Blog-Embryonic Opportunities For Predictive Analytics In Australia
1. Embryonic Opportunities
For Predictive Analytics In Australia
Australia has recently introduced a new form of consumer credit reporting known as ‘Comprehensive Credit Reporting (CCR)’. This
form of reporting allows credit providers such as banks and other lenders to share positive information about consumers through a
credit bureau. Pricing based on credit worthiness is commonplace in mature markets such as the US and UK, where consumers
actively use credit scores to seek out better deals.
What makes this form of reporting more exciting for a software vendor like Nucleus Software which is venturing into these developed
markets is that, the positive information shared by the credit bureaus when coupled with advanced predictive analytics solutions
can help lenders with better risk management capabilities while enhancing customer service right from the ‘lead’ stage to drive
business growth.
A negative credit report provides ‘negative’ information on an individual’s credit worthiness by capturing information like previous
credit enquiries, ‘negative’ or adverse information of the past 5 years (applications for credit – including mobile/gas/electricity
accounts, defaulting on a loan which the consumer does not pay even after 60 days of the due date, bankruptcies, insolvencies,
judgements) along with the usual account information like name, address, date of birth etc. In contrast, a positive credit reporting
involves ‘positive’ information about the individual’s credit position. It consists of five additional pieces of information relating to the
person’s current credit commitments which when coupled with a strong predictive analytics solution can help banks with even more
powerful analysis and information about its customers.
Mentioned below are the additional pieces of information captured and what they can be indicators of:
sales@nucleussoftware.comwww.nucleussoftware.comwww.nucleussoftware.com sales@nucleussoftware.com
Type of account (e.g. credit card, home loan etc.)
Date the account was opened and closed
Details of the credit provider
Credit limit placed, credit utilisation rate and
balance of the account
Repayment history*
Customer’s risk appetite and product mix
Level of risk – Measured using age of accounts – Long term account
relationships implies lower risks (Loyalty)
Customer’s risk appetite and product mix along with choice of lender
Customer’s exposure
Strong risk measurement characteristic Ø Proof of borrower’s
willingness to meet loan commitments
COMPREHENSIVE CREDIT REPORTING – NEGATIVE & POSITIVE CREDIT REPORTING:
INFORMATION/FIELD INDICATOR OF
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* Repayment history refers to monthly payment performance over the previous 24 months. Telecommunications and utilities
companies cannot share repayment history.