTION
© 2005 CRIF Group
TIME

17. Credit Application Processing: Main Benefits
Operational costs decrease
Process streamlining
Less manual work to carry out
Need for manual assessment reduced
Free up resource for value added
activities
Efficient Risk assessment
Advanced risk measurement tools
Customisable strategies
All risk drivers taken into account
Time to market
Response time minimized
Easy and fast extension to new products / segments / distribution channels
© 2005 CRIF Group
Objective and standardized
evaluation
Acceptance criteria decided from the centre and uniformly applied throughout the network
Control on human bias and overrides

18. ITALY Some achievements
Approximately 195 banks and financial companies use Application Processing Services by CRIF, built using
and which enables to accurately and rapidly evaluate both Consumers and Businesses
Among them having:
6 “Major Banks”
11 “Big Banks”
Around 60 Cooperative Banks!
© 2005 CRIF Group

19. CANADA MEXICO RUSSIA SWEDEN
Some achievements
CANADA
Local Credit Bureaux (TransUnion Canada and FIRA) use to provide value added services to Banks
MEXICO
RUSSIA
NBCH (RUS) and UC (SWE) use and
to provide credit application processing services to their associates
© 2005 CRIF Group
SWEDEN

20. Conclusions
To efficiently manage the credit lending activity is essential to structure it as a process, leveraging on advanced risk management methodology and up-to-date technology
Nowadays this is no longer a possibility only “big players” have: outsourcing and software innovation have made it possible for small Banks to get access to best in class solutions
Crif software is successfully used for credit request processing in an Application Service Provider context by many international operators thanks to its
Flexibility and modularity
Easiness of use
Customisability
© 2005 CRIF Group

21. Outsourcing in data management: Credit Application Processing
Thank you and good bye!
Giovanni Catinari
Business Consultant
CRIF Decision Solutions
© 2005 CRIF Group