1. Introduction Commercial Bank of Ethiopia (CBE) aspires ‘’to become a world-class commercial bank financially driving Ethiopia’s future’’ and is working to provide banking services tailored to the needs of its esteemed customers. The bank has carried out a comprehensive assessment and strategy design work and drawn a business reform road-map. Accordingly, the Bank has introduced a new customer-centric business model and undertaken amendment on its organizational structure in order to render effective service based on customer segment. The customers facing unit i.e. wholesale banking division, is established to address banking needs of all individual and non-individual business (Corporate and MSMEs), public and institutional customers. The new business model creates an opportunity to offer enhanced customer value proposition based on customer segmentation which in turn requires customized and differentiated product and services. It aims to ensure customers enjoy segmented and personalized value and ultimately transform the customers’ journey from customer experience to loyalty. CBE’s strategic transformation will be delivered by twelve strategic imperatives across six pillars. Among these pillars “Transforming CBE into a customer-centric bank with differentiated Customer Value Propositions (CVPs) in retail, wholesale and interest free banking and enhancing sales force effectiveness’’ is the major one. This strategic pillar can be realized through defined and clear customer segments, delivering differentiated CVPs and superior customer experience on the one hand and enhancing sales force effectiveness and coverage model to drive cross sell on the other hand. Currently the bank has established dedicated MSMEs department under the wholesale division to avail products and services for underserved and un-served segment of the society. And the Bank has started developing digital micro saving and loan products and services so as to achieve financial inclusion as per the rules and regulations of the NBE, and aligning its digital micro saving and lending products with the digital strategy of the country, the National Digital Payment Strategy, and the National Financial Inclusion Strategy;

1. The importance of Credit Bureaus
Stefano Stoppani
IFC – Credit Bureau Advisor

2. 1
 Credit Bureaus (or credit reference agencies or credit registries) are
organizations that collect, process and provide public record data, socio-
demographic information, credit transactions and payment histories of
borrowers (consumers and businesses).
 The primary proposition of the Credit Bureau is the aggregation of
information from multiple sources to form a more complete and accurate
view of the borrower that is more reliable for informed decision making
than the information that the single lender may have.
 The information can either be positive or negative and is used by lenders to
determine the relative risk level of existing and potential borrowers.
 Although CBs provide information to support the credit decision making
process, they in themselves DO NOT make credit decisions.
Defining Credit Bureaus

3. 2
Main differences
between PCR & PCB
Public Credit Registries Private Credit Bureaus
OWNERSHIP Central bank / supervisory authority Private enterprises
MISSION Credit system supervision (no–profit) Information sharing for lenders (profit
oriented)
TYPE OF DATA Commercial, corporate, SME loans Consumer credit, retail
SOURCE OF
INFORMATION
Banks and other regulated credit and financial
entities
Banks, retailers, credit cards issuers, utilities,
microfinance, insurances
PARTICIPATION Compulsory, regulated by bank’s law Voluntary, regulated by Conduct Code
SCOPE OF
REPORTING
Large (restrictions on low amounts) All amounts (focus on retail lending)
ACCESS Restricted (aggregated data only) Open on reciprocity principle
END USERS Regulated entities – (no to customers) All contributors – (yes to customers)
DATA ACCURACY Imposed and controlled by authority Left to contributors’ will
CONSUMERS’
PROTECTION
Low – subjects of information do not have
access to their own data
High – subjects of info have access to their
info and may amend wrong data

4. 3
Information provided
1. Personal information • name, current/previous addresses, tel. number,
Personal identification number, date of birth and
current and previous employers.
• For businesses, some additional information will
include identity of key stakeholders including
shareholders and management personnel, etc.
The basic credit report is a standard document that contains details about financial
behavior and identification information of an individual or business. A typical credit
report includes 4 types of information:
2. Public information • including bankruptcy information, unpaid utility
bills/cheques and other public record.
3. Credit information • Number & type of credits, date opened, credit limit/loan
amount, credit status (performing, past due, delinquent
etc), n. of days/amounts past due etc.
4. Credit histories’ requests • identification of all inquiries made on the credit history
of an individual, business or corporate entity and the
date of such request.

5. 4
Information provided (2)
Credit reports typically do not contain – religious preference,
medical history, personal lifestyle, political preference, friends,
criminal record or any other information unrelated to credit.
Nor is there information about other banking transactions such
as deposit accounts.

6. 5
The Credit Bureau requires collaboration between the bureau
operator and other key actors:
The CB environment
Credit Bureau
Operator
Borrowers
Subscribers (Lenders)
Media
Data Protection Bodies
Hardware Suppliers Private Data Suppliers
Public Registry Data
Other Vendors & Service
Providers
Telecommunication Service
Providers
Credit Bureau
Know-how /Software suppliers

7. 6
2
3
4
5
6
1
•Contain both positive and negative information
•Contain data on both individuals and firms
•Contain data from financial institutions and others (retailers, utilities)
•Contain five or more years of historical data preserved
•Contain data on all loans
•Guarantee consumer’s right to inspect their data and amend it
 World Bank rates credit bureaus’ quality on a 6 factors index
 A score of 1 point is given to each factor
 In 2004 only 14 nations out of 120 got the maximum score (6)
Quality of PCB

8. 7
Classification of
Credit Bureaus
Lowest predictiveness
(e.g. Korea, Morocco)
Lower predictiveness
(e.g. Poland, Czech
Republic)
“Fragmented”
(e.g. information
shared among banks
only or retail only)
Lower predictiveness
(e.g. Australia)
“Full”
(information shared by
banks, MFIs, retailers,
NBFIs, mobile
operators)
Sources of
Information
“Negative
Only”
Types of
Information “Positive
& Negative”
High
predictiveness
(e.g. US, UK, Italy)

9. 8
Broader information sharing
expands credit
39,8
74,8
Negative
information
only
Negative and
positive
information
Percent of Applicants who Obtain a Loan
Source: Barron and Staten (2003). Note: Figure shows the simulated credit availability assuming a target default rate of 3%
90% increase in
access
75,4
83,4
Retail
information
only
Retail and
other lender
information
11% increase in access
Out of 100.000 Applicants
35.000 potential good
customers are lost if
assessment is based on
negative info only.

10. 9
Broader information sharing
decreases loan losses
3,35
1,9
Negative
information
only
Negative and
positive
information
Percent Decrease in Default Rate
Source: Barron and Staten (2003). Note: Figure shows the simulated credit defaults assuming an acceptance rate of 60%
43% decrease
in default rate
1,9
1,18
Retail
information
only
Retail and
other lender
information
38% decrease
in default rate

11. 10
More information sharing =
more credit, higher growth
Source: Doing Business in 2005
A WB analysis of credit markets, over the last 25 years shows that:
• Broader info sharing & stringent bankruptcy rights expand credit and reduce Non
Performing Loans
• SME are 40% more likely to get a bank loan in countries with credit registries
• Loans are cheaper
• Ratings of financial systems are higher
• Increasing the quality/reach of information sharing is strictly associated with GDP growth

12. 11
• Lenders are better able to objectively price for risk resulting in more appropriate interest rates
that reflect the risk inherent in individual credit exposures.
• Borrowers with good credit histories (“reputation collateral”) can borrow to more equitable limits,
and receive lower interest rates. They also have improved access to a wider range of credit
products.
• “Serial borrowers” – who are contributors to significant credit losses through concurrent
exposures to more than one lender – are prevented from obtaining further credit with ease
• A healthy credit culture is created as borrowers become aware that the market rewards and
sanctions them based on credit behaviour.
• The development of non-cash payment options (cheques, cards) become more attractive.
• There is increased access to credit for a larger segment of the population, thus improving
general standards of living, encouraging investment and stimulating economic growth.
Benefits and Impacts of CBs
Beneficiaries of CBs include all sectors of the economy, both private and public,
and in recognition of their relevance in economic growth, the WB/IFC are
promoting and facilitating the development of efficient and best practice Credit
Bureau services in developing countries.

13. 12
OECD Countries
Positive vs. Negative Reporting
AUSTRALIA
CANADA
UNITED STATES
AUSTRIA
FRANCE
GREECE
PORTUGAL
LUXEMBOURG
DENMARK
ICELAND
UNITED KINGDOM
IRELAND
NETHERLANDS
FINLAND
SWEDEN
NORWAY
SPAIN
BELGIUM
SWITZERLAND
JAPAN
ITALY
GERMANY
CYPRUS
NEW
ZEALAND
PRIVATE CREDIT REGISTRY:
POSITIVE
NEGATIVE
DOES NOT EXIST
NO INFORMATION
DEVELOPED WORLD
PRIVATE CREDIT REPORTING

14. 13
Europe and Central Asia
Positive vs. Negative Reporting
EUROPE AND CENTRAL ASIA
PRIVATE CREDIT REPORTING
DOES NOT EXIST
NO INFORMATION
PRIVATE CREDIT REGISTRY:
POSITIVE
NEGATIVE